98% AUM Retention During Emily's G2 Transition

98% AUM Retention During Emily's G2 Transition

Executive Summary

Richardson & Associates, led by Emily Richardson, faced the critical challenge of migrating its clients' assets to a new custodian, G2, a move fraught with the potential for significant AUM attrition. Golden Door Asset partnered with Richardson & Associates to develop a comprehensive communication strategy and manage the entire transition process, focusing on personalized client support and proactive issue resolution. This focused approach resulted in a remarkable 98% AUM retention rate, minimizing revenue loss and ensuring continued growth for the firm.

The Challenge

Emily Richardson, founder and principal of Richardson & Associates, a thriving RIA managing over $75 million in assets, faced a significant operational hurdle. Her firm's existing custodial relationship was dissolving, necessitating a complete migration of client accounts to a new custodian, G2. Custodial transitions are notoriously challenging, often leading to client anxiety and potential AUM loss if not handled with precision and care.

Emily recognized that a poorly managed transition could have severe consequences for her firm. Client frustration over paperwork, unfamiliar processes, and perceived disruptions could lead to them moving their assets elsewhere. Even a small percentage of attrition could significantly impact revenue. For example, a 5% AUM loss on $75 million translates to $3.75 million, potentially resulting in a decrease of $30,000 in annual revenue for a firm charging a 0.8% management fee.

Furthermore, the transition was occurring during a period of market volatility. Clients were already sensitive to market fluctuations, and the added complexity of a custodial change could exacerbate their anxieties, leading to rash decisions and premature withdrawals. Richardson & Associates had spent years building trust and rapport with its clients, and this transition represented a significant test of those relationships. A primary concern was the potential for increased call volume from confused or concerned clients, overloading the firm's limited administrative staff and impacting their ability to serve existing and prospective clients effectively. Emily estimated that a poorly handled transition could increase administrative workload by 20-30% during the critical migration period. The ultimate challenge was maintaining client confidence and minimizing disruption while seamlessly moving all accounts to G2 within a six-week timeframe.

The Approach

Golden Door Asset partnered with Richardson & Associates to develop and execute a comprehensive transition strategy centered on proactive communication, personalized support, and efficient execution. Our approach was guided by the following key principles:

• Transparency and Proactive Communication: We recognized that open and consistent communication was crucial to alleviating client anxieties. We worked with Emily to develop a multi-channel communication plan, including:

  • Pre-Transition Announcement: A personalized letter from Emily outlining the reasons for the change, the benefits of G2, and a detailed timeline of the transition process. This letter was sent via both email and physical mail to ensure maximum reach.
  • Informational Webinar: A live webinar hosted by Emily, explaining the transition process in detail and answering client questions in real-time.
  • Personalized Phone Calls: Emily and her team made individual phone calls to each client to address their specific concerns and offer personalized support.
  • Regular Email Updates: Weekly email updates providing progress reports, highlighting key milestones, and reminding clients of upcoming deadlines.
  • FAQ Document: A comprehensive FAQ document addressing common questions and concerns about the transition, accessible on the firm's website.

• Personalized Support: Recognizing that each client's needs are unique, we emphasized personalized support throughout the transition process.

  • Dedicated Support Team: Emily assigned a dedicated team member to serve as a point of contact for clients with questions or concerns.
  • Customized Onboarding Materials: We created customized onboarding materials tailored to each client's specific account type and investment strategy.
  • Proactive Problem Solving: We anticipated potential issues and developed proactive solutions to address them, minimizing disruption and frustration for clients.

• Efficient Execution: We streamlined the transition process to minimize disruption and ensure a seamless experience for clients.

  • Digital Signature Adoption: We encouraged clients to utilize digital signature technology to expedite paperwork and reduce processing time.
  • Account Mapping and Automation: We carefully mapped each client's existing accounts to their corresponding accounts at G2, leveraging automation tools to minimize errors.
  • Real-Time Monitoring: We implemented a real-time monitoring system to track the progress of each account transfer and identify any potential delays or issues.

Our decision-making framework prioritized minimizing client disruption, maintaining transparency, and ensuring efficient execution. We continuously monitored client feedback and adjusted our approach as needed to optimize the transition process. We used a RACI matrix to clearly define roles and responsibilities for each task, ensuring accountability and minimizing confusion.

Technical Implementation

The technical implementation involved a careful orchestration of custodian-provided tools, customized communication templates, and real-time monitoring systems.

• Custodian Transition Tools: We leveraged G2's proprietary transition tools, including their online account opening platform, automated account transfer system (ACATs), and reporting dashboards. We trained Emily's team on how to effectively use these tools to ensure efficient account transfers.

• Customized Communication Templates: We created a suite of customized communication templates for each stage of the transition process, including email templates, letters, and webinar scripts. These templates were designed to be clear, concise, and client-friendly, providing consistent messaging across all communication channels. We ensured all communications were compliant with SEC regulations and firm-specific compliance policies.

• Real-Time Monitoring: We implemented a real-time monitoring system to track the progress of each account transfer. This system provided alerts for any potential delays or issues, allowing Emily's team to proactively address them before they escalated. The monitoring system tracked key metrics such as the number of accounts transferred, the value of assets transferred, and the average time to complete an account transfer. This data allowed for continuous process improvement and identification of potential bottlenecks. We used G2's API to extract transition data and create custom reports in a business intelligence dashboard.

• Data Security and Compliance: Throughout the entire process, we maintained a strong focus on data security and compliance. We ensured that all data transfers were encrypted and compliant with SEC regulations and industry best practices. We worked with G2's compliance team to ensure that all transition processes were fully compliant with applicable regulations. We also implemented a robust data backup and recovery system to protect client data in the event of a system failure.

• Performance Calculations: To track AUM retention, we calculated the percentage of AUM retained by dividing the total AUM successfully transferred to G2 by the initial AUM under management at the beginning of the transition period. We also tracked the number of client accounts retained to provide a comprehensive view of the transition's success.

Results & ROI

The meticulous planning and execution of the transition strategy yielded remarkable results for Richardson & Associates:

• AUM Retention: Richardson & Associates successfully retained 98% of its $75 million AUM, representing only a $1.5 million outflow during the transition. This far exceeded initial expectations of a potential 5% attrition rate.

• Client Retention: The firm maintained a 99% client retention rate, demonstrating the high level of client satisfaction with the transition process. Only one client chose to move their assets elsewhere, representing a significant success.

• Reduced Administrative Burden: The streamlined transition process significantly reduced the administrative burden on Emily's team. The firm experienced only a 5% increase in call volume during the transition, far below the initially anticipated 20-30% increase.

• Cost Savings: By minimizing AUM attrition and maintaining client retention, Richardson & Associates avoided significant revenue losses. The projected revenue loss from a 5% AUM attrition rate was estimated at $30,000 annually (assuming a 0.8% management fee). By achieving a 98% AUM retention rate, the firm effectively saved $27,000 in potential lost revenue in the first year alone.

• Enhanced Client Relationships: The proactive communication and personalized support provided during the transition process strengthened client relationships and fostered greater trust in the firm. Many clients expressed their appreciation for the firm's dedication and professionalism, leading to increased client referrals.

Before the transition, Emily anticipated spending approximately 40 hours of her personal time on the project. With the streamlined process, she was able to reduce that commitment to 15 hours. This freed up her time to focus on strategic initiatives and new client acquisition.

Key Takeaways

For other RIAs facing similar custodial transitions, the following takeaways are crucial:

1. Prioritize Proactive Communication: Communicate frequently and transparently with clients throughout the entire transition process. Address their concerns proactively and provide clear, concise information.
2. Offer Personalized Support: Recognize that each client's needs are unique. Offer personalized support and guidance to ensure a smooth and seamless transition for each individual.
3. Streamline the Process: Leverage technology and automation to streamline the transition process and minimize disruption for clients.
4. Monitor Progress in Real-Time: Implement a real-time monitoring system to track the progress of each account transfer and identify potential issues early on.
5. Invest in Training: Ensure that your team is adequately trained on the custodian's transition tools and processes.

About Golden Door Asset

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