Five Questions Every Advisor Should Ask Before Moving to a New Firm

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By John Pierce

Cover your bases before pulling the trigger.

In the span of a career, most successful financial advisors will have the opportunity to join a new firm. Switching firms can be exciting, but it can also open the door to legal issues. If you’re considering a move, ask yourself these questions to determine if it makes sense for you.

 1. How will moving benefit my clients?

Think about how a move would affect your clients. Will you be able to devote more attention to their needs? Or will you be forced to handle new responsibilities that take you away from serving your clients?

What is the new firm’s compensation structure? Are there any potential risks to your clients’ investments? What insurance coverage or federal protection does the new firm offer? Will you have access to better products, services, technology, and equity research?

At Stifel, we know that transitions can be difficult for advisors and clients. As such, we address every potential client concern that can stem from an advisor’s move. And the advantages we offer new advisors benefit clients as well. “It feels like a family office, except with a lot of infrastructural advantages,” says Ed Moldaver, Managing Director/Investments. “The bigger firms have just as many great people working for them and high-caliber talent, but the problem is that when you’re there, you don’t have any access to them. Stifel fits in nicely between those two models.”

2. Can I take my clients with me without legal repercussions?

An industry agreement called the Protocol for Broker Recruiting allows financial advisors to bring specific information pertaining to their clients with them to the new firm, namely, their clients’ names, addresses, and phone numbers. Advisors are forbidden to bring any privacy information, such as account numbers, birthdates, or Social Security numbers.

In the years since the Protocol agreement was signed, thousands of advisors have transitioned to new firms. However, broker-dealers have made it clear that anyone who does not fully and perfectly follow the Protocol may still be subject to lawsuits seeking to limit their actions.

3. Have I thoroughly read my current employment contract?

Employment contracts can be rife with legal trapdoors, including agreements and non-compete language. Be sure to review the contract you signed when you joined your current firm and consult an attorney with any questions.

Even if you are moving between two protocol firms, your employment contract is enforceable should you violate any protocol rule. For example, you may assume that you are free to take all client information and account notes with you, but that’s not the case. Even if you have spent years collecting that information on behalf of your firm, it remains the property of the firm upon your departure.

4. How is the new firm managed?

You should have some level of comfort with the new firm’s management. Will you have face time with executives at the new firm? Were you offered the chance to speak with senior leadership about the firm’s future? It’s essential to understand the reputation and direction of any firm you’re considering. Performing due diligence will give you a better feel for how your business will fit into the firm.

“What I like about Stifel’s management structure is that it’s pretty flat,” says Moldaver. “You don’t have to go through layers and layers of people to get things accomplished. Other firms pitch that, but they rarely execute on it.” At Stifel, we value transparency. Our advisors know their voices will be heard, and they understand their vital role in our firm’s future.

5. Is the new firm’s culture the right fit for me?

With so many financial and legal issues to consider, it can be hard to gauge whether a new firm is the right cultural fit for you. Are performance expectations realistic, so that you can achieve success in a reasonable amount of time? Bringing in assets takes time and hard work. You need to make sure you have a realistic chance of meeting your goals and growing your business.

“We actually do have the best of both worlds,” says Walter Mancing, Senior Vice President/Investments. “We have the products and the reach, and at the same time, we have the feel of a smaller boutique firm that actually cares about us.”

Moving to a new firm can open the door to new opportunities. But before you pack up your desk, you owe it to yourself, your clients, and your family to ask the right questions. At Stifel, we understand what’s at stake. Our experienced transition team comes prepared with the answers and support you need to make your move go as smoothly as possible.

John Pierce is head of recruiting at Stifel

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