Editor’s note: Beverly Flaxington is a columnist with Rethinking65. Read more of her articles here.
Of the thousands of advisors that I have worked with over the years, the most common refrain I hear is how much they value their clients. Every advisor I have encountered, and I am sure all of those I don’t know, emphasize doing the right things for clients. They care deeply about helping clients reach their financial goals and understanding them on a personal level. Ofttimes, they also create deep, personal relationship with clients and their families.
While this approach works exceedingly well during the advisor’s career, it can cause difficulty when the advisor decides it is time to retire. Sharing, and shifting, client relationships can be a daunting task. This is the case even when the advisor has done a great job creating a team-oriented approach to serving clients, or when the RIA firm has surrounded clients with many employees to get to know and care for them.
Whether advisors are passing the torch to the next generation selling or merge their firm, or just figuring out what they want to do in their next phase, they worry the most about, “What do I do for my clients to make this easier?”
Get a Head Start
If you have the luxury of time to think about and plan for retirement — say three to five years — you’ll have more choices. Here are some steps to take that’ll make the process easier for you and your clients:
Involve team members at the outset of an engagement with any new clients. Get your team members involved in the sales process and have them play a prominent role in all communication. Start to be the background person on these relationships so clients recognize that all team members are knowledgeable and available to them.
Start talking to clients about your strategy for retirement. Showing that you are thinking about the future — and importantly, the client’s future — can benefit new and existing relationships. Make it clear you have built a team/firm to be there for generations to come. Show through your actions that instead of leaving your clients vulnerable if something unexpected happens to you, you’ve built a reliable system that will continue to serve and support them beyond your personal involvement.
Set an example for clients. Most of your clients will think about retirement at some point in their career journey, yet getting them to discuss this can be difficult. Sharing some of your own retirement decisions and plans may trigger a level of camaraderie that helps clients feel more comfortable and open to sharing thoughts, ideas and fears about their own retirement. Because you never want to alarm clients, start this dialogue long before your actual departure date so the conversation seems thoughtful rather than threatening.
When There’s Little Time to Plan
Recently, I worked with an advisor who had been very diligent in finding the “perfect” replacement for her impending retirement. However, her intended successor wasn’t so perfect and that individual ended up leaving. Rather than try to find another successor, my client decided to retire with only a few months to plan for everything.
Another advisor I recently worked with experienced the unexpected passing of his business partner. As a result, the advisor has had to take on much more responsibility than he had ever planned, just at a time when he wanted to start planning for his own retirement. He has put his retirement plans on hold while reorienting the entire team for the future.
The morale of both of these stories is that you won’t always have the time needed to plan. Even when retirement come fast:
• Segment Clients
Start by identifying connections—who is linked to whom, which clients are most at risk, and which ones have only interacted with the lead advisor. In a crisis situation, when there may be little or no little time to prepare, knowing your audience is critical for developing tailored, effective communication.
• Use Several Forms of Communication
Send a nice email and letter to clients celebrating the advisor’s deserved retirement and outlining the steps being taken to fill that advisor’s shoes. The departing advisor and the advisor taking over the client relationship should also call the client together, preferably over a video call. The departing advisor should connect the client while positively and confidently noting the new contacts’ background, strengths and credentials.
Trading Places
After the communication is distributed, the new advisor should follow up immediately. Their approach should be welcoming and open, asking if the client has questions or concerns. Adding one or touchpoints before the next scheduled sit-down with the client — such as an email or a phone call — can be valuable for maintaining connection and trust.
Meanwhile, the departing advisor, in their waning days or weeks with the practice, should completely recuse themselves from working directly with the client. The more contact the advisor has in this transition period, the more the client will look for this contact to continue. Instead, the departing advisor should let the new advisor handle client needs in order to show the client they’re capable. The departing advisor should serve as a muse and confidant to the new advisor, providing behind-the-scenes information and direction.
Can Friendships Persist?
One more thing to consider whether you have days, weeks or years for your departure is the nature of these client relationships. In many cases, clients have become close friends. You may have been invited to a family picnic or wedding, or have attended a funeral. You probably have shared many meals with clients and accompanied them to sporting events or the theater. To deepen client relationships, you become attached to them and they, too, become personally attached to you.
Do you need to completely separate and say a final goodbye? Not necessarily. The key is setting boundaries with clients. Of course, you won’t (and can’t) stay friendly with the hundreds of people you have served, so select the ones who are deeply meaningful to you. Let them know you will continue to stay in touch and want to have an ongoing relationship.
However, you don’t want to create a wedge with their new advisor or the firm/team. So, let your clients know the relationship will transition to a personal one and that you can’t dispense financial advice or even give them guidance on whether or not to maintain a relationship with your successor.
Continue to pursue and respond to relationship only if you believe you can maintain this distance. Many of my retired advisors still enjoy the company of their close clients and that can be a nice carry-over from their professional lives. For it to work, there must be clear demarcations to protect the new advisor, the former firm, the retired advisor and the client.
Good Luck!
Retirement can be a wonderful chance for a hardworking, successful advisor to finally ride off into the sunset — but the ride won’t be smooth without a significant focus on client transition. Consider whether you have done all you can, or thought about what you need to do, before you make your exit.
Beverly Flaxington, MBA, an investment industry veteran with over 30 years of experience, runs The Collaborative, a training, coaching and consulting firm devoted to business building for the financial services industry. The firm founded and manages the Advisors Sales Academy, and won the Wealthbriefing WealthTech award for Best Training Solution for 2022, 2023 and 2024. Beverly is also an adjunct professor at Suffolk University, teaching graduate students about leadership, managerial skills and team leading. She is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
