Getting client input on sensitive subjects

By Guest |  24-10-20 | 
 
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Morningstar invites thought leaders from the investment community to share their insights. Views expressed are personal and should not be construed as investment advice.

“I haven’t slept well all week.” That’s what Mary said as we began our briefing before her client advisory board meeting.

The main topic was succession. She had been planning her succession for four years. She had merged with her planned successor’s firm. All had been going well. The working relationship was everything she anticipated and confirmed her feelings about the new partner as her successor. She had not indicated to clients the succession aspects of the firm’s mergers. But now was the moment of truth. With her planned retirement just over a year away this was no longer hypothetical. There were real dates on the calendar close enough that it was time to consider when to go public with the plans. We sought guidance on the announcement and implementation from her advisory board.

Her anxiety was understandable. Telling any clients, even a small group of them bound by the promise of confidentiality, about transferring decades long relationships to a new adviser has risks. Many advisers would not be so brave. But, as we have done with many firms, we advised her that engaging clients in designing and carrying out her succession plan creates better outcomes.

It turns out the clients are interested in discussing the retirement plans of their advisers. They know you won’t work forever. Involving them in the process of transitioning the leadership of a firm or through a merger is the ultimate way of being client driven. It is an opportunity to incorporate their needs and desires into a succession plan.

Here are some things we find engaging boards in succession discussions:

  • Clients have specific likes and dislikes about potential successors.
  • They trust you have their needs at heart especially if you involve them in the conversation.
  • They want a couple of meetings with you and your successor involved during the transition.
  • They appreciate the opportunity to give you feedback privately after the first meeting with the new adviser.
  • The transition period clients want is not as long as you might think.
  • Conversations about implementing your succession plan go amazingly smoothly.

Mary’s board meeting was wonderful. Participants contributed lots of valuable suggestions: have a town hall meeting to introduce the new adviser, don’t make an announcement by email, include a reminder on a meeting agenda that the new adviser will be sitting in. Besides getting great feedback, board members took the opportunity to reinforce the warm feelings they have for the adviser and their gratitude for the relationship.

Clients can be a great ally in making strategic plans that affect the relationship they have with you. Having a voice increases loyalty. It is your best insurance against making any big mistakes. Be client driven and engage them in the process.

This post by Stephen Wershing was orginally published on The Client Driven Practice.

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