Adamson Advisory

Transferring Client Relationships

This is an important area when a partner retires, and it is the one that pays the bills. The annuity revenue stream that we enjoy from our clients is critical and it is the currency that most firms use to pay the unfunded retirement benefits to the retiring partner. You really do have to get this right. 

The client transition plan needs to be orchestrated over at least two years, it needs to be written and it needs to be supervised and managed by the firm’s managing partner. More and more firms are requiring a minimum notice period for early exits, mandatory retirement ages and that the retiring partner work through a specific client transition process with the firm. There is also a trend toward penalties (reduction in retirement benefits) for the retiring partner if clients are lost because of inadequate notice and/or the client transition process developed by the firm is not completed. 

Beyond the above broad parameters, what should the process look like? First, separate the clients into groups based on their ease of transition. This really comes down to two or three factors: the closeness of the retiring partner’s relationship with the client decision maker, the degree of involvement of other people in the firm with that decision maker and the size of the client. The 1040s and small business clients may be as easy as a phone call or a letter introducing the new person. Perhaps personal introductions are all that you will need for others. The larger business clients are more likely to have other staff and partners involved and sometimes may actually be easier than accounts where the partner has been the primary contact. For the close personal relationships, which are always the toughest to transition, you should plan on shadowing through at least two year-end cycles.

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