5 tips for a financial adviser handling a handover

3 mins read

Think back to the last time you hit it off with someone at an event or party.

Chances are a mutual friend or colleague introduced you, shared a story to help break the ice, then left the both of you to your own devices.

Funnily enough, effectively transitioning a book of clients isn't too dissimilar, just without the canapés.

“The most successful transition strategies are where the old adviser introduces the client to the new adviser in a way that adds value to the services they've been receiving,” explains practice sales expert Steven Fine, Managing Director of Growth Focus.

Fine says when a handover is done exceptionally well it's possible to have zero client drop-off, but the gold standard is 5% client loss or less. Here are his top five recommendations for achieving that.

1. The seller needs to justify their choice
Nothing helps get a client across the line like a ringing endorsement.

“Clients have had a long relationship with the seller and trust their recommendations, so the seller needs to justify why they selected you.”

Ensure there is a contractual obligation to support this, advises Fine.

“Generally there will be a requirement for formal face-to-face introductions with the top 15 clients, or so,” he says.

2. Put a positive spin on it
Usually a letter will go out to all clients explaining that change is in the air, says Fine.

“That letter is very important. Its purpose is not to shock the client. It's to give them a sense of comfort, a sense of continuity and not an impression they're being left in the lurch,” he says.

“Make it a good news announcement and use words like pleased, keen, merger, values, new services, and growth.”

3. Be prepared, and follow up
The biggest mistake some acquirers make is not following up with new clients, says Fine.

“I've seen situations where the acquirer has completed the transaction and then just done nothing,” he says.

“They haven't followed up the clients because they were too busy and were under-resourced. They just weren't prepared enough.”

4. Do your homework
Client files will be transferred to you as the new owner, so do your homework before meeting with each client.

“Make sure they don't feel they have to explain their situation all over again,” says Fine.

How quickly you can do this will depend on the seller's records. So try and get a good idea of the kind of client files you'll be purchasing.

“If the seller's files are all over the place, in hard copy only, and badly filed, that makes the transition more difficult,” Fine says.

5. See if the seller wants to stay involved
Sure, the business will be yours. But that doesn't necessarily mean locking the doors on the seller.

“We've had numerous cases where a handover has been virtually seamless with zero client fall-off because the vendor continued on in an employed capacity,” says Fine.

“One example that worked well was when the vendor retired but still remained on as a figure-head. They weren't formally involved in the business, but clients could contact them, and their picture was still on the wall.”

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Important: This article has been prepared without taking account of the objectives, financial or taxation situation or needs of any particular individual. Before acting on the information, you should consider its appropriateness to your circumstances and if necessary, seek appropriate professional advice. Any information used in this article is for illustrative purposes only. Growth Focus is an external entity that is not a member of the Commonwealth Bank of Australia Group of Companies (the Group) and the content or any view expressed by Growth Focus and its employees does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. CBA, nor members of the Group accept any liability for losses or damage arising from any reliance on external parties their products, services and material.