Changing Firms: A Guide for Advisors on Client Communication

Oct 17, 2023 5 min read

Client conversations can be challenging, particularly when discussing the transfer of their assets from one firm to another. The good news is that with careful communication, these interactions can be made less difficult. When discussing the decision to change firms, it is important to approach the topic in a way that builds your relationship and highlights the positives of the future by focusing on why you are going where you are going, instead of why you are leaving.

Building trust with clients

Trust is the backbone of a successful business and it starts with open and honest communication with your clients from day one of your relationship with them. Below are the specific steps to keep in mind when communicating with your clients. While these are important requirements from a regulatory standpoint they also contribute to building a relationship of trust with the client.

  • Stay In Frequent Contact: When was the last time you had a touchpoint with your client? Are you keeping up with your yearly discussions regarding any KYC changes? Did your team send an email on the client’s birthday or wish them the holidays? Ensuring that you and your team show up for the touchpoints is the start of a relationship of trust.

  • Be An Effective Listener: During your meetings, are you asking the right questions? Were there any flags that indicated recent or upcoming lifestyle changes? Is there a shift in any of their investment goals, objectives and/or risks? Active listening during meetings helps you identify areas of focus so you can follow up on them. When your clients feel heard and recognize that their needs are prioritized, it strengthens the foundations of trust in your advisor-client relationship. This will demonstrate that you value their input and are invested in their success.

  • Be Honest and Transparent: If risks were identified, were they communicated to the client in a timely manner? If markets are down, are you reassuring the client that their investment was made in good faith and explaining the market situation? Avoid sugarcoating difficult conversations, and instead, assure your clients that you are working in their best interests. By being transparent, you will build a reputation of trust that will help you navigate through any challenges that may arise.

The above is not an exhaustive list of the questions a financial advisor can ask their clients, but guidance in crafting a meaningful conversation. This set’s the tone for a long-term partnership between the client and their investments that are in the advisor’s hands.

Once trust is established, what’s next?

Advisors that are moving their business to a new firm should reflect on the relationships they have with clients before signing the agreement to move the assets. The ultimate question to consider is: will the clients choose to follow them to the new firm?

Remember, if you have a strong and lasting relationship with your client they will inherently trust you and want to see you at a place that helps your business succeed. They will trust in your ability to find the right solution providers to meet their needs. However, if trust is yet to be developed, the outcome is uncertain. In this scenario, it should come as no surprise if the client refuses to move to the new firm.

A trusting advisor-client relationship is an essential component before initiating any conversations about the move. A study conducted by Environics Research found that 60% of independent financial advisors preferred focusing their time solely on building their client relationships. Evidently, clients who remain with the same financial advisor over a long period of time do so because they trust that the advisor is invested in their success. One example of a prospect can be a young client that has the potential to grow their assets over time by maintaining their portfolio with one advisor for their entire career through retirement. Another example can be a client who refers family and friends to their advisor based on their own positive experience, good returns, and overall proven trustworthy long-term relationship. There are numerous benefits and reasons to dedicate time to relationship-building. All you have to do now is put this concept into practice with your clients!

Thoughtfully Building the Communication

When Is the Right Time?

A common phrase is “the right time will come whenever the right opportunity arises”, which applies to moving an advisor’s business to another wealth management firm.

Always remember the WIFM — What’s in it for me. The client will want to know what the impact is on them — both positive and if there are any issues with the transition. Being clear on potential issues — and how you will mitigate/support through the transition will help alleviate concerns and build trust.

The client experience is a key factor in any move and one that shouldn’t be neglected. Bringing awareness to what the process entails ensures there won’t be any surprises down the road during the transition.

What Is the Rationale?

Navigating the transition of moving a financial advisory business to a new wealth management firm requires a strategic blend of financial planning, investment management, and effective communication. You should conduct a thorough financial analysis, emphasizing the benefits and addressing challenges proactively. When communicating the decision, you should focus on the positive aspects and align the move with their client’s long-term financial goals. Actively listen to client concerns, integrating financial planning insights to reassure them about stability and growth potential. Building trust through transparent communication is essential to showcase the commitment to the client’s financial well-being. In essence, a seamless transition hinges on thoughtful financial planning and cohesive communication, reinforcing trust, and ensuring clients understand the rationale behind the move.

How To Approach This Conversation:

“I am moving to a different firm; I need you to sign these documents” is certainly not the right way to put it. Every client is different; therefore, every conversation will vary. The messaging should remain consistent, but the delivery of this message should be tailored to your client, and the relationship you’ve built with them.

While clients will want to get into details, it is important to first set the context for your decision and why you made it. “As you may know I’m always looking for partners that can help me better meet your needs as you and your financial needs grow. After significant research and consideration, I have found a new partner that I believe can help us better serve you based on reasons 1, 2 and 3. While you may have concerns, we have worked through the transition and we will manage the process to ensure a smooth transition and strong communications.”

Some additional key messaging points to remember when approaching this conversation are:

  • Assure the client that their relationship with you will remain consistent despite the change in wealth management firms.

  • Bring awareness to each client that new documentation must be signed at the new firm. Some clients may be uncomfortable with this process as it is time-consuming, but it is best practice to assure them that it will be a seamless process. While is this a regulatory requirement, it is also a great opportunity to review the households for any updates that are to be made.

  • Whether or not the receiving firm waives transfer fees for new clients, it is important to be transparent with your client about any changes in the fee structure.

  • Supporting clients throughout the transition is greatly important as clients may have questions that arise — knowing their advisor is attentive to those inquiries, sets them at ease.

Deciding to move firms can seem straightforward as an advisor, but there is a lot to consider when thinking about the impact it could have on your client. If you want to discuss your options before moving firms or learn how to plan this move, reach out to us.

-Laura Frasheri is an Advisor Success Manager at Purpose Advisor Solutions

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