Executive Summary
When financial advisors are faced with the decision to relocate their firm to another state, there is often an immediate tendency for the advisor to worry about losing clients who signed on with the expectation of being able to meet with the advisor in person throughout the engagement. But in today’s environment, with the availability of convenient virtual meeting technology and the increasing normality of working from home, do advisors really need to worry that much about losing their clients due to relocation? Even with the accommodations to conduct remote meetings, advisors can still find it difficult to have the conversation of ‘leaving’ clients behind when they need to relocate – even when they intend to maintain the relationship remotely.
In our 78th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how advisors can approach the conversation with confidence and honesty to quell the fears and anxiety of their clients, while remaining calm themselves.
As a starting point, it’s important to put the idea of jeopardizing client relationships into perspective, because even though clients may have been onboarded in person, many will likely be open to continuing the relationship on a virtual basis, especially in our current era of remote work and digital communication. And while it is easy to imagine any number of scenarios where clients may want to leave their advisor, unless there are serious issues in the advisor-client relationship itself, clients actually tend to prefer staying with an advisor they trust – regardless of where their physical office may be – and aren’t generally looking for a reason to leave the relationship at any given moment. Because the trust a client has in their advisor is usually a function of the advisor’s ability to provide outstanding service… and not so much of the physical location of the advisor’s office.
To maintain that trust, advisors can arrange a meeting or phone call with the client to discuss the transition and reassure the client that they can still expect the same level of service and attention as before. Sending an email prior to the meeting to initiate the conversation can be a good opportunity for the advisor to reassure the clients that the relationship will, in fact, continue, and to provide an overview of what, if anything, will need to change. This gives clients a chance to absorb the news and identify any questions or concerns they may have that can be discussed in more depth during the meeting.
Ultimately, the key point is that communicating with clients about intentions to move a firm begins with being honest, compassionate, and confident. Even if a few clients may be lost in the process, advisors will undoubtedly have opportunities to find more clients in their new location. But by taking to heart the tremendous value they offer to clients, advisors can trust that they will always be able to maintain their client relationships potentially anywhere they may choose to go!
Authors:
***Editor's Note: Can't get enough of Kitces & Carl? Neither can we, which is why we've released it as a podcast as well! Check it out on all the usual podcast platforms, including Apple Podcasts (iTunes), Spotify, and Stitcher.
Show Notes
Kitces & Carl Podcast Transcript
Michael: Greetings, Carl.
Carl: Well, hello Michael. Imagine seeing you here.
Michael: Imagine seeing you here! And here with this...I just have to comment that this lovely, artistic drawing behind you... It is not a blue couch, because you have shelving behind you. But there is a blue drawing, for those who are listening to audio but not on the video. There's a drawing. It's an 8.5 by 11 sheet of sheet of paper size thing, and it's got just a blue line, like, a, I'm going to dare say, a Kitces Blue line, just drawn across it, and I guess that's paint. It's like what is...is this your artistic representation of the blue couch? Have we gone abstract art on the blue couch now? What is going on here? I'm assuming this is not a coincidence to have...
Carl: Yeah, look, I'm...
Michael: ...a blue art in the absence of the blue couch.
Carl: I'm staring at the blue couch. The blue couch is just right over there. It's just, I couldn't get it up here on the shelf. I'll do that next time, but I'm starting it... I have been dabbling in... I don't know... Look, I don't know how many listeners know this, but the sketches became a thing a couple years ago, and I had art shows all over the world. So, I had a big, solo 50-piece art show here in Park City, Utah. Had one in California, one in New York, one in Belgium, one in London. And it was really, really fun, but as a part of that, I've been experimenting with lines that tell stories, and I've become a big fan. This is not what the show's about, but I've become a big fan of these really...it's like Japanese calligraphers, really energetic, almost meditative capturing of lines.
And so, the other day, I was in the office, and I went and got some blue paint. We have this paper that we do the letterpress prints on, and I started experimenting with lines, and I literally...I was at the store and I thought, "I want..." I call this... I don't call this "Kitces Blue." Come on. It's called "Rock'em Sock'em Blue." And so, that's… That's what that is. And this actually is owned by an advisor. I sold these on Twitter, and had a bunch of people buy them, and this is going out to an advisor's office.
Michael: Did you pitch it as a Kitces Blue line?
Carl: You know what? That's a good... Actually, I have a whole new series of just blue, that I'm going to now... So, follow, about the time when this goes out, follow me on Twitter. You'll see Kitces Blue...the "Kitces Blue Sketch Series." And no royalties to you.
Michael: Man. Gotta copyright my name. So, what do you call this?
Carl: Okay, so...
Michael: You're not calling it the "Kitces Line?" Yet.
Carl: That's called "Blue Number One." And this is, for those of you watching, this is "Blue Number Two."
Michael: Oh.
Carl: So yeah, they're just numbered.
Michael: All right, for those…again. See, Carl just held up...so, the blue line is a straight line. He just held up a wavy line. Like, painted.
Carl: You... One thing you're not going to be allowed to do is be an art critic. So, that...
Michael: No.
Carl: Okay, so, here's one thing...
Michael: Clearly not.
Carl: ...you can do, though. Here's one thing you can do.
Michael: I am a simple man. That's why I have 12 copies of the same shirt. No one asks me for fashion advice or art advice.
Carl: And 15 designations behind your name. I think there's some correlation between those.
Michael: Probably.
Working Through Business Relocation Anxiety And Fears Internally [3:25]
Carl: So, but here's what we can talk about, is this interesting question, and I'm sure...I know I've seen this from more than one person, but I recently got a question from an advisor who we'll just call "Dan." That may or may not be his name. And Dan is thinking about moving from a cold section of the country...let's just call it "The Northeast..."
Michael: Okay. Hypothetically.
Carl: ...to a warmer section of the country. Let's just call the warmer section of the country, call it "Texas." Separate country, actually. So, Dan is wondering, like, his question is, this advisor we're going to call Dan, his question is, "Look, how do I communicate with clients? I've been in the business 10-plus years. I've got most of my, a good percentage of my clients are local. I've got some across the country, but most of them are local." This sounds very familiar. "And I, for lifestyle or other reasons, family reasons, lifestyle reasons, I'm going to move."
And a lot of people are in this situation, because there's a...well, I don't know if this is true all over the country. There's certainly a lot of people moving to Park City, Utah. So, there has been a lot of migration. And this advisor we're calling Dan, his question is... And I think there's more to it. I'm going to... What he asked was, "How do I communicate?" What I think he's really asking is "Hey, I'm a little scared to do this. I'm scared everybody's going to leave me." Right? And so, I think there's two questions. One is how do we deal with it internally? And the second one is how do we communicate to clients that we're moving?
Michael: I love this discussion. I feel like it's... Well, I feel like it's the natural outcropping of last episode. Although we recorded these very close to one another, so Dan did not actually email us after hearing the last episode before this one. But I do feel like it's sort of the...it's the "let's get real" moment about last episode's discussion. So, it's nice to say just make the thing you want to make, and get your clients there, as you said, be who you really are, and go all the way. And that's another one, you say okay, cool saying from a famous philosopher, but I have clients. They pay money for me here, so not being here would be kind of risky. So, how do you make this happen in the in the real world?
And I do think Dan's question is fantastic. A, just, I love that he's asking the question, because I know, I am sure there are a lot of listeners who aren't even where Dan is, like, the presumption. "My clients are here, I built my business here. I have to stay here. I have to be here for...I could never move, because my clients are here and built my business here." And so, just the fact that Dan is rejecting that as a principle, or a constraint up front, maybe a little bit fearfully, so he's asking for some help, we'll talk through in a moment, but just the fact we could have enough a mindset shift to say, "I might actually be able to move away from where I built all my clients, and that could be okay," I just, I actually think that's a really cool thing. Just unto itself, that's worth noting and reflecting on for a moment.
Carl: Yeah, totally. It's not something... I mean, I, look, when we moved from Utah to Las Vegas, I remember being really scared about... And that's only a one-hour flight, you know? A six-hour... Well, depending on how fast you're driving, a six-hour drive. But I remember being very nervous. Even, everything was like, "Oh, do they think I'm moving to Vegas and I'm going to be part of Vegas?" You know? You start coming up with all sorts of stories about why everyone will leave you. My wife jokes all the time. She's like, "Yeah, you think everybody's going to fire you tomorrow all the time."
And, so... Yeah, but I understand where this fear comes from, and I think we should talk through, first of all... Because I largely, now, having just the benefit of perspective and hindsight, and having moved a couple of different times, one time to New Zealand... But let's leave New Zealand out of it. Just the Utah to Nevada, northeast to California, California to Florida, inside this country, I think it's largely, largely in our heads. I think the fear is largely in our heads now. How we communicate it can really solve a lot of problems, and we'll talk about that. But first, we just have to get over the idea that people aren't sitting around waiting, looking for a reason to leave you and run to another advisor. And I think sometimes we feel that way. Right, that we give them any reason. And look, I don't want to overstate that, right? If you give them a reason based on trust, or a reason based on... There's a bunch of things we can imagine that they would leave you immediately, but I don't think, generally, moving.
And not the kind of work we do, and the kind of relationships we have with people. Half the things I was scared of... Well, not half. Almost all of the things I was scared of clients leaving me for, when clients found out, they were just like, "Why were you ever worried about that?" And I remember John Bowen actually said to me, "One of your greatest disappointments is going to be when you do that thing, and no one cries but you." You know? So I think this is largely in our heads. Do you think that's true? I mean, again, we'll talk about how to talk about it, but...
Michael: A little bit of a mixture. I do think there's a lot of it that's in our heads, but we talked about this a little bit on the last episode, but there are clients who just, they like in-person. They have a preference for in-person. They've said in-person. If, particularly for, it sounds like for products like Dan, just, he built an in-person practice, which means there's at least some implication that a segment of his clients picked him because he was local in-person. So, when you are not local in-person, do you run the risk that you blow up the gig, that you blow up the deal, you blow up what you created? I think, for me, the biggest distinction, though, is there's a difference between the dynamic with clients in the first year or few when you're getting going, and what it's like in all the years thereafter, right? It was like, there's the first year, I got to do all that stuff, provide a bunch of value, prove that they made a good decision to hire me in the first place.
Then there's kind of this intermediate phase in years two, three, four, where we're getting into a groove, we're learning communication, we're learning style, we're learning pattern, I'm getting familiar with the issues, I've started to figure out how to communicate stuff to you so that you handle it well. I'm learning how you react to markets, because you have some volatility. Just, the relationship's getting more cemented. And then you kind of get to the stage three, where the relationship's there, the trust is there, and we sort of go into comfort mode, of "I'll call you if something's going on, you call me if something's going on. Short of that, I don't even need to come to your office unless..." Well, unless...I'm remembering certain clients in the past that just were retired and really bored, and had nothing to do, and they really wanted to come to our office any time they could, because they just literally needed something to do. We were the only thing on their calendar for the week.
But short of that, although, I guess, recognizing that's your clientele, short of that, most of them, once we get to that established point, the truth is, I find the meetings start getting at least more email and phone call-ish. Zoom's a little more recent, but the meetings would start getting more email and phone call-ish already, and at the point you're communicating digitally, I could be responding to you from halfway across the country. As long as I do it in a timely manner, you wouldn't even know. So, just as I think about this for Dan, obviously, we don't get a lot more details since we are not a live call-in show here, but just, it makes me wonder how long has Dan been in business? How long has his clients been with him?
Because I just, I do realistically think he has at least a little bit more at risk if he's been only doing this two or three years, and has a fairly new set of clientele where he's relocating, and some of the local preference clients won't come with him...well, won't go virtual with him, versus he says, "I've been doing this for 17 years. My average client's been with me for more than a decade," in which case I would say, "This is probably pretty much all in your head at this point." I mean, they trust you. Their relationship's with you, not the street address of your office, at this point.
Carl: Yeah. And I think while saying it's all in your head, I don't in any way mean to discount the concern, because I empathize with that concern.
Michael: The fear.
Focusing On Giving A Confident Message To Clients Over Fear [12:43]
Carl: Yeah, the fear of that. And so, let's talk a little bit about how you communicate it, because I think...and I think there's some element of this communication that we need to strip the fear away from it. Because if you communicate fearfully, and certainly if it comes across as needy... You just want to strip that away. I think the best way to think about communicating this is confidently. And one way to...I think that every time I ever struggle with a communication problem, every single time, which has been, for some reason, part of my job for the last two decades, is to sort of help people to… I just think, "Gosh, what if you just told it like it was?" That's what I always think. I'm just like, "Well, what if we were just..."
Michael: It's too simple, Carl. Too obvious.
Carl: I know. Yeah. Exactly. What if we were just honest... And I don't mean to be that we would be dishonest. What if we were just open and honest, we just told it like it was, and we talk to people like we would want to be spoken to, and with a level of confidence? So, what I'm thinking about is just simply saying to somebody, "Hey, Michael, after years of being here, my family and I have made a decision to move, and we're going to move to," you know, wherever. Let's just say we're moving eight hours away, like, a three-hour flight, eight hours, so we're moving...it's substantial. It's not next...it's not the town next door. "We've decided to move..." And you could do this... I think this would ideally be done with a preface email, and then a meeting or a phone call.
And I used to not...I used to think, "No, this should be done in person." I think it's really valuable to give somebody the time to absorb something like this... Not in person. Not right there. So, "Hey, we've made this really..."
Michael: Because I've got to tell you, just, you started down that road, where' you're like, "Been working together for a while. I've decided to move my family to Texas..." You started down that road, like, I'm trying to put myself in the client shoes, and you were 10 seconds into that, and my brain was already at the "Carl's about to dump me." This is the breakup talk. This is how the breakup talk begins. Which is ironic, because you're not actually about to, like, you're not breaking up, right. This is actually the, "I'm moving, and I'm still going to be servicing you."
Carl: Yeah. That’s…
Michael: But just reflecting, I'm happy for you and your family, but at the end of the day, this is...you're my advisor. This is…This is about me, and my end, I'm like, "Oh, crap. Are you breaking up with me?" I'm going to have to go find another advisor? Like, "Man. I liked working with you. Like, you're dumping me? Really?"
Carl: That's super interesting, right? Because obviously, the fear I'm having is that you're about to say, "You know what? I think the guy next door will be fine." So, I think we should just keep that in mind.
Michael: Yeah, right, so I'm afraid you're dumping me, and you're afraid that I'm dumping you, right? Like...
Carl: Yeah. Yeah, and you're...
Michael: I'm just flashing back to terrible high school memories. But...
Carl: Yes, yes. You're an N of one, and we don't want to draw too much from your response.
Michael: Fair. It's fair, but...
How To Reassure Clients Services Will Remain After Relocation [16:03]
Carl: But, but. But I do think it's an interesting point, because it probably is true, so I think an email that says, "Hey, we've made this decision to move. I want to talk with you about it. I just wanted to give you a heads up before our meeting," you know. And then I would just outline, like... And the confidence, to me, comes from this statement. Look, and I don't know if this happens in person or in the email, but I would be really tempted to be like, "Look, Michael, I want you to know that if this doesn't work out for you... Let's give it a year. Right, and if for some reason, this isn't working well, for whatever reason, I will be the first one to help you find a local advisor."
And you can't say that if you don't mean it, but you should mean it.
Michael: Yeah.
Carl: And if you do mean it, it actually has the side benefit... I don't think it's the primary reason you say it. It's not the primary. But it has the side benefit of being a pretty powerful sales tool. But that's not why you say it. But I remember having this exact conversation with a guy named Doctor Buck, was his name, and he moved. And I remember saying, "Hey..." He's like, "Should I find somebody local?" and I was like, "I don't know. But we've developed quite a relationship here. Why don't we give it a try? And if for any reason, I will help you find a home." And he was a great client for a long time. Even... we moved. Even when we moved to Vegas, we moved five hours further away from him.
So, I think, to me, I would handle... I would give people a heads up. It's not a warning. A heads up, really matter-of-factly. You have nothing to apologize for. None of that language of "I'm sorry," or "regret to inform you," or... It's just fact, pattern. Like, "We're moving."
Michael: Well, and, "I'm confident we can continue to serve you from a distance, given all the work that we've done together," like...
Carl: And point. Point to the other clients you've been serving. "I realize you're a local client, but we have a lot of clients that live further away than we're going to be from you."
Michael: Yeah. "A third of our clients are already virtual, because they started with us and they moved, and they continue to work with us after they retired and relocated to the grandkids."
Carl: Easy. Easy. Easy. All of that stuff. I would preface all that. I'd maybe write that in an email, so that you have time to think about it, review it, edit it, make sure it sounds right. I would want to come across professionally confident and deeply empathetic, right? And the empathy comes from saying, "Hey, we're totally confident in our ability to continue to serve you. What we don't know is how you're going to feel about that. So, let's give ourselves a check-in at 6 months and 12 months, and we'll help you find a solution if for some reason this doesn't work. I plan on coming back X." If you do. Like, "I'm going to come back once a quarter for meetings. I'm going to come back twice a year. We still...our family's still...we have family and friends here, so we'll be back often." From Vegas, I used to come back once a month. But it's close, right?
Now, I will say, just from an empathetic perspective, we were in Vegas during the credit crisis, and when the credit crisis happened, I was convinced I needed to be back here to save the business. So we moved back, because I was like, "I got to be close." Now, it's now obvious to my wife and I that I was wrong. Right, that we didn't have to. And so, that's, again, just is sort of this... And especially now. We've got so many tools to do this remotely.
How To Acclimate Clients To Virtual Meetings For A Smoother Transition [19:37]
Michael: Yeah, it reminds me of just... There was a strategy around this for a number of years, that if you were planning it, you could actually start prepping your clients in advance. Start doing slightly fewer in-person meetings, start doing some virtual meetings with clients. Five to 10 years ago, when it wasn't a pandemic thing, it was just like, "Hey, we're avant-garde because we have webcams now." But I knew a couple of firms over the years that actually started practicing doing video meetings with clients. They just were, "We're trying a thing. We want to start meeting with some more clients virtually. Traffic's a pain in the area, so I'm going to save you the drive." But they actually started getting their clients used to meeting virtually, so that if at some point they said "Hey, you know how we've been doing most of our meetings virtually? We're going to keep doing them virtually, but I'm going to be 1000 miles away. But you won't be able to tell, because it's still going to be like this."
And I think, for better or worse, the fact that almost all of us were forced to do a virtual environment over the past 18 months with the pandemic, every client, at least almost every client, guess it depends a little on where you are, but almost every client has been forced into a virtual environment, and has interacted virtually. Now, most of us that have a good sense, right? Most of our, many of our clients are fine for a lot of this. Most of our clients are fine. You know the few that are not. Right, who have not been happy virtual, and want to get back in person, and were the first to get back into person when our offices opened earlier this year. And, like, okay. They might be at risk. You may have a few that are at risk, that are just that anchored to local in-person, they're not going to be happy if you move or relocate. But, even there, there are workarounds to this.
It's saying, "Hey, but I'm still going to come back to the area... one week a quarter, two weeks a quarter, and meet with all the clients here. So, I'm going to keep an office presence here, I'm going to come back, one, two, three, four times a year..." You stack your meetings up. It's like a mini-surge meeting process. Stack your meetings up with all your local...all your formerly local clients in the local area. You can do a hybrid version of this that holds at least for quite a while. Maybe you don't want to do that indefinitely, but at some point, either they'll move on anyways, they'll get comfortable with you being distance-based and then they don't need to be local, you don't need to keep flying back, or just, you'll add enough clients in your new location, or virtually, because you're location-dependent. Over a couple of years, at some point, you can say, hey, the seven clients I'm still flying back to is just really not worth the time and a great fit anymore. I've grown enough otherwise. I'm just going to start transitioning them. It's okay now. And you may decide to let them go. You don't have to commit to a lifetime of flying back because you decide to continue to service some of them that way if you want to go that far.
But just recognizing, like, there are mid-points to this, right? You can start acclimating clients to video, although many of us did. You can commit to periodic fly-backs, and do a chunk of meetings every time you fly back, to grab those few clients that just insist on the local in-person, and at least make that transition more gradually. But, as I think you've sort of noted, Carl, if they're mostly longer-term established clients, a lot of them end up being more fine with this than I think we give them credit for. I mean, it's the same... like, most of us have clients that move when they retire, at least many of those clients that move with them when they retire. It's not like the average advisory firm loses 50% of its retiring clients who relocate. Most of us keep almost all of our clients who relocate.
Not all, right. Sometimes, "I liked you being local. I'm moving across the country. I'm going to find someone local." But that is usually the exception to the rule when they move, which means it's probably the exception to the rule when you move as well.
How Advisors Can Build And Relay Confidence To Clients [23:43]
Carl: Yeah. And so, I just am reminded of all of these conversations I've had over the years, about big angst around, "I make a change. Everybody's going to leave me. I'm going to change the way I bill. I'm going to raise my fees a little bit." I remember a firm that, a billion dollars, and they charged less than 25 basis points. And they decided that they were going to move to 50 basis points, this doubling of the fee. And they were so worried, and no one complained. And I'm not... I, just, over and over and over, we... And again, I'm deeply empathetic to the fear, and I think anybody who's going through this will look back on it and go, "It wasn't nearly as bad as I thought."
And then that confidence level, too, I think, if you've decided this is an important move for your family, and you communicate it right, and you lose a couple of clients, you should be confident in the fact that you'll find new ones. And that's scary, but you can be confident in the fact that you'll find new ones. And so, I think... Yeah, that's my advice. And the communication piece, pretend like you were talking to a friend. That's a trick I play all the time with myself. All the time. If I'm having a hard time writing anything, I just literally pretend like a buddy of mine walked in the room, and they look at me, and I'm all pained, and they say, "What's wrong, Carl?" And I say, "Oh, I'm trying to write this email, and it's about this," and I just have the conversation with a buddy. And while I'm having it, I type it down real quick, with my... Actually, I record me talking to my pretend friend in the room, only when nobody else can hear it, and then I type it up.
And I think that idea of just the confidence you would have in communicating with a friend, write that up. Send it. It'll be fine.
Michael: Yeah. And I think, to me, just the key word is confidence. Because if we make it out that it's going to be bad, clients will take our cue and assume it's going to be bad. If you say, "Look, we've really enjoyed working with you, but my family and I have made a decision that we're going to be relocating to Texas. I want to let you know we're fully prepared to continue to give you all of the service that you've received over the years. Here's how it's going to work. We've been meeting virtually for the past 18 months. We're going to continue to meet with this way. You're still going to have all the access you had to me before. It's just going to be primarily virtually. I'm going to come back..."
Carl: Let me pause you for a minute.
Michael: ...once a year.
Carl: I want to pause and just point... This is so important. I want to point this out. I want you just to, like, listeners, and people who are watching, and... Notice how much different that feels. "Here is the plan." Michael said literally those words. "Here's how this is going to work." That's the words he used, not "Here's the plan." Either one of those are fine. "Now, here's how this is going to work." Right. That's so much different than…
Michael: They just want to know you're not dumping them, and how it's going to work for them, so just tell them.
Carl: Yeah, but I love just the level of, "I'm in charge," and I empathetically hug. I know, all that stuff, but "I'm in charge. I'm the doctor here. Here's how this is going to work." It's so much different than "If you need me to, I promise I'll come back once a month," and it's so much different than... "Here's how this is going to work. I'm going to be back here once a quarter. We'll meet with all of our clients. We're completely prepared for this." I just wanted to pause you and point out how different that style of communication is than the needy thing. You are in a position that you're massively valuable in people's lives. You're not asking them to do anything silly. Nobody is going to...largely nobody's going to care. And you are in a position, I don't want to say "position of power." That's what my friend Blair Enns would say. But you are in a position of providing massive value, and so communicate that way. So, thanks for the example, because I thought that was really cool.
Michael: Absolutely.
Carl: Sorry to interrupt you...
Michael: No, no.
Carl: ...but I think it's an important point.
Michael: I think it's great. Just, it's confidence, right? Just, at, if you say it's going to go well and explain how it's going to work well, it really usually does. Because at the end of the day, they don't want to go through the work of finding a new advisor, much more than you want to go through the work of finding a new client, so most of these work. And again, so, I think the other anchor, to me, is just, yes, we've all had the client that we lost because they retired, they relocated, and they said, "Hey, I'm moving, and I want to find someone in my area," and I think we tend to fixate on that. But think about how many clients you have who are not local, either anymore or ever, and it's fine, you're just going to do more of that.
Carl: Yep.
Michael: So it's fine.
Carl: Totally. Love it.
Michael: It's going to be okay.
Carl: Super good.
Michael: Awesome. Thank you, Carl.
Carl: Cheers.
Wait, did I ask this question?