Intro
Unknown: we want the advisers to be proactive in reaching out to their clients right they’re allowed to reach out right they’re allowed to announce where they are they can tell their clients you know what they’re doing it’s a service industry clients get to choose who they work with a financial adviser is not going to want to be doing a lot of printing right in the the weeks and the days um and even the months leading up to a transition especially at an Edward Jones Edward Jones has been known to write to advisers after they leave to say Hey you know we we did our fanic look back we see that you printed something
Podcast Opening + Introductions
Corey: hey everyone thank you so much for joining the firm transitions podcast today after helping over a hundred Edward Jones advisers transition over my career I have a pretty good grasp of what their main hesitations are when considering a move there’s hesitations such as will my clients come with me or how will I do building my business without the brand of Edward Jones um those definitely top the list but almost every adviser I have a conversation with has a pretty serious concerns about the actual legal risks and repercussions of of making a transition
Corey: so Kim Cronin volunteered to come on the podcast she has helped many many Edward Jones financial advisors uh make a successful transition to another firm uh she’s a financial services attorney and a partner at M mesner Reeves and Kim I really appreciate you coming on today
Kim: absolutely thank for having me Corey it’s my pleasure
Corey: yeah absolutely if you don’t mind just telling the audience a little bit about your background how long you’ve been helping financial advisors I I think that would be really beneficial
Background
Kim: yeah absolutely so um I graduated law school in 1997 um you know my background is in litigation employment law corporate law I’ve been working with financial advisers in the Securities industry transitioning them for 20 years years
How Kim helps advisors through transitions
Corey: so so what what does that mean how do you help a financial adviser through the process like when they come to you and say hey I’m considering making a transition like how are you how are you helping them through that process
Kim: right so I am reviewing their contracts I’m helping them you know understand the um the dos the don’ts right you know we’re talking through strategies um we’re putting together strategies um you know we we spend quite a bit of time together making sure that they feel comfortable confident and in control of their move and of course you know every adviser has a different set of circumstances so we are doing that on an individual basis you know even with uh you know a firm that I’m very very familiar with it’s going to be a different set of circumstances for you know each of the advisers I’m working with so we just dig in and and get going
Corey: yeah absolutely I mean even sometimes inside of one firm you know a couple years apart where a financial advisor started those those rep agreements can be you know completely different so it it always makes sense to talk with an attorney for sure
Kim: yes absolutely
Volume of transitions and Edward Jones experience
Corey: how many financial advisors do you think you’ve helped transition over the years just a an estimate
Kim: wow yeah okay so I haven’t done a calculation on that Corey but I’m gonna say um you know recent in recent years somewhere between five and 600 advisors a year whether they’re individuals or part of a team um you know and and going back 20 years you know maybe in the beginning it was 100 200 and then kind of ramped up but you know over the last I’d say at least 10 years it’s been about five to six hundred a year
Corey: wow and just estimated how many of those do you think are from Edward Jones
Kim: you know conservatively I’m gonna say about 700 and that’s a conservative estimate but that’s yeah right around there
Corey: that definitely has to be some of the most in the industry for sure
Kim: I think so you know a lot of uh you know lawyers will will do a lot of different things and you know I was lucky to do a lot of different things for a long time but you know ever since about uh 2008 it’s been exclusive to um advisers in the industry and so all day long you know that’s that’s what I’m doing
Risk of legal battles
Corey: so out of those you know out of that large amount you know a lot of financial advisers always have the concern if I make the move what’s going to happen to me what happens if Edward Jones sues me I mean out of those you know 600 plus that you’ve helped transition how many realistically have wound up in in some sort of legal battle
Kim: very very few you know um realistically um not even well I mean maybe maybe uh maybe seven 10 you know out of that 700 100 ever Jones has a reputation of being very aggressive and they can be but you know I see my goal as you know reducing you know litigation right you know doing all that we can to put that strategy together so that they can move successfully without litigation and and you know do the things that they want to do bring over their their clients and you mentioned earlier you know the concerns about hey how much am I going to move and that kind of thing you know Edward Jones advisers are very very successful you know they’ built their businesses in a way that a lot of other firm advisers have not they tend to have deeper you know relationships with clients and so you know they’re following the guidance and they’re they’re very very successful
Corey: absolutely I’m I’m sure everyone on the podcast would you know love that number to be you know zero out of out of 600 to make to make themselves feel better but like out of out of those six or seven you know were there any commonalities between those that you know some of the listeners should should should should be aware of or like mistakes that maybe that they made
Common mistakes and managing the human aspect
Kim: yeah so you know I would say um uh you know dealing with a human aspect of the transition is really important and the more successful you are in doing that you know the more under the radar you’re going to be uh the more um you’re going to avoid litigation and so I think failing to do that right is is probably one of the the areas of concern and um so that’s kind of what I see you know over and over
Kim: I always tell advisers look you know we’ve got the contract and it says what it says but we’ve got the people right and so you just got to control the temperature right you know they’re going to have a range right of of um of emotions when you leave because we’re we’re talking about you know Regional leaders right we’re talking about people in the field um Edward Jones is a large entity and you know behind that entity is you know a ton of people and so I think you know doing what you can to be successful in managing the relationship and the people including the boas right that are left behind on the way out the door um you know it’s a huge Advantage not doing that I think can you know prompt some litigation
Reaching out to clients after leaving
Corey: so I think a lot of financial advisers when they transition they are under the impression that you know they resign from Edward Jones they drive over to their new office and you know they’re they’re they’re sitting in front of their office phone and they’re just waiting for clients to call and that’s that’s all they can do you know can can can you can you walk through that and and and tell me if that’s true or you know what they actually can do to you know just tell their their clients what they’re doing
Kim: right yeah so absolutely not no we do not want them to to move over and sit in front of a phone and wait um we want the advisers to be proactive in reaching out to their clients right they’re allowed to reach out right they’re allowed to announce where they are they can tell their clients you know what they’re doing um it’s a service industry clients get to choose who they work with um they can’t solicit right you know they can’t ask for the business but you know you don’t have to do that I mean in a normal conversation you’re going to say hey right this is Steve you know or an um and here’s what I’m up to here’s where I’m at and I want to let you know you know um so yes they can be proactive and they can reach out to their clients immediately once they’ got um the green light from their new broker dealers or you know if they’re going raia then you know once they’re all established and ready to go
What crosses the line into solicitation
Corey: so it’s more it’s more them saying at the end of that conversation you know I really want you to come over here I’m sending paperwork out that’s the thing that they have to let the the client kind of fill in the blank is that right
Kim: correct yes and the client will absolutely fill in that blank right I mean they’re going to have a million questions for the advisers hey you know when when did you make this decision um you know where are you can we still work to you know they’re going have a lot of questions and the advisers can answer whatever question the client asks and you know they can let the clients know hey this is a service industry you do get to choose right and obviously if the clients are choosing the advisors well then they still get to work together and so that’s that’s huge right you know it’s client Choice um but they do want to avoid um you know asking the client and you know um all of that
Corey: yeah yeah for sure and
Client anxiety and loyalty example
Corey: I never went through this with like an actual financial advisor but my doctor of 10 plus years just left a really big box hospital system and he went out with a bunch of other people and opened up his own independent practice and when I got that letter in the mail like I had so much anxiety that I potentially couldn’t be part of this person’s practice anymore like it just gave me so much anxiety that I would have to go out there and meet somebody new and build like another 10 years of Rapport so like I was calling that person immediately and I was like yeah please like can I be part of that practice and if you’re doing the right things for your clients I mean I see that happen so many times
Kim: yeah absolutely I agree with you that’s H that’s exactly true
Best practices and coaching approach
Corey: so when you talk with a a financial adviser that you know has already kind of figured out where they’re going and they’re coming to you you know what are some of the best practices that you’re telling them kind of through the coaching process to make sure that this goes as smoothly as possible
Kim: yeah so I mean first of all I want them to um you know really sort of um uh reach out to me right and and talk to me I never want anyone to think that any question is too small because it’s not right um you know there’s a lot of things that they can do to protect themselves before they transition you know there are things that they can do to make sure that you know they’re 150% in front of their clients and um so yeah I mean when they reach out to me I talk with them about what their circumstances are you know what their their fears are right you know what their goals are and then um we sort of mold our strategy around that
Absolute do not do
Corey: I asked about some of the best practices what what are some of like the absolute do not do uh for lack of better word when a financial advisor make a transition I’m s you I’ve seen a lot of big mistakes out there right
Kim: yeah so you’re a financial adviser is not going to want to be doing a lot of printing right in the the weeks and the days um and even the months leading up to a transition especially at an Edward Jones Edward Jones has been known to write to advisers after they leave to say Hey you know we we did our forensic look back we see that you printed something you know and it’s just kind of that back and forth that you would like to avoid
Kim: so I think number one it’s that you know a lot of advisers um you know will want to talk to their clients in advance to say something right you know get a feel for for um you know what what their clients might think you know if if they were looking at something and you know obviously there’s there’s you know some of that that can um uh get advisers into trouble right you know you don’t want a client saying hey thanks for telling me you you’re leaving right and emailing you at the office and um of course advisers are not telling their clients that right but the client’s interpretation may be that that’s what’s happening um
Kim: a couple other big mistakes I’ve I’ve seen are just you know talking to their boa you know a little too early in the process before maybe they had their parachute pack I call it where they’ve like before they figured out where they’re actually going where they have an offer letter where they have the ability to transition firms really really quickly and that’s potentially put them in a you know a real really bad spot where they’re you know let go earlier than they should have and they’re kind of scrambling to find a place you know still while you know figuring everything out
Corey: yeah that’s a good point Corey
BOA strategy and restrictive covenant
Kim: um when I talk to advisers about talking with their boas you know they do have that that restrictive covenant right where they’re not allowed to solicit employees of Jones which include the boa and um so we have a two-step process there right with the boa we talk in generalities first to get a sense of things and then um you know if we get the right uh answer and and conversation is going well then we get on to the more specifics and it doesn’t even have to be you know at the same time right it could be a coffee meeting here and a lunch over there um but there is sort of a strategy with that too and that so that is a really good point
Corey: yeah I definitely think people need to reach out to you you know about that I don’t think a lot of advisers know that that potentially puts them at a higher risk you know bringing their boa with them and I know there’s you know a right way and wrong way to do that but every financial adviser that I speak to if they have a great relationship with their boa they feel like that’s absolutely crucial to them having a good transition so I agree
Kim: absolutely
Higher-risk scenarios
Corey: are there any we might have just mentioned one what we were just talking about but are there any scenarios where a financial advisor might have a harder time transitioning um without legal legal repercussions than than another that you know about
Kim: uh good question you know I think um there are probably um you know things that that can cause legal repercussions um you know consistently but what I see is you know a lot of individual stuff happening right you know in some cases it’s the boa right who you know sort of um pulls the trigger in other cases it’s maybe a um you know an email that comes across um
Kim: I think you know we talked about that human aspect right in transitioning that’s very very important to deal with um so you know those are things that we we Counsel on and advise on and and um those can be different makers difference makers for sure
Office space leases and restrictive covenants
Corey: one thing that I’ve seen throughout the years a lot of financial advisers just being very entrepreneurial will go out and they’ll you know purchase their own office base and what better than who better than one of the largest financial services institutions to you know be the person that’s that’s leasing your office right you know that’s a guaranteed payment every month but one thing that I’ve noticed is that there are there’s a lot of uh legal uh limitations and Covenants inside of that lease that basically Force you know an Edward Jones adviser that owns their business owns their office space to wind up if they move to another firm basically like moving out of that office space to another place and another financial adviser is moving into the office that that they own and they paid with their own money which is which is obviously a sticking point
Corey: correct
Kim: yeah yeah I do see that quite a bit and um you know what we try to do there is is you know capture sort of any um you know benefit that we have to maybe a monthly you know uh lease with Jones if they’re at that point you know some people are um you know not there and and they aren’t you know going to be moving back into the office this um but again Dynamics are going to come into play right if it’s a a small town you know they may not put anybody in there right away that’s competitive they may decide that they don’t want the lease you know and we’ll always give Jones the option to you know get out of the lease right you know sometimes they take it sometimes they don’t
Wrap-up
Corey: this is all super super helpful Kim I mean the reason I wanted to just bring you on the podcast today is just to help financial advisers understand whether they’re at Edward Jones or they’re at UB s or they at Morgan Stanley you know yes some of these firms have some you know limitations but you know 20 years ago you know every single firm had a non-compete there wasn’t protocol there wasn’t you know financial advisers have been transitioning successfully for years and there’s you know great attorneys like you that can they could have a conversation with and just like really figure out what they can and cannot do just besides you know a lot of the misconceptions they’ve been fed over over the years with the Edward Jones financial advisers that I’m working with and other employee advisers at a UBS or a Morgan Stanley you know we’re seeing you know 70 80 90% of assets being being retained even in these restrictive environments so I I appreciate you providing a little a little insight today from someone that does it all day every day
Kim: yeah well thanks for having me I mean it’s been absolutely great um working with all of the advisers overall these years I absolutely love what I do right I mean it’s just it’s a real pleasure and and an honor for me to work with um folks in transition
Corey: well you’ve been hugely helpful we we’ve worked on a few financial advisors together and I’ve got nothing but great feedback if an adviser ever wants to have a a conversation with you where could they reach out
Kim: so I’m here at mesar Reeves call me anytime uh 303 6231 1800 I’m happy to chat with anybody you know 10 20 30 minutes right I mean I want to get to know who they are
Corey: awesome I’ll put your contact information at the bottom of uh my contact area as well and if anybody has any questions about the broker dealer the ra space uh my contact information is all over my YouTube channel um and my podcast channel uh I really appreciate the time and Kim hope you have an awesome day
Kim: absolutely thanks Corey you too
