Is Now The ‘Right Time’ To Start Exploring Your Options?

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Financial advisors often wonder if there’s a right time to embark upon the due diligence process.


The truth is that taking the time to get educated about the opportunities available is a smart business decision—regardless of whether you want or are ready to make a move.

Advisors often wonder if there’s a right time to embark upon the due diligence process. And the reality is that it’s important that they always stay aware and educated about the opportunities around them—particularly in an environment that’s evolved rapidly over the last several years.

But to do a “deep dive” takes some time and effort on the advisor’s part and is generally left to those experiencing a gap between where they are now and where they want to be. And that gap helps determine the urgency around the next steps you might take.

If the gap is big enough and important enough to justify the hassle of a move, then it makes sense to begin due diligence. You may decide that a more passive approach – what we call “armchair exploration” – is enough to enlighten you about the possibilities that exist beyond your firm. Or you may feel greater exigence and opt for a more active form of due diligence—that is, taking meetings with representatives of other firms and engaging in a true “compare and contrast” of all possible options.

Either way, taking the time to get educated is a smart business decision—regardless of whether you want or are ready to make a move. Being a “student of the industry” – knowing how it is changing and becoming aware of the growing list of options available – will no doubt empower you to become a better advisor and, even more so, a fiduciary to your clients. That is, it allows you to know, with certainty, that you are delivering the very best of what’s available to your clients.

Yet many advisors shy away from the due diligence process itself, envisioning an exhaustive barrage of calls from recruiters and managers of other firms and meetings that often lead nowhere. But it doesn’t have to be that way. Having full awareness of your goals, plus basic knowledge of the industry landscape, will allow you to weigh options against the status quo in the most effective manner—with your current firm serving as the benchmark upon which to evaluate every other option.

Best practices to consider

For those who have decided to embark upon an active due diligence process, whether with a recruiter or on their own, there are ways to make it both strategic and efficient.

Arm yourself with a solid understanding of your goals. In fact, the cornerstone of our process is a proprietary self-assessment designed to help advisors objectively evaluate their current business life and gain clarity on whether “where they are” aligns with their goals. (A subset of this tool is available here.) Ultimately, the answers will bring to light any incongruence that may exist and serve as your blueprint throughout the due diligence process.

View everything from your clients’ perspectives. What’s in it for them? Think about the message you would deliver to clients should you opt to make a move, highlighting the benefits they would see.

Don’t allow yourself to be blinded by the “big check.” Surely, being compensated for the hassle of making a move is a reasonable expectation. Most advisors wouldn’t – or shouldn’t – go elsewhere without being certain that the financials of a transition are appropriate. While understanding the economics of a recruiting package is important, it shouldn’t be your first inquiry.

Be sure you’re not running from your frustrations but toward your goals. Every move is driven by a series of “pushes” and/or “pulls.” The pushes are pain points or frustrations that an advisor is looking to remediate, while the pulls are what advisors are most excited about—that is, the real potential that a new opportunity represents. But, a move motivated by pushes alone can be a mistake. There needs to be an equal or greater number of pulls drawing you somewhere else.

Have a 10,000-foot view of your business at the ready. Put some thought into which clients will follow you and those you might prefer to leave behind. Assess what you need to replicate and identify which clients may be challenging to move or require special consideration.

If in a partnership, be sure everyone is on board with the plan. Identify each partner’s specific goals and determine if you are aligned as a team. Be clear on how decisions will be made and what would happen if there weren’t a consensus.

Get – and stay – organized. Develop a process for keeping track of open items, questions, and who is responsible for follow-up.

Keep your circle close. Discretion and confidentiality are critical so that any move you make can be accomplished without the pressure of being “found out.” Limit your discussions about a potential move to only those who “need to know.” Avoid openly discussing your thoughts and actions outside this circle.

Maintain the status quo. Don’t alter behavior such as printing reports or taking conspicuous absences from the office. Avoid any actions or attitudes that are uncharacteristic—and always be a good corporate citizen.

Speak with an attorney. Legal advice is a vital step to understanding and remaining in compliance with Protocol (where applicable), any-and-all post-employment restrictions, and new or potential regulatory requirements. Review your compliance history as this can impact and possibly complicate a move.

And most importantly, keep your current firm at the top of the list of possible choices. Every option you evaluate must be compared against what you already have. On par, a new opportunity needs to be better than your firm and more than “better enough” overall.

But what is “better enough”?

There might be certain aspects of another firm or model that appeal to you, but when you consider the whole, if it isn’t more than marginally better than the status quo, then it’s likely not “better enough” to justify the risk and hassle of a move.

The concept of better enough relates to two key areas:

1. The ability to serve clients with greater freedom and customization.

2. The ability to grow faster.

Keep in mind that the goal of any due diligence process should be to find clarity that will allow you to make an informed decision—whether it’s to stay with your current firm or opt for another firm or model. Ultimately, you’ll walk away – at the very least – with a heightened understanding of the evolved industry landscape and a better sense of the opportunity that abounds.