Was It Worth It? Advisors Reflect on Joys and Pains of Moving

by: John Kimelman

Reading the trade press and the almost daily deluge of advisors jumping from firm to firm, you might think switching firms is a quick and easy task.

But regardless of whether you’re going independent, joining another wirehouse or shifting to a regional firm, moving presents enormous risks to advisors who want to preserve their book of business and transition assets while also avoiding legal trouble from their former firm or ending up at the wrong place.

Three advisors who moved since last summer and agreed to speak to AdvisorHub about their move generally report that the process has gone smoothly thanks to careful planning, patience in dealing with unexpected surprises and a loyal client base who was willing to follow.

Starting an RIA in Atlanta

Zachary Morris, 35, said that he and his partner, Jeffrey Diamond, have no regrets about their move from J.P. Morgan Securities, the legacy Bear, Stearns brokerage business, one year ago to start their own registered investment advisory firm in Atlanta.

Despite “a few surprises,” since moving, they have transitioned almost all of the roughly 70 households and $200 million in assets they worked with, he said.

Their new firm, Paces Ferry Wealth Advisors, manages around $187 million in advisory assets, which it custodies with Charles Schwab & Co. according to its most recent ADV filing.

“We don’t regret any part of it,” Morris said. “The biggest difference is the excitement is all yours, and the challenges are all yours.”

Morris attributed their success to the loyalty of their clients and also the intensive year-long preparation they undertook to set up the firm prior to leaving to make the process as seamless as possible for them and their clients.

Paces Ferry also partnered with tru Independence, an RIA service provider, for compliance and back-office support and to avoid the ‘analysis paralysis’ that comes from selecting among a wide array of tech vendors.

“It was a bit overwhelming with all of the choices,” Morris said.

It also helped that J.P. Morgan Securities is signatory to the Protocol for Broker Recruiting, which allowed their new firm to sign on to the agreement as well and take a limited amount of client contact information without fear of violating their non-solicitation agreements.

Morris says his advice to others considering such a move is to start early and do research to understand your options and prepare for the unexpected.

“Talk to a lot of other advisors who have gone through it,” Morris said.

“I’m reenergized in the business because I got rid of all the drudgery, which was occupying about 30% of my time,” Morton said.

Succession Planning

For brokers or firms considering partnering or selling, Steven H. Morton, 65, says the process was easier than expected.

Last August, he sold his $400 million-asset RIA, which he founded in 1981 in Greensboro, North Carolina, to CAPTRUST Financial Advisors, an independent RIA roll-up based in Raleigh. He made the move as part of a succession plan for his business after his son said he was not interested in taking over the firm.

The transition has made things easier because he has turned over most of the daily administrative and compliance tasks he dealt with as a business owner over to CAPTRUST, Morton said. He now spends most of his time working with advisors in his practice and spending time in front of clients.

“I’m reenergized in the business because I got rid of all the drudgery, which was occupying about 30% of my time,” Morton said.

Clients, many of whom had been with him for decades, understood the motivation, and there was little paperwork aside “repaparing” client account statements. CAPTRUST had done 29 other deals and was helpful in assisting with the administrative and logistical hurdles, he said.

Morton said he was concerned that by joining up with a larger firm he would be forced to use the new firm’s model portfolios, but that it hasn’t been an issue so far at CAPTRUST.

Indie in Texas

Trey Wilkerson, an independent broker in Diboll, Texas (population 5,303), said things have gone “fairly smoothly” since he switched broker-dealers in June this year after spending all of his 21-year career with his firm.

In just four months, he has transitioned most of the $100 million in client assets he had been managing to LPL Financial from Hilltop Securities, where he was also an independent broker.

Wilkerson, who said he decided to move out of frustrations over delays in tax reporting, explained that the hardest part has been ‘repapering’ all of his clients. Many of his accounts are mass affluent customers with a few hundred thousand in investable assets. They didn’t understand the process for transferring accounts and had a lot of questions, he said.

“It’s been an easy move,” Wilkerson said. “The clients are making adjustments about how to read new statements but they have been supportive about the change.”

Wilkerson said explaining the tax reporting issue as a pain point was helpful in answering client questions about why he decided to change firms. He said he focuses on helping clients with taxes and planned his move accordingly during the summer when work was slower.