When To Tell The Team: A Guide For Financial Advisors Who Are Considering A Move

The due diligence process is intentionally done “under the radar” to ensure that advisors remain in compliance and in no way expose the fact that they’re exploring. But eventually the team needs to know—some sooner than others.

It may feel disingenuous to be covertly exploring other options—particularly when it comes to leaving trusted team members in the dark. But, as fiduciaries to their firms, advisors are technically prohibited from soliciting their team to go elsewhere, so must carefully balance loyalty to their firm and to their team.

That is, until the time comes when the advisors are serious and certain enough that a move is in the best interests of all constituents: themselves, their clients and their team.

Because there are several points throughout due diligence in which key team members will need to be advised of the potential change – some sooner than others – so they can participate in the vetting and planning process. 

Yet it’s a very fine line that advisors walk to ensure they remain in compliance and are fulfilling their obligations to their firm, while tapping the expertise and perspective of those who best support the business and would continue to play a key role at a new firm. 

In what’s become a hyper-vigilant culture, the last thing a team wants to do is increase vulnerability and thereby the potential for termination—and as more team members become “aware” of a pending move, the greater that risk becomes. So it’s critical to maintain a close-knit “circle of confidence” throughout the process.

While advisors considering change should always adhere to the advice of counsel, there are ways to think about who enters that trusted “circle” and when. It starts by understanding the stages of the due diligence process and what advisors are looking to vet about a prospective new firm along the way.

Early Exploration

Typically due diligence is initiated and conducted by the partners or lead advisor on a team. As the “CEO(s)” of the business, it’s incumbent upon them to assess whether the status quo serves them best or to determine if there is a “better enough” opportunity elsewhere. 

This stage is usually limited to only those at the very top of the food chain. They will guide the vision of the business, taking into account the team’s goals, the needs of the clients and what they see as the next step into the future. It’s as much an assessment process for themselves as it is for the business as a whole. As such, bringing anyone else into the circle would only enhance the risk, not the process.

Narrowing the Choices

Once the leaders have decided that a move is likely and have narrowed down the choices to one or two firms or models, essential team members can be brought into the loop: Only those held in the highest confidence and who play a critical role in the business. For example, the team’s COO whose perspective on operational excellence will help guide whether it can be achieved elsewhere. This may also be the right time to invite the team’s best relationship managers as they are well-poised to assess another firm’s capabilities from the clients’ perspective, as well as those best-positioned to evaluate technology and its potential impact on efficiency, productivity and client service.

As these individuals are brought into the fold, it’s appropriate to let them know why a move is being considered and that, ultimately, it is as much in their best interests as it is in the business overall. But even more importantly, it’s critical they are made aware that while they were chosen for their expertise, they are also considered “trusted partners” who are being relied upon for their complete discretion and confidentiality.

Getting the Right Team Members on Board

The due diligence process provides leadership with the opportunity to assess the business as a whole—which includes ensuring that only the “right” team members will be a part of the move. 

This phase requires extreme sensitivity and the ability to balance the need for confidentiality vs the desire to keep the team “together.” While the goal may be to loop as many key team members in as possible, it is always more important to err on the side of caution and adhere to the principle of “less is more.” 

If there is concern that any of these individuals will not hold the information in the strictest of confidence, it may be wise to notify them at the very last minute.

Ultimately, all will need to have some time to both hear out the options and conduct their own due diligence. They’ll need to understand “what’s in it for them” to have agency over their ultimate decision to stay or go. 

So many top advisors are on the move—driven by a desire to serve clients better and with more freedom. Likewise, they have a vision to create an enterprise built upon a culture of trust and commitment. 

The due diligence process is intentionally run as a stealth operation—designed to eliminate any questions about an advisor’s commitment to a firm. As much as an advisor’s instincts to “be loyal” to the team will be challenged, the reality is that is far more important to color within the lines and ensure a successful transition – and future – for all.

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