Article June 29, 2020

Transferring clients to a new advisor: Case studies and lessons learned - Case #1

Case study #1: Do Albert and Bernard have compatible client bases?

Jean Dupriez, LL.L., DAE, Pl. fin.

Today I’ll tell you the story of Albert (the seller), who sold his book of business to Bernard (the buyer).

Albert started by preparing an extremely detailed description of his investor clients. He had a very loyal clientele, with the average relationship going back 21 years. He also compiled a list of seven potential buyers he’d known from the brokerage company he was affiliated with.

Albert wanted to find a successor who had at least 15 years of experience.

Five of the candidates were quickly eliminated because their practice and clientele were too dissimilar from Albert’s.

Albert then held information meetings and negotiations with the two remaining candidates. In the end, Bernard made Albert a firm offer and they signed the contract. They took care to ensure that the contract was correctly executed with the usual adjustments related to the retention clause.

Bernard formally took over Albert’s book of business after a serie of meetings and personal introductions with his biggest clients.

At the end of the six-month retention period, 94% of Albert’s old clients had “adopted” their new advisor. The transition appeared to be a success.

After only two years, however, several of the clients had left their new advisor. Could the transfer still be called a success?

Perhaps, but...

In my experience, client transfers are most successful when there’s some overlap in the characteristics of the former advisor and new advisor’s clienteles.

Let’s examine three characteristics in particular:

  • Segmentation by client type

Albert had divided his client base into groups based on education and profession. The main group consisted of engineers aged 45 and older. Another group had a humanities background.

Lesson learned: Albert should have considered whether the new advisor liked working with engineers. This group of professionals is highly meticulous and they value receiving clear and concise explanations from the people they work with. However, Bernard sent his new engineer clients impersonal, computer-generated reports. Some of them had expected more. Unsatisfied with the change, they bid their new advisor farewell.

  • Tax handling

A high-net-worth client will be more concerned with tax implications than a less affluent client. Albert’s main focus had been delivering investment returns, while matters related to tax were handled in coordination with several accountants and tax advisors. By contrast, Bernard asked his new clients to entrust him with all their tax needs. This prompted some of them to leave.

Lesson learned: Bernard did not take the time to reassure his new clients of his tax expertise. A business relationship, like any successful long-term relationship, requires patience and should never be rushed.

  • Segmentation between “big clients” and “small clients”

Shortly after taking over Albert’s book of business, Bernard decided to “resell” its smaller client segment to his colleague Charles. Albert ran into some of these clients a few years later, when he was already retired. They told him they hadn’t met Charles, their new advisor, a single time. Albert couldn't help but feel disappointed. He had known each and every one of his clients, big and small.

Lesson learned: Perhaps it would have been well advised for Albert to personally select a new advisor for each of his “small clients”.

When there’s no one-size-fits-all solution, advisors should consider dividing or segmenting their client base to find appropriate buyers for each category of clientele.

The key takeaway

A transfer will have a higher chance of success, measured both by the new advisor’s professional competence and by their ability to retain their new clientele, if both the seller and the buyer have a similar client base. It’s important for all parties to be aware of this dynamic.

In a future column, we’ll discuss the issue of compatibility of beliefs between buyers and sellers. 


Over his many years of experience with clientele appraisal, Jean Dupriez has seen transfers of client portfolios give rise to all kinds of difficult situations, ranging from frustration to disputes and even financial losses. 

He decided to share his extensive expertise with this topic in a series of articles that highlight real-life cases, some of which resulted in substantial damages for the seller and/or the buyer involved. Presented in the form of case studies, these stories are followed by a brief analysis and practical tips on avoiding common pitfalls.