By Jacob Rouser

As we move further and further away from the challenges that 2020 presented and move deeper into 2021, we see that the impacts of a global pandemic are still generating ripples within the wealth management and financial services industries.

As Fidelity’s Wealth Management M&A Transactions: January 2021 Report highlights,

A surge of M&A activity in the last half of 2020 led to a second consecutive year of record M&A activity and has continued into January of 2021, resulting in the most-active month on record. There were 23 RIA transactions in January, representing an astonishing $47.8B in client assets. To put this in perspective, the total assets represented in M&A activity throughout all of 2016 was $49.0B.

And with M&A comes the challenge of Advisors Transitioning their books of business. For receiving firms and transitioning advisors, the transition process requires adhering to many legal requirements regarding what data advisors can take with them; logistical hurdles for outreach and communication to account holders; and ensuring that all the requisite documentation to open a new account is documented, captured, and approved for re-papering.

Time is the Greatest Enemy

Revenue is generated based on Assets Under Management (AUM) for both the advisor and the firm. When AUM remains an advisor’s previous firm, that revenue is lost. Firms and advisors know that the longer a financial account remains at the previous firm, the likelihood of moving those assets over significantly decreases.

Once an advisor delivers the former firm their U5 (Uniform Termination Notice for Securities Industry Registration), the former firm will immediately start messaging to that advisor’s clients to attempt to retain them. And the former firm has most of the leverage in this scenario; they can simply point the client to a new advisor to retain their business.

The hurdles are much steeper for a transitioning advisor. When an advisor leaves a firm, they are allowed to take “Christmas Card” type data (namely, name, address, phone number, email, product company, and registration type). However, the receiving firm needs many more data points to open an account. This leaves advisors and the receiving firm in a bind, where they must go back to the client and gather these pieces of information.

Going Digital to Overcome the Burden

Innovative firms leverage digital solutions to help advisors make the transition process easier for their clients.

Modern toolsets provide advisors with tools that can help facilitate this process with the former client. Through digital portals, these advisors can work with their clients to reduce the effort in getting the information they need to complete the transition.

Some digital platforms even have compliant solutions to capture required data that can be uploaded to the new firm on the first day, post-transition. From there, the advisor can see how complete any of the accounts are, prioritize the accounts that are most important to them, and identify exactly what information they need to surface.

Skience’s Advisor Transitions offering is the only fully digital solution in market that can shortcut the process of transitioning a client in some cases from months to days. Having a compliant solution that gives firms and advisors visibility into the progress of their account transitions and reduces the burden of back-office staff are only a few of the highlights. Learn more and book a demo with us: https://skience.com/skience-platform/advisor-transitions/