How to bring clients along when moving
When adviser Todd Resnick resigned from Morgan Stanley on the Friday morning before the recent Fourth of July weekend to found his own registered investment adviser, he gave “zero minutes” notice.
But those brief moments were the culmination of long, intense and often nerve-wracking planning.
“I didn’t sleep for months on end, basically,” Resnick says.
He left Morgan Stanley with three other members of his wirehouse team, which managed $600 million.
In the long run-up to his departure, Resnick sought counsel and advice on every aspect of the transition, making sure that he was following proper procedure in a way that would effectively help his new firm, called One Seven, retain as many of the team’s former clients as possible.
Because they couldn’t tell clients about the move in advance, the key for his team was positioning themselves so that “within an hour of resigning, we’re calling clients and trying to connect with them.”
That strategy appears to have worked.
At two months out, Resnick estimates that Cleveland-based One Seven has retained about 80% of his team’s former clients.
Advisers should start planning about six months in advance of a move and use the time to keep in touch with clients, says Cleveland-based securities attorney Scott Matasar, Resnick’s lawyer and a member at Matasar Jacobs, who specializes in representing advisers on transitions.
“A client who hasn’t heard from you in a year and then the first contact is when they find out you’ve moved to another firm is a client you’re at risk of losing,” says Matasar, who estimates that he counsels about 200 advisers a year.
“Whether it’s breakfast, a cup of coffee, a meal or a holiday card, it’s reaffirming to clients how much you value their business,” he says.
That was the easy part for Resnick, who says that strong client relationships have always been at the center of his practice.
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In that sense, his transition strategy “didn’t really deviate much from what we try to do all the time, which is to focus on our relationships and to create an experience beyond the balance sheet,” he says.
The goal for the transition was to keep those relationships undisturbed, in other words, to make things feel the same for clients and advisers.
“We tried to make it a seamless thing where people came on board, and it felt that it was still like working at Morgan Stanley,” says Resnick, who points out that the new team was even able to relocate to an office convenient for most of its previous clients.
That is just one example of the many details that he says advisers must look at, and he recommends that they drill down into “how it all works and why.”
Looking back, Resnick says that there is just one detail that he shouldn’t have worried about quite so much: getting the clients to immediately commit on paper, especially because it was a holiday weekend.
“The client who’s coming with you is coming with you, whether the paperwork is there Saturday afternoon or not,” he says.
“The client is going to come because the client wants to be with you. Whether you have the paperwork is not going to make a difference,” Resnick says.
This story is part of a 30-30 series on transitions.