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Tips For Successfully Transitioning Your Team

SuperUser Account posted on December 01, 2010

Whether you’re a solo advisor or a member of a team, you can do many things to help your transition go smoothly, such as hiring a competent securities attorney, abiding by the terms of your employment agreement, and making sure you only take the information you’re entitled to. But when you’re leaving as a team, you need to consider several additional points. Read on for some advice on how to successfully transition your team.

Determine your collective and individual goals.
Don’t take for granted the fact that everybody shares the same goals, says Rick Rummage, managing partner and career coach at The Rummage Group, Reston, Va.

As soon as you have the epiphany that you need and want to move, it’s important to determine, in writing and in order of importance, what each person hopes to achieve at the new firm. Things to consider include how important is a name, technology, product offering and service.

If you find you want different things, you either need to compromise, or find a firm that suits your diverse needs, Rummage says. For example, if one person on the team is transactional, the other sells primarily mutual funds and the other is fee-based, those could transition into three different firms or a firm that caters to all three, if they want to stay together.

After you write down your goals, select one person on the team to be the point of contact. Create a combined list of questions of what’s important to all team members so you get the answers that satisfy everyone, not just one or two team members, he says.

Evaluate who and what aspects of your team will be necessary in the new firm.
It’s important to determine whether or not the team, as it exists today, has what it takes to survive in the new business, says Jason Del Col, Senior Vice President of advisory services at United Capital in Newport Beach, Calif. It may be that some or all members of the team won’t fit into the new environment; those are decisions that are better made sooner rather than later.

Set definitive roles and responsibilities.
You need to know what everyone will be doing at the new firm, says Matt Brinker, Vice President of acquisitions at United Capital. For example, who will be handling the chief financial officer responsibilities, who will be the chief operating officer, and also head of marketing? By breaking it out into buckets, you’ll have a better sense of what skills you are lacking and where you need to hire or outsource. Regardless of what you call the job titles, you need to know how each person will be spending his or her time, Brinker says.

Make sure the desire to move is mutual.
Make sure everyone’s on board because the chance of getting certain clients diminishes if the team doesn’t stay intact. You should be a little wary if all partners aren’t in a similar place in their lives, says Catherine Sidamon-Eristoff, Managing Director at Constellation Wealth Advisors in New York City.

Say, for example, your team consists of a senior partner and a junior partner. As the senior partner, you need to recognize and plan for the fact that a move might create financial stress for the junior advisor and that he or she might be more vulnerable to the departing firm’s pressures.

Think of the worst-case scenario—that one partner decides to stay, says Sidamon-Eristoff. It’s a good idea to have a written agreement that says, should you not leave or the team not travel together, you don’t solicit clients that weren’t brought into the team by you.

Determine who on the team should be in the know.
The more people know you are preparing to leave, the greater the chance it can leak out. That’s why securities attorneys often suggest that only the senior partners be involved in early discussions. Even though this might seem harsh, wait to tell assistants until a day or two before the move, unless they are truly senior members of the team. The fewer people that know, the better because there is less chance the news can get back to the departing firm, with dire consequences, says Patrick J. Burns Jr., Managing Attorney with the Law Offices of Patrick J. Burns Jr. in Beverly Hills, Calif.

Determine what kind of joint production agreements are in place.
This will determine which accounts you’re entitled to bring and which you’re not. If, for example, smaller producers brought in accounts and those folks don’t join the new team, those accounts probably won’t be leaving, Burns says.

Look at restrictions that would prohibit a team member from leaving.
Check to see whether certain team members have promissory notes that need to be paid back, for example. Thomas B. Lewis, partner in charge of employment litigation at Stark & Stark in Princeton, N.J., has seen cases where certain team members decide not to leave because of an outstanding promissory note. This can be a problem because the advisor with the note still has to earn a living, so a fight for accounts sometimes ensues.

“It’s a much easier sell to the clients when all team members transfer together because then it’s like it was in the past,” he says.

Create a written partnership agreement.
It’s imperative to determine in advance who will own what and under what terms the new entity will function. If you don’t put this in writing, it can become a source of conflict, an unwelcome obstacle to running a business.

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