“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 advi-sory practices as effective as possible.

> Assigning Clients To New Advisors

Advisor: I am in the process of buying some assets from the branch manager at my firm, who’s also a practising advisor. Here is the letter we both plan to send to those clients; it will be signed by the branch manager:

“To whom it may concern: With the tremendous growth of our business over the past six years, along with my commitment to providing you, my client, with the best financial planning and service you deserve, I find it necessary to grow my team.

“With that in mind, I have asked [Ralph Advisor] to join my team as an advisor on your account. Ralph is a certified financial planner with more than 15 years of experience and has been part of my office for more than three years. Because of the tremendous growth, having Ralph take the lead on your account ensures you will receive the level of service you deserve and require. I will formally introduce Ralph to you at our next review and will have my assistant, Betty, touch base with you to book a meeting for the next couple of weeks.

“Talk with you soon.”

Any comments? Also, what process would you recommend to ensure the clients will stick with me?



Coach says: Congratulations on the purchase. Acquiring clients and assets from a respected advisor can often be a great way to give your practice a big boost. I will comment on your letter shortly. First, let me put whatever communication you have with clients in this situation into perspective: The transition part of a book of business is very much like the transition that occurs when an advisor retires and his or her successor takes over the client base. As such, this “mini-succession” in which you are involved can be approached in a similar manner.

One of the first things I ask advisors who transition their practice to a successor is whether they have done a thorough review of their client segmentation. There are a couple of good reasons why this becomes important at this time. First, a periodic assessment is always a good idea, as it helps ensure that you have the right clients in each segment. Some “A” clients, for example, may have slipped to “B” status as a result of you raising the bar on what it takes to qualify as an “A” client.

Conversely, some clients in lower levels may need to be elevated, so to speak, as a result of having their value to your practice increase. I won’t go deeply into client-segmentation strategy here, other than to say that you should have one and it should be reviewed regularly — just like all other critical aspects of your practice-management techniques.

The second important reason for assessing the transition of clients from a segmentation perspective is that this process provides guidance when it comes to allocating resources among clients. In particular, it helps you decide what is required to retain the clients you are acquiring. Obviously, you want, first and foremost, to retain those clients whom you feel will contribute the most to the overall long-term growth of your business.

Ideally, you’d like every transferred client to fall into that category, although that is not often the case. Even in a relatively small block of business, only 10%-20% of clients typically stand out, in terms of the revenue they represent, the referral possibilities and future potential (all of which, by the way, are good segmentation criteria). It just makes sound business sense to focus your efforts first on keeping them as clients. With those relationships secured, you then can direct time and energy toward the others, in line with your segmentation plan.

Regardless of where clients fall in your segmentation, I encourage you to ensure that all those who are being transferred are treated to what I call the “three Rs”: reassurance, redirection and reassignment. Essentially, you want every affected client to: be reassured that they are not being abandoned; be specifically redirected to their new resource person; and, ultimately, be reassigned in a formal way to break the link between the original advisor and you.

These actions will allow you to move forward with your own business-building activities. Your client segmentation will dictate how much effort goes into this process and how long it will take. Here is what it might look like in action for a typical client base of “A,” “B” and “C” clients.@page_break@> “A” Clients

Arrange a face-to-face meeting with both advisors present. Reassure these highest-value clients that you, the new advisor, have been hand-picked because of your extraordinary capabilities. Let clients know the original advisor will still keep a watchful eye on them and will be available anytime, if needed. In practice, once the you demonstrate your competence and build trust, clients will look to you first and the relationship with the original advisor will give way to the new one.

Redirect client requests and service needs to you, with a proviso that if clients do not feel they are receiving top-notch service, they can contact the original advisor. Assuming you are delivering a similar (or better) level of service, the original advisor is likely to receive very few calls. After a reasonable trial period of three months or so, formally reassign these clients to you.



> “B” Clients

Rather than a face-to-face meeting, the original advisor will have a telephone conversation with each “B” client, essentially reiterating the points above.

This is followed up by a call from you, seeking a meeting to introduce yourself.



> “C” Clients

The original advisor announces the appointment of you as the new advisor via an email message and invites “C” clients to contact you for a meeting if desired.

Of course, like all systems you might employ in a financial advisory practice, this one won’t work every time. On occasion, you will find yourself making exceptions: the “C” client who insists on a meeting with the original advisor; the client who persistently bypasses you; and so on.

You will have to decide on the extent to which you are willing to allow things like that to happen and how you will deal with clients who don’t want to go along with the new arrangement.



> Art Of The Transition Letter

Now, back to the letter. Personal style always plays a part in communication. I don’t think it would be appropriate for me to suggest there is only one correct way to express the points you have made in your proposed message. What I am comfortable in doing, however, is making some comments of a general nature that other advisors have adapted to their own language and style in similar communication with clients.

In this case, your branch manager must make sure that he’s presenting the change in the best possible light: he should be positive, excited and inspiring.

As well, he needs to write the letter from the clients’ perspective — what’s in it for them? Although clients may be interested to know his business has become overwhelmed by growth, they are more concerned about how that growth will affect the level of service they receive.

He needs to position the change as a “graduation” rather than a “demotion.” For instance, the letter might say: “John, your financial situation has reached a level of sophistication for which I think you would be best served by our newest star advi-sor, Ralph, who specializes in working with people in circumstances similar to yours. Quite frankly, he is better qualified to meet your needs than I am.”

The letter should provide a “lifeline” that gives clients permission to say something if they are not satisfied with the transition: “John, if you find, after a reasonable period of time, that this arrangement is not working out for you, let me know and we’ll work together to ensure you get the service you require.” Note: this is not committing to a return to the original advisor; it’s just a commitment to work it out.

The key to passing on a book to new talent successfully and having the acquiring advisor retain those clients is the ability to shift clients from one advisor to another. That should be done in a way that brings together the client’s need for trusting relationships and the advisor’s need to manage his or her business in an efficient way. IE



George Hartman is president and CEO of Market Logics Inc. and a senior coach and facilitator with the Covenant Group. Send questions, comments and opinions on any aspect of practice management to
george@marketlogics.ca.