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Decision Guide: Simplifying the Due Diligence Process

It’s a sad story, really—one you’ve heard before, and if you talk with enough mentors, you’re likely to hear it again. It goes something like this: An advisor is unhappy with their current firm, but for one reason or another they get stuck, inertia takes over or they become overwhelmed by the prospect of a move, so they stay live.

Ultimately, they are afraid to come to work every morning; Their customers may not be served as well as they could be otherwise; Their support staff is pathetic, etc and so on.

How does it come?

For many consultants, the sheer idea of ​​conducting due diligence — even consider the heavy lift involved in a move — is fraught with intimidation. Due diligence can be downright difficult.

But if it is done with thought and a step-by-step approach, the process becomes far more manageable.

After working with consultants for decades, we have identified a simple framework for due diligence, based on strategic and focused intent, that empowers advisors to make informed decisions and limit excessive emotion.

The calculation of a move usually comes down to three decisions made in this order:

  1. If you’re going for a walk,
  2. where are you going to go, and
  3. When you’re about to move.

Decision 1: Are you unhappy or eager enough to explore options and consider a move?

Conducting a strategic diligence doesn’t mean you’ll eventually make a move. It simply means that you are getting educated about what the landscape looks like. It also doesn’t mean randomly meeting up with any of the firms in your Rolodex.

So, what is involved? Step 1 is to get educated on the landscape of possibilities and do some real introspection about how you want to live your professional life in the future. For some, this simply means doing homework on your own (“Armchair Exploration”) or under the guidance of an experienced recruiter. Others want to hold meetings with different firms.

In both cases, the diligence process continues until one of two inflection points is reached: either you find something “better enough” to continue down the path, or you stop the process. And knowing your current firm is the best place for you. Here.

Another benefit of being educated is creating a “Plan B”. We live in a world of increased and heavy-duty compliance at large firms, and ever-changing management mandates, so consultants take comfort in having a backup plan at the ready.

Decision 2: Where do you want to go?

Answering these questions will help guide your thought process:

  1. How much transition money do you need/want?
  2. How important is a name brand?
  3. What is your biggest frustration that a move should solve?
  4. What aspects of the business do you enjoy/want to take control of?
  5. What exactly does your current firm do that you would like to replicate?
  6. Are you an entrepreneur, and does the notion of independence appeal to you?
  7. If so, how enterprising? How much support do you need?

The questions above are not the be-all, not the be-all. They are intended as a framework for governing your thinking. For example, if maximizing transition money is important, then independent options probably aren’t the right fit. If you’re frustrated with the lack of control and management bureaucracy and desire more freedom and flexibility, it makes sense to look outside the traditional wirehouse space.

Decision 3: When do you pull the record?

The decision boils down to personal preference in part, but there appears to be a happy medium. For most consultants, you want enough time to be thoughtful, thorough, and well prepared for the big day, but not so much time that you feel like a person swimming between islands for an extended period of time.

For example, once you decide to make a move it can be difficult for new customers to prospect, as it may seem fraudulent. In addition, you are likely to be excited about the new option and extending the move will mean keeping the secret for a longer period of time.

While there is no right answer, a well-planned move usually takes at least six weeks from the time a decision is made, to mitigating circumstances.

Mentors who might otherwise be better served elsewhere are stuck only when they want to be. But the reality is that inertia is a mighty force.

Is it best to stop and “make it work”? Or would you rather take the time to investigate what else is out there?

Jason Diamond is the Senior Advisor, Vice President of Diamond Consultants – a nationally recognized recruitment and consulting firm based in Morristown, NJ that focuses on serving financial advisors, independent business owners and financial services firms.

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