5 things I wish I knew before leaving my broker-dealer

By Ciano B. Villaquiran

Change is inevitable in the financial services industry. Regulations evolve, technology advances, and client needs shift. These dynamics often lead advisors to make one of the biggest decisions in their careers: changing their broker-dealer. According to a study by Cerulli, roughly 10% of financial advisors are expected to switch firms during the year.

Why does this happen? Sometimes it’s about better income opportunities, alignment with the right company’s vision, or external factors beyond your control.

I’ve personally gone through three broker-dealer changes:

- First was due to a company acquisition
- The second to pursue independence
- Most recently, to align with a broker-dealer that shares the same long-term vision as my local firm

Each move taught me valuable lessons. Here are five things I wish I knew before making the transition:

Understand where you’re going, inside and out

Like any new home, it's essential you do your due diligence on your new firm. It's key to understanding their long-term vision, the technology they offer, how their solutions compare to your current broker-dealer, and how your procedures align with theirs. Understanding these areas will ensure you are set up for long-term success.

Ask for references to current advisors with the new broker-dealer, speak to leadership, and connect with your wholesalers who partner with the broker-dealers to get all sorts of perspectives. The more clarity you have upfront, the fewer surprises you’ll face later.

Keep client information up to date and know what information is yours

Accurate client information is critical to a well-organized financial advisor, and when transitioning broker-dealers, having up-to-date client information is critical to a smooth transition. Your new broker-dealer is being introduced to your clients for the first time, and they require you to have up-to-date addresses, driver’s licenses, suitability, etc. on file before approving accounts.

I would encourage you to add a client profile audit as part of your review process with your clients to collect any updated information that you may come across during the transition.

One thing that was a surprise during the first transition was understanding what data we own and what information belongs to our firm. We were surprised to hear that certain information we didn’t own and weren’t allowed to transition with us. Ensure you understand this in full detail before you decide to transition, to avoid putting yourself in a non-compliant situation and running into legal issues.

Set roles, responsibilities, and procedures

Changing broker-dealers is not a solo act - it requires team effort. It’s crucial to set clear expectations, procedures, and roles for your team to ensure a smooth transition. This will require you and your team to take on new responsibilities that may have a learning curve attached to it. The good news is your new broker-dealer is there to help and should assign a transition team to guide you along the way.

I strongly encourage that, as a leader of your firm, you portray confidence and positivity throughout the transition. Your staff will be spending hours on this transition and some days they will feel exhausted. Having you encourage them during these times and praise them for their dedication and hard work goes a long way. Don’t forget that.

Slow down to speed up

My business partner Jim Lingelbach shared a quote with me that continues to be a mantra anytime our firm engages in a large-scale project: “Slow down to speed up.” This is the title of a McKinsey and Company study that states that if top teams slow down, they eventually go deeper and faster into achieving their objectives.

Most advisors who transition broker-dealers attempt to continue to operate normally, bring on new clients and try and transition to a new broker-dealer as quickly as possible. Taking this approach will lead to mistakes and bad expectations. Take your time, slow down, minimize mistakes and this will lead to a more efficient transition.

Set the right expectations for your clients

Your clients understand that any transition takes time and it’s important you set clear expectations and timelines for the change. By communicating effectively with your clients, you will see better results and a more efficient transition.

It takes years to build trust with your clients and just seconds to break it. Explain why you’re making the move, how it benefits them, and what they can expect during the transition.

Remember: clients care less about the name on your business card and more about how you serve them.

Changing broker-dealers isn’t easy. There will be speed bumps along the way. However, if you prepare well, communicate clearly, and keep your clients’ best interests at heart, you’ll emerge stronger on the other side. You’ll look back and feel confident you made the right decision.

Ciano has been in the financial services industry since 2012 and is a partner in a boutique planning practice, CURO Financial Planning and Insurance Solutions, based in San Diego.