Tips For Moving Your Investment Program To A New Broker-Dealer

Six best practices and a credit union case study offer guidance on how to make a complicated transition run smoothly.


Investment programs move to a new broker-dealer for a variety of reasons — sometimes to enliven a dormant program, sometimes to grow revenue for the institution, or sometimes to start a new program. Rarely does a broker-dealer transition go perfectly, but it is possible to anticipate challenges to make the process as smooth as possible. A poor transition can cause lost revenue, internal chaos, and damaged client relationships. A successful transition builds team unity and client trust as well as puts the program on a fast track to revenue growth.

6 Best Practices

When evaluating broker dealers, look for these best practices to achieve the most successful transition.

  1. Dedicated Conversion Team — A dedicated conversion team is a group of people, usually led by one or two key contacts, who spearhead the transition process from start to finish. Look for a broker-dealer that provides dedicated individuals — not just a sales person — whose main job is to transition accounts. They are the project managers of the whole process and typically pull in contacts in other departments at appropriate times throughout the process. These include contacts from the marketing, HR, IT, and legal departments. Your conversion team should be responsive and proactive, providing hands-on assistance in preparing client communications, documentation, and overall direction and problem solving at all times.
  2. Comprehensive Transition Plan — A comprehensive plan is a necessary best practice and should be available before the transition begins. Ask to see a sample plan. It should include clear timelines, specific tasks, and the names of people who will manage each task. It should include some work for the financial institution to complete, but the broker-dealer should manage the complex tasks. For example, your broker-dealer might help develop a communication for staff explaining what a broker-dealer does, why you changed, and what you see as the advantages of working with this broker-dealer. If there are ancillary services such as home banking integration or wealth reporting, it’s also good to inform your internal team on those.
  3. Regular Communications — Weekly calls are integral to keep the implementation process running smoothly. The dedicated conversion team should lead these calls with timely input from broker-dealer support staff such as marketing and HR. They should review the transition progress, confirm steps completed, and plan for next steps. For example, your conversion team could bring in marketing staff to set up business plans, then IT staff to set up home banking integration, then legal staff to manage email archiving. Your broker-dealer should act as a project manager, directing traffic and ensuring all pieces of the process keep moving.
  4. No Cost Funds Transfers — Moving the clients’ accounts with minimal impact to the clients is often the most difficult and most important part of the process. If done incorrectly, both reps and the financial institution could lose revenue. Look for a broker-dealer that offers these services: electronic transfer of brokerage accounts, bulk transfer of direct accounts, and coverage of transfer or account termination fees.

    Many broker-dealers offer a flat fee to move the program to their platform but leave the cost to transition all of the individual accounts to the financial institution. Transitioning accounts can easily incur $300,000 or more in brokerage fees for a big program. Make sure your new broker-dealer will cover that cost. Your conversion team should confirm all accounts are with the right rep and territory before the transition to make certain all assets move over.
  5. Extensive Training — Leading up to official transition day, ask about the types of training your team will get. Proper training focuses on educating your reps and IT staff on the new systems via phone calls, webinars, and/or in-person training. Additional services might include someone from the broker-dealer being on-site the first week of the transition to help take calls and answer advisor and client questions.
  6. Business And Marketing Support — Your new broker-dealer should also support your team post-transition with business and marketing resources. There should be numerous resources designed for a variety of uses. These include best practice checklists to get your reps up and running and customized marketing and business plans. Ideally, your program manager and marketing contact will work with the broker-dealer staff members who specialize in this type of support so they can develop strategies tailored to your specific financial institution. Ask to see sample plans or to meet the contact that will manage this aspect of the transition.  

Thorough due diligence of your new broker-dealer can mean the difference between a painful and a successful transition. Ensuring the aforementioned best practices are included in your transition will go a long way toward keeping your program on the path to success.

Case Study: The Coastal Federal Credit Union Transition To CUSO Financial Services

Marvin (Al) Jones is vice president of wealth management at Coastal Federal Credit Union in Raleigh, NC. With almost $2 billion in member assets, the credit union serves more than 190,000 members through 15 branches. Although the program had been successful for more than 10 years, Coastal executives wanted to move to a broker-dealer that could help take the program to new levels of success. Jones shares the credit union’s experience of transitioning a large program to a new broker dealer.

Do Your Due Diligence

Exhaustive due diligence is the key to changing broker-dealers and that takes time.

“You can’t rush that decision,” Jones says. “We took a year and a half. We visited CFS’s headquarters, met their people, saw how they worked, and saw how they implemented policy.”

Coastal’s due diligence also included asking many questions to fully understand the process. Jones insisted on getting detailed answers on a variety of topics.

“We requested specifics from their marketing people, IT people, and HR people,” he says. “I asked how they would help us enhance the experience of our clients and how they would help us enhance revenue. Those are fundamental business questions. CFS was the only broker dealer who could give me tangible answers.”

Make Sure It’s A Match

Matching values and overall philosophies is an important part of choosing a broker-dealer. A priority for Coastal executives was that their new broker dealer be progressive.

“Things change,” Jones says. “The way this business was run just three years ago is different than the way it is today. We wanted a partner who was willing to learn, grow, and change to keep doing a good job for us.”

Keep It Moving

Once they decided on CFS and started the transition process, Jones saw firsthand many identified best practices in action.

“One of the things CFS did extremely well was lay out a comprehensive plan,” he says. “They had a whole list of activities that needed to take place to make the transition smooth. It was a game plan that included what needed to be done and by whom. That was something we didn’t find with their competitors.”

He also worked with his conversion team on weekly calls to keep the process moving. By having open and frequent communications, the joint teams were able to fix any glitches fast. Jones also appreciated the holistic approach that included staff from other departments at his financial institution. An investment program does not work in a vacuum, and by coordinating the transition with all departments at the credit union, Jones was able to build credibility throughout the process.

Use Tools To Improve

Jones and Coastal FCU’s management were very pleased with all of the tools CFS provided to help the investment program grow. Key credit union staff received fundamental training on the investment program’s processes and technology systems prior to going live, which was vital. But a primary factor in choosing CFS was the broker dealer’s ability to help Coastal offer more services and achieve better results.

“We wanted a better platform with non-proprietary products and unbiased support,” Jones says. “And we needed a partner who was invested in helping us and didn’t just expect us to do it on our own. CFS was able to demonstrate specific ways they would help us grow and by how much.”

For example, CFS staff reviewed Coastal’s revenue and expenses and provided a benchmark budget that Jones could use to ensure he was properly allocating program revenue. CFS business development staff provided guidelines to help him create a new position for a client relations advisor. He received a detailed breakdown on what activities that person should do, how they should be compensated, and how their efforts would support the rest of the program.

“The CFS Program Development Center is where they store resources like these, and I use the Center almost daily,” Jones says. “It gives me the day-to-day specific tools I need to improve.”

Offer Additional Services 

Coastal has expanded its services to members through its relationship with CFS by offering several additional services:

  • Home banking integration allows members the ability to sign on to their online banking pages and view their investment accounts.
  • Performance reporting through Albridge, granting them access to a variety of customizable reports that cover performance, asset allocation, holdings, cost basis, and more.
  • Financial calculators through Financial Management Center, allowing members to take a high-level look at their unique financial situations, helping them to uncover if they are on track to meet their goals.
  • Financial profiles using a goals-based profiling program that centers on five life stage modules. These modules can help an advisor provide a complete analysis of a client’s financial situation, enabling them to create a dynamic and a graphic-rich overview of your financial needs in as little as 20 minutes. 

Celebrate Your Success

After the transition was over and Coastal Federal Credit Union’s investment program had been with CFS for approximately three months, CFS requested feedback on the transition process. Jones and his team outlined what they liked and didn’t like, offering suggestions on areas in which CFS could improve. Jones says he was especially impressed when CFS acted on the feedback and changed its processes. He saw that as proof his new broker dealer was dedicated to continually enhancing its support.

Even more telling is Coastal’s program success after its first year with CFS. The program has grown 121% in its first year, reaching an impressive $1,114,912 and is on pace to reach nearly $1.5 million by the end of the second year.



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