Issue 16-35, August 29, 2012
8/29/2012 7:19:00 AM
News & Views
Client Relationship Transitions
With summer ending soon, it’s time to start year-end planning for our practices. As we enter what is shaping up to be a busy season for the business valuation profession due to the looming threat of changes in the tax code, it’s easy to put off planning for the long-term while trying to deal with the short-term work load. However, this may be a great time to think about transitioning client relationships, as many clients that we may only hear from sporadically get in touch.
Most of us don’t think or plan for the transition in our roles with clients until we already have changed roles or are on the cusp of retirement. However, in any transition, laying the groundwork takes time. Here are some tips for transitioning client relationships that may be useful to consider integrating into the upcoming busy season and final quarter of the year:
- Plan Ahead. Transiting client relationships takes time. Think of how long it took to build these relationships in the first place. For clients, in addition to technical skill, comfort and trust are major factors in the providers they choose. As a result, it can take years to effect a change-over. Two to three years or more can be required. Client contact can be frequent or highly sporadic. The longer the time between contacts, the fewer the opportunities to introduce a prospective new provider, so planning ahead when you get a call from these infrequent clients to transition this relationship is a must. Also, larger and more complex clients take longer to transition—a timeline of many years (possibly five) could be required.
- Designate a Successor. This should be clear both internally (to yourself as you plan), as well as to the client. Consideration on who to transition the relationship to should incorporate both client and provider factors, such as the personality of the client and the designated successor, as well as the technical skill of the potential person to whom you are transitioning the relationship. You might want to have two providers involved in the transition-one more suited to the client relations side and one more suited to the technical side.
- Outline the Plan. Clients usually know if something is changing and it’s best to be up front and honest about the change. Clients expect change, but if they are in the dark about what is happening, they can lose trust.
- Mentoring—Not Just The Technical Stuff. As financial service providers, we sometimes forget as we mentor those in our profession that though the “finance” portion of our work is important, the “service" is as well. Relationship skills can be learned and should be one of the areas senior staff work on with the more junior staff. Even having them listen in on a phone call with a client can help teach them the tactics and skills you use to interact with the client, and the nature of the relationship expected by the client from your firm.
- Communication Style. Client service expectations typically are set by the initial provider. Every client is different, and their quirks, likes/dislikes, etc. are in our heads after years of contact, but this knowledge also needs to be conveyed to make the transition smoother. How do they like to be contacted (email, phone, letter)? How frequently do they need contact? How fast do you need to respond to inquiries (5 minutes vs. 24 hours)? What type of detail do they require in their reports or work product? All this should be conveyed to the new provider in some manner ahead of the final transition.
- Transition Specifics. A successor should begin to attend client meetings with the transitioning practitioner, gradually taking over primary client responsibilities as soon as they are able. During the transition when you are still involved, having the successor lead meetings, make presentations to the client, etc., can also help build familiarity and trust.
Having the client see the original provider and the successor working closely also helps build comfort in the transition—the client’s trust in the current provider and his/her perceived skill can “rub off” on the successor. Having the original provider continue on as a consultant can also help assist in the transition, particularly if it has not been planned out far ahead of time and/or if client contact is sporadic.
- Team Focus. Even before any thoughts of transition, introducing clients to other people at the firm can aid in future transitions. This reinforces the relationship with the firm as opposed to an individual. The more areas of a firm the client interacts with, the less traumatic a transition will be.
I hope you all have a safe and enjoyable Labor Day!
Arlene Ashcraft, ASA, CFA
Columbia Financial Advisors, Inc.
Note from the Chair:
The second exposure draft of the 2014-2015 version of USPAP is available. Comments are due on or before October 5, 2012.