Slideshow 10 Ways to Prevent a Bad Career Move

Published
  • March 07 2013, 12:03pm EST
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10 Ways to Prevent a Bad Move

When advisors move their practice, many things can go wrong – and they can go wrong very quickly. Fortunately, many of these mistakes can be avoided.

Rick Rummage, founder and CEO of the Rummage Group, shares 10 easy steps to prevent making a bad move.

1. DON'T BE AFRAID OF NON-COMPETES/NON-SOLICITS

Non-compete and non-solicit agreements generally work well because they scare people into submission. But in reality, most firms do not want to spend the time, effort or money to truly enforce the agreement.

A few tips: Don't put anything in writing to a client regarding your move prior to or immediately following it. Do not print anything regarding your clients prior to the move. (You should keep a handwritten Rolodex of your clients and any pertinent information.) And don't discuss anything you happen to have in your possession with the hiring manager.

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2. HAVE PROOF OF T-12 AND AUM

When a manager finds out an advisor is looking at other firms, the advisor is sometimes fired on the spot. Unfortunately for some, they don't have printed proof of production or assets. All firms want verification of an advisor's previous 12 months. If you don't have these numbers and you are fired for any reason, your offer from the new firm will drop significantly.

3. AVOID PROPRIETARY PRODUCTS

Firms want you to buy products that are difficult or impossible to move. Buying proprietary products is one of the most foolish things an advisor can do. It puts them in a precarious situation when asking their clients to move their assets to the new firm. An advisor should only buy products that are common to most firms.

4. DON'T GO FOR THE QUICK BUCK

Everyone in wealth management knows that fee-based business is high priority. When you move your book to a new firm, it is less stressful to have a portion of your book throwing off annual fees. If you are putting 100% of your clients in an annuity or "A" share mutual fund, you'll find it more difficult moving your practice. Whether you are in the fee-based or transaction camp, it is smart to have some assets that provide you with income.

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5. BUILD STRONG RELATIONSHIPS

Moving your book is the name of the game and it's all about the relationship. If your clients like you and feel you add value to their financial lives, they will usually move with you. If not, they won't. End of story. Take the time to build strong personal relationships with your clients.

6. KNOW YOUR A,B,C's

Don't just guess which clients will move with you. Make a list and sort them into "A" clients, those you're certain will move; "B," those you think will move; "C," those who are a total question mark; and "D", those who are not likely to move with you or the ones you'd like to jettison.

7. KEEP YOUR MOUTH SHUT

It's hard to keep a secret, but telling anyone about your move other than your spouse or a consultant is a big mistake. This information puts everyone at great risk. The chances of your friend keeping it a secret are low.

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8. KNOW HOW TO HANDLE YOUR CLIENTS PRIOR TO A MOVE

It's never a good idea to tell a client about your change. However, you may feel if you don't, they will be insulted and therefore not want to move with you. There are ways to hint to your better clients, but be very cautious. You don’t want any clients to panic and call your employer, asking what will happen to them when you leave the firm.

9. NEGOTIATE A GOOD TRANSITION

While some advisors transition because of incompatibility with the firm, some also do it for the money. Regardless of which camp you stand in, you should be able to negotiate a deal that takes into account unbiased information. If money is your concern, weigh your options, look at other models, and let the hiring manger know you have other offers on the table, rather than expecting them to pay you more because you think you deserve it.

10. DON'T ASSUME THIS IS YOUR LAST MOVE

Many advisors changing firms feel this is their last move. Be realistic and assume you will be moving again at some point in your future. Since firms are always changing without your permission or consent, eventually the pain at your new firm may become too great.

No matter which firm you’re in, keep striving to manage your practice better, and you will be around for a long time.