EDUCATE CLIENTS ABOUT THE NEED FOR A TEAM APPROACH TO ADVICE
April 30, 2021 | Rick Kahler
One of the most common reasons new clients seek me out is the loss of their long-standing financial advisor. It’s not unusual for someone to have been with the same advisor for decades. I have clients who have been with me for over 40 years.
In my experience, the most common reason someone loses a financial advisor is the advisor’s retirement from their practice. That is followed by the advisor’s death, changing firms, or changing professions.
Regardless of the reason, ending a longtime relationship with any trusted professional can result in a disruptive and emotional transition as you look for a new service provider. Like finding a new physician, accountant, or therapist, you are often left to “start from scratch” in your search for a trustworthy replacement.
I have written about what to look for and look out for in an advisor. One thing I would add to the list might negate ever having to find yourself in this situation again. You may want to consider becoming the client of a team of financial professionals, rather than the client of just one advisor.
Just because advisors are associated with a larger firm does not mean they are part of a team. Most financial planning firms, like most real estate firms, are “solo” practices. The company provides the back-office services and training to the advisors, but it is each advisor’s responsibility to “build a book” of clients. Only that advisor, often with one or two assistants, oversees advising and servicing their clients. If an advisor leaves the broker/dealer, their book of clients often is the property of the firm and turned over to a new advisor.
These clients often receive an impersonal mass email notifying them that the advisor is no longer with the company and introducing them to their new advisor – usually someone they’ve never met and know nothing about. Such an abrupt notice can leave clients feeling abandoned, betrayed, anxious, overwhelmed, and angry.
Other solo practitioners are independent fee-only advisors. They often start out on their own and add assistants to handle administrative tasks as they grow. Nevertheless, the emotions and dynamics of the advisor’s retirement, death, or disability are the same as if the solo advisor was with a larger firm.
Depending on the specific situation and their firm’s protocols, some solo advisors can give advance notice of their departure and in some cases can introduce the new advisor to the client. This can go a long way to soften the blow. It may not, however, eliminate the need to make a change.
One of the solutions to this downside of having a solo advisor is engaging a firm that uses a team approach, called an “ensemble” practice. In some ensemble practices there are often two advisors in every client meeting, typically a more experienced senior planner and a less experienced junior planner. In others, planners rotate between clients depending on specific client needs. For example, even though all Certified Financial Planners are generalists, individual CFPs may have a specialty, such as taxes, legal, financial therapy, asset protection, and more. These planners can rotate in and out of regularly or specially scheduled meetings with the client.
With this team approach, if one person on the team retires, dies, or leaves the firm, there are one or two other planners and support personnel, all known to the client, that can comfortably fill the void.
When the time comes for you to find a new financial advisor, find out whether the company is a solo or ensemble firm. Learn how they handle the sudden loss of an advisor before you establish a new relationship.
Rick Kahler, MS, CFP®, CFT-I™, ChFC, CCIM, is founder of Kahler Financial Group, a Rapid City, SD-based fee-only Registered Investment Advisor.