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Navigating Advisor Transitions: The Top 3 Challenges & Solution Facing Broker Dealers

The advisor recruitment market is staying hot this year on the heels of an active year in 2022, according to the most recent Diamond Consultants Advisor Transition Report. However, as a Broker Dealer, managing advisor transitions is no easy feat. There’s no shortage of challenges that can arise during an advisor transition. 

In this blog, we’ll explore the:

  • Challenges facing independent broker dealers as they navigate advisor recruiting.

  • Solution firms can apply to differentiate themselves from the crowded marketplace. 

Challenge #1: Regulatory Compliance Hurdles

The financial services industry is heavily regulated, and the advisor recruitment arena is no exception. Transitioning and onboarding new advisors must adhere to strict regulatory and compliance requirements set forth by FINRA, the SEC, individual states, and other regulatory bodies. 

While each Broker Dealer should look to their compliance teams for legal guidance around managing advisor transitions, there are a few key regulations to be aware of considering lack of adherence could result in legal and financial consequences:

  • Advisor Registration & Licensing: Confirm that the advisor you are looking to transition has properly registered with the SEC or FINRA. Their licenses should be fully updated to reflect how they work with clients. The transitioning advisor should also be compliant with AML regulations as discovered through appropriate due diligence.

  • Broker Protocol: Originally formed in 2004 as an agreement between large Broker Dealers about how to handle advisors moving firms, Broker Protocol dictates standard procedures firms should follow in an advisor transition. The procedures outline what client information can go with an advisor when they transition firms, and how the transitioning advisor should handle their resignation. Advisors wishing to follow Broker Protocol must follow procedures to the letter, so it’s important to become intimately familiar with its requirements. 

  • Review Non-Solicitation Agreements & Transition Disclosures: Confirm the transitioning advisor doesn’t have a non-solicitation from a prior firm that could impact your work with them. It’s also worth checking to see the advisor’s disclosures to see if there are any conflicts of interest before the transition process kicks off. 

Navigating these complex compliance procedures during transitions is no cake walk, but data and proper documentation add a new layer of risk that can’t be ignored. 

Challenge #2: Documentation, Data & Risk Mitigation

Broker Dealers commonly experience challenges organizing and transferring client information, account data, and historical records accurately–and in a compliant manner. 

Advisor transitions involve shuffling vast amounts of data and documentation. That makes ensuring the security and integrity of sensitive client information throughout the transition a top priority. And it should be. Maintaining compliant client communication not only creates a seamless client experience during the transition phase, it helps the transitioning advisor maintain client relationships and trust—which could earn you more referrals. 

One of the best ways to maintain a high quality of service during the transition process is to leverage a technology that makes managing high-volume paperwork and data seamless. 

Challenge #3: Resource Allocation and High Costs

From compliance, to data security, client communication, and everything in between, it’s no surprise that advisor transitions are an all-hands-on-board effort. Broker Dealers competing for advisory talent today need to find the best balance between their available resources and costs.  

Time-consuming processes leading to delays in onboarding new advisors also make it difficult to allocate resources effectively. Delays tend to cause bottlenecks and inefficiencies that make swift transitions more difficult. Balancing the financial impact of advisor transitions with the firm's resources is not always an easy challenge to solve. 

But, technology designed to support secure advisor transitions without requiring more of your firms’ resources can make solving this challenge simple. 

Meet the Compliance-Friendly, Seamlessly Secure Advisor Transition Experience 

Forms Logic has pioneered a one-of-a-kind cloud-based technology that transforms the paperwork experience. With Forms Logic, firms have the ability to:

  • Save and retrieve tens of thousands of forms

  • Remember information

  • Apply even the rawest data in minutes

These benefits simplify a process that used to take hours while making it more thorough and accurate than ever. 

Forms Logic offers an innovative solution called the Forms Logic Migrator Platform, designed specifically to support advisor transitions to your firm. Through pre-populating advisor paperwork, the automated workflows set up in Forms Logic Migrator Platform saves Broker Dealers time, costs and effort during the transition process. 

If you want to learn more about implementing Forms Logic Advisor Migrator platform to reduce NIGOs and make your transition process seamless, get in touch with us today to discuss your requirements.


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