Practice Management

Find about issues such as corporate culture and the way your book will be valuated

By Leah Golob |

You might think the grass is greener at another firm, but there are many factors to consider before making the leap, says Rosemary Smyth, founder of Rosemary Smyth and Associates in Victoria.

How will you know if another firm is right for you?

Many advisors may have incorrect assumptions about the way another firm operates, Smyth says. To save yourself any unwanted surprises, you should start by asking the following five questions before joining a new firm:

1. What is the corporate culture?
Each firm has it's own unique corporate culture — a vision or attitude that is shared by management and employees. But not all companies will have a culture that is compatible with the way you want to grow your business, Smyth says.

For example while some firms may focus on a branding strategy, others may pride themselves in a robust technological platform. Still others may emphasize products and services.

Make sure your values and vision are aligned with the firm's culture before signing on the dotted line. 

2. Will I be able to build strong team relationships?
Before joining a firm, you should feel confident that you will be able build strong relationships with other advisors on your team. Open communication is key, Smyth says. You'll need clarity regarding each person's individual role in the business and how you will contribute to each other's growth.

3. Does the firm have minimum asset requirements?
Many firms will require that new advisors bring assets when joining the firm. So, you should ask yourself whether you will be able to meet the firm's expectations.

It is  also important to know what the consequence will be if you do not meet those expectations, Smyth says, and by what deadline they must be met.

4. How will my book be valuated?
Valuation is not  an exact science, and there is no single formula for assessing the value of a book of business.  It is important that you understanding how the new firm would calculate the value of your business, Smyth says.

For example, some firms may simply set the value of a book of business as 1% of assets. Others may use a more complex formula, based on criteria such as revenue and cost per client. It's important that you start questioning the valuation process right from the start, Smyth says.

5. What will my new clients be like?
If you will be acquiring new clients as a result of the move, find out as much as you can about them. For example, if you are interested in dealing with young clients who are excited about technological developments in the industry, you might be disappointed to find out your new clients are mostly seniors who want to stay invested in guaranteed investment certificates.

This is the first part in a two-part series on changing firms. Next: Common mistakes when making the switch.