“Coach’s Forum” is a place in which you can ask your questions, tell your stories or give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.



> Changing Firms.

Advisor: For a variety of reasons that I won’t go into here, I have decided that it is time for me to change my sponsoring dealer firm. This has not been an easy decision because I like most of the people there and they have been pretty good to me. In addition, I worry about the message I will be sending to my clients after years of telling them what a great organization it was.

However, I have concluded that there is no longer a “fit” between what I want to do with my practice and what the firm can provide, and it is in the best interests of everyone if I move on.

Based on what I have seen and heard, there are a hundred places I could go. But I only want to do this once, so making the right choice is critical.

I have a list of requirements that my new firm would have to satisfy, but I am wondering what your list would look like if you were in my situation.



Coach says: This is one of those “hot topics” that I knew someone would raise one day and that I would have to address — at the risk of offending some readers who feel I shouldn’t be providing counsel on changing firms.

On the other hand, I know we have readers who are engaged in actively recruiting financial advi-sors from their competitors, and who would be happy to be part of this conversation.

That said, this is an issue that comes up with considerable frequency, so it demands attention. However, before I tackle it, let me disclose my bias. I am generally not in favour of advisors changing firms for the reason you stated: it is disruptive for clients and leaves them with a diminished impression of the integrity of the industry and those in it.

It is not that advisors should not make what they feel are the best decisions for their practices that will result in better service or products for their clients in the long term. If that is the case, by all means, go for it. Everyone will be better off. If, however, the move is primarily for financial incentive and with little or no benefit to your clients, in my opinion, the argument is weakened.

OK, now that my “preaching” is done, let’s look at some of the basic considerations. But let’s do it from the perspective that these are things you should look for in any dealer relationship — the one you are in currently or the one you may be contemplating. For our purposes, I will focus on the qualitative conditions you should seek rather than the quantitative or “money” side of the equation.

> Start With Your Vision. The fundamental objective is to be associated, as you suggest, with a firm that has a good “fit” with how you want to build and manage your business.

The details of that relationship should be captured in your vision statement, a written description of what you want your practice to look like when it is as successful as you want it to be. By defining such things as how large you want to become, what role you personally want to play, the products and services you will offer, the type of clients you want, the support infrastructure you anticipate having, and so on, you will be able to identify the attributes you need in a dealer firm.

So, rather than focusing on what your practice has used or needed in the past, step back and consider where you would like your practice to be in three to five years.

When you have your vision firmly in mind — and on paper — consider the support you will need to achieve your ideal practice. Will you need help hiring staff? Will you need marketing support to attract more ideal clients? Do you want to grow a branch or build a solo practice? Do you need help planning for your practice transition at retirement, perhaps even for selling your practice?

> Culture. Just like people, organizations have personalities and beliefs that manifest themselves in everyday behaviour and are reflected in policies and performance expectations.

If you are a “leave me alone as long as I am producing” type, you probably won’t fit well with a firm that has rigid reporting requirements and mandatory meeting attendance.

On the other hand, advisors who flourish by having standardized operating methodologies to guide them and disciplined supervision are likely to feel undersupported in an environment in which the corporate mantra is “run your business any way you want, as long as it is compliant.”

> Reputation And Financial Stability. Of course, you want a dealer firm that is reputable. That reputation should be one that appeals to your clients and your target market, and aligns with your personal philosophy.
@page_break@For some advisors, that means a big firm, such as a national or global financial institution; for others, a smaller regional organization is more appropriate. Either way, you want to have confidence that the firm will be able to support your practice over the long term.

> Practice Structure. Some advisors work well as soloists, while others excel in a larger ensemble. Look for the flexibility to work within the practice structure that best suits your needs and personality. Perhaps you like the synergy of working in a collaborative group environment, whether you want to share office space to reduce costs, enter into a partnership with another advisor or join a branch office.

Alternatively, if you prefer to go solo, look for resources to help you expand your offerings to clients beyond your own area of expertise, including access to different strategies and products, third-party expertise and other resources.

> Evidence Of Helping Advisors’ Practices Grow. Successful advi-sors recognize the need for ongoing education and training. Refer to your vision statement and evaluate your personal strengths and weaknesses to identify training that will be needed in order for you to achieve the long-term picture you have for your practice.

For example, does the prospective firm offer programs on specific topics such as marketing and client acquisition? Does it offer comprehensive practice management, including coaching tailored specifically to your practice?

> Integrated Technology. Few financial advisory practices can survive today without technology that makes everyday tasks more efficient and less time-consuming.

The challenge is that technology can sound great until you actually have to use it. While no dealer firm has, to my knowledge, truly reached the level of a 100% integrated technology platform, you should want systems that automate as many functions as possible.

> Compliance To Secure Your Practice And Protect Your Clients. Never before has the issue of compliance and supervision been as essential to protecting your practice as it is today.

Documentation of every communication, recommendation, decision and action (or lack thereof) can be invaluable in a claim or arbitration but daunting in terms of person-hours and document management. A dealer firm with a strong compliance expectation, supported by technology, will help you manage the regulatory requirements efficiently and effectively.

> Success In Helping Advisors Buy And Sell Practices. Consider the prospective firm’s support for advisors looking to buy books of business or sell their practices. Support in this area can be very helpful if you plan to expand your practice through acquisition of other books of business or, ultimately, to realize the value of your life’s work through the sale of your own.

Services should include continuity and contingency planning that address the worst-case “what if” scenarios of disability or death, as well as maximizing the value of your practice in preparation for selling it upon retirement. If there is a funding mechanism in place to assist in the transition, all the better.

While the questions to be considered may seem obvious, finding the answers may not be simple. After all, how can you understand a culture you have not yet experienced? And how can you evaluate technology you’ve never used? Several resources that may be helpful in making an informed decision about the fit between you and your dealer firm include:

1. Investment Executive Report Cards. IE publishes annual reviews and rankings of brokerage and dealer firms based on many criteria, as measured by advisors at each firm.

2. Peers in a range of professional groups such as Advocis, the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada. Talk to knowledgeable advisors you respect. If they were forced to change broker-dealers, which firms would be on their list, and why?

3. Wholesalers and company representatives. These intermediaries have frequent contact with large numbers of advisors as well as their dealer firms, and are often “in the know” as to which firms are in or out of favour, and why.

Regardless of who you are or what your stage of career, the right choice of dealer firm will be the main underpinning of a successful, enduring practice. IE



George Hartman is president and CEO of Market Logics Inc. and a senior coach and facilitator with the Covenant Group. His latest book, Blunder, Wonder, Thunder: Powering Your Practice to New Heights, was published in January. Send questions, comments and opinions on any aspect of practice management to
george@marketlogics.ca.