WEALTH MANAGER-Advisers switching firms need a plan

* Do not tell clients until after you move

* Take only basic client contact details

* Hand deliver transfer documents to top clients

By Helen Kearney

NEW YORK, April 27 (BestGrowthStock) – Ninety-hour work weeks, a
diet of takeout pizza and mountains of paper work are what most
advisers have to look forward to when they switch firms and
begin the long process of transferring their clients’ assets.

But the hardest thing for adviser Charles Nemes when he and
partner Tim Rush decided to move was being unable to inform
clients in advance.

“It’s like moving out on your wife and then calling from
your new house and explaining why,” said Nemes, who moved from
Merrill Lynch to Raymond James & Associates in 2008.

This secrecy is essential, according to Thomas Lewis, an
attorney with Princeton, New Jersey-based Stark & Stark. If an
adviser tells his clients before he leaves his old firm, he can
be sued for breaching his duty of loyalty.

Lewis even recommends the adviser keep the move a secret
from support staff until he is ready to go. “It can become the
subject of office gossip and if your manager finds out, he’s
likely to come and fire you before you’re ready,” he said.

The job termination would then show up on the adviser’s

Departing advisers also need to stick to the guidelines of
the Protocol for Broker Recruiting. Under the Protocol,
advisers are permitted to take their clients’ basic contact
information — names, addresses, email addresses, phone numbers
— when they leave the firm.

They cannot take any other information, such as account
numbers or positions. If they do, they risk being sued. Today
most firms have monitoring systems that track when an employee
downloads, prints or photocopies information, said Lewis.

“Don’t try to outsmart the firm. The last thing you want
when you’re starting at a new firm is a lawsuit,” he said.

Once the adviser has handed in his resignation letter, he
needs to have a plan of action to contact clients. His former
colleagues will be eager to pounce to keep the clients at the
firm. Lewis said he has even heard of firms offering clients a
year of commission-free trading to persuade them to stay.


The departing adviser needs to be able to articulate why he
is leaving and how the move will benefit the clients, said
Dianne MacPhee, an industry consultant. “You cannot talk to
your clients like they’re merchandise to be moved from one firm
to another,” she said.

Nemes recalls seeing 30 clients the day he moved to Raymond
James (RJF.N: ). Despite the chaos, he took his best client to
lunch and had him sign all the transfer papers.

Nemes admits some of his 250 clients were nervous to make
the move from Merrill Lynch, just two weeks after it was bought
by Bank of America Corp (BAC.N: ).

“We explained that we wanted to be at a firm that matched
our morals and ethics and we felt Merrill Lynch was going in a
different direction,” he said. His team, which oversees $275
million in assets, also told clients that they were better off
at a financially secure firm.

MacPhee said it is essential for advisers to make the paper
work as easy as possible for clients — fill in everything and
then walk clients through the documents. She also recommends
sending a prepaid overnight envelope with the transfer
documents or hand delivering the documents to the client’s
home, at least for one’s best clients.

Then comes the hard part of actually transferring over the
assets. Nemes recommends creating an individual spreadsheet for
each client listing every investment they own and ticking them
off as they are transferred, so that nothing is left behind.
However, some investments, such as proprietary life insurance
and annuities, can be difficult to transfer and may need to
remain at the old firm, said Nemes.

Most importantly, clients need to know that the transfer
process is going to take time. “Make sure they have realistic
expectations, and keep reminding them why things are better at
the new firm,” he said.

Investing Research

(Reporting by Helen Kearney, editing by Matthew Lewis)

WEALTH MANAGER-Advisers switching firms need a plan