Smooth Transition: 150 Accounts Migrated in Under 30 Days

Smooth Transition: 150 Accounts Migrated in Under 30 Days

Executive Summary

Santos Financial Research Group faced a significant challenge: migrating 150 client accounts from a legacy custodian without disrupting client relationships or operational efficiency. Golden Door Asset collaborated with Santos to develop a streamlined account transfer process leveraging automation and proactive communication. The result? A seamless transition, completed in under 30 days, minimizing client disruption and demonstrating a clear return on investment through enhanced operational efficiency.

The Challenge

Santos Financial Research Group, a rapidly growing RIA managing over $250 million in assets, identified a crucial strategic opportunity to consolidate its custodial relationships. A legacy custodian, while initially suitable, no longer provided the advanced technology and competitive pricing necessary to support Santos's evolving needs and commitment to client service.

The decision was made to transfer 150 client accounts, representing approximately $75 million in assets under management (AUM), to a new custodian offering superior features. However, this undertaking presented several critical challenges:

• Minimizing Client Disruption: Transferring accounts can be a stressful process for clients. Delays, paperwork errors, and lack of communication can erode trust and lead to dissatisfaction. Santos aimed for a "white-glove" experience, ensuring clients felt supported and informed throughout the transition. Any delays would impact client satisfaction scores, which Santos tracked closely. A drop of more than 5% would be considered unacceptable.

• Operational Efficiency: Manually processing 150 account transfers would be incredibly time-consuming, diverting valuable resources from core activities like financial planning and client relationship management. Estimates indicated that a purely manual process could take upwards of 90 days, requiring at least two full-time employees dedicated solely to the transfer. This would translate to significant operational costs exceeding $30,000 in lost productivity and potential overtime.

• Data Integrity: Ensuring the accurate and complete transfer of client data, including holdings, cost basis information, and historical transaction records, was paramount. Any discrepancies or data loss could lead to compliance issues, inaccurate reporting, and potential legal liabilities. Maintaining data integrity also factored into the calculation of capital gains on client tax returns. The potential for even a few errors could be a compliance disaster.

• Compliance Requirements: Adhering to all regulatory requirements governing account transfers, including ACATs (Automated Customer Account Transfer Service) guidelines and SEC regulations, was essential. Failure to comply could result in fines, penalties, and reputational damage.

Santos needed a solution that could efficiently manage the account transfer process while prioritizing client experience, data integrity, and regulatory compliance.

The Approach

Golden Door Asset collaborated closely with Santos Financial Research Group to develop a comprehensive account transfer strategy focused on three key pillars:

1. Automation & Streamlining: We leveraged the ACATs system to automate the account transfer process. This included digital form completion, automated document routing, and real-time status tracking. We also implemented a secure document sharing platform to facilitate the secure exchange of sensitive client information between Santos, the new custodian, and the clients themselves. This eliminated the need for physical paperwork and reduced the risk of errors.

2. Proactive Communication: A dedicated communication plan was implemented to keep clients informed at every stage of the transfer process. This included:

   • Initial Notification: A personalized letter explaining the reasons for the custodian change and outlining the benefits for the client.
   • Step-by-Step Guide: A clear and concise guide outlining the steps involved in the transfer process, including instructions for completing necessary forms.
   • Regular Updates: Proactive email and phone updates to keep clients informed of the status of their account transfer. A dedicated phone line and email address were established specifically for transfer-related inquiries.

   These communications were designed to anticipate client questions and address potential concerns proactively, reducing anxiety and fostering trust.

3. Centralized Project Management: A dedicated project manager from Golden Door Asset oversaw the entire account transfer process, acting as a central point of contact for Santos, the new custodian, and the clients. This ensured that all tasks were completed on time and within budget, and that any issues were resolved quickly and efficiently. The project manager used project tracking software to monitor progress, identify potential bottlenecks, and allocate resources effectively.

The strategic thinking behind this approach centered on minimizing manual intervention, maximizing transparency, and proactively addressing client concerns. By automating key processes and providing clear, consistent communication, we aimed to create a seamless and stress-free experience for both Santos and their clients.

Technical Implementation

The technical implementation involved the following key components:

• ACATs System Integration: The ACATs system was the backbone of the account transfer process. We integrated directly with the new custodian's ACATs interface, enabling automated initiation and tracking of account transfers. This eliminated the need for manual paperwork and reduced the risk of errors. We used APIs provided by the custodian for real-time updates, and implemented logic to reconcile transfers against internal records.

• Secure Document Sharing Platform: A secure document sharing platform compliant with SOC 2 Type II standards was used to facilitate the secure exchange of sensitive client information. This platform allowed clients to securely upload signed forms and other required documentation. It also provided a secure channel for Santos to share confidential information with the new custodian. Data was encrypted in transit and at rest using AES-256 encryption. Multi-factor authentication was required for all users.

• Data Migration & Validation: A custom data migration script was developed to extract client data from the legacy custodian's system and transform it into a format compatible with the new custodian's system. This script handled a variety of data types, including account balances, holdings, cost basis information, and historical transaction records. To ensure data integrity, a rigorous validation process was implemented. This involved comparing the migrated data against the original data to identify any discrepancies. Any discrepancies were manually reviewed and corrected. The cost basis information was validated using tax-lot level reconciliation.

• CRM Integration: The entire process was integrated with Santos's existing CRM system. This allowed Santos to track the progress of each account transfer within their CRM and to automatically update client records once the transfer was complete. This integration provided a single source of truth for client data and streamlined internal reporting.

• Calculations & Validations: For cost basis transfer validation, algorithms were used to compare cost basis calculated based on the legacy custodian data versus the cost basis calculation based on the data at the new custodian. Any discrepancies exceeding 0.1% of the holding value triggered an alert for manual review and correction. Average cost basis calculation was the primary method, aligning with IRS guidelines.

Results & ROI

The implementation of the streamlined account transfer process yielded significant results:

• Timeline: 150 accounts were migrated in under 30 days, significantly exceeding the initial estimate of 90 days for a manual process. This represents a 67% reduction in transfer time.

• Client Disruption: Client satisfaction scores remained consistently high throughout the transfer process. A post-transfer survey revealed that 95% of clients were satisfied with the communication and support they received. The client satisfaction scores did not drop more than 1%, avoiding the unacceptable 5% drop.

• Operational Efficiency: The automated process freed up two full-time employees, allowing them to focus on higher-value activities. This resulted in an estimated cost savings of $30,000 in reduced labor costs and increased productivity.

• Data Integrity: The data migration and validation process ensured that all client data was accurately and completely transferred to the new custodian. No significant data discrepancies were identified, mitigating the risk of compliance issues and legal liabilities.

• Cost Savings: Reduced administrative overhead by approximately 40%, freeing up time for financial advisors to focus on revenue-generating activities such as client acquisition and portfolio management. The team was able to focus on onboarding new clients and expanding the customer base instead of spending time on manual account transfers.

Overall, the streamlined account transfer process delivered a significant return on investment by reducing transfer time, minimizing client disruption, improving operational efficiency, and ensuring data integrity.

Key Takeaways

Here are key takeaways for other advisors considering a similar account transfer:

1. Prioritize Client Communication: Proactive and transparent communication is essential for minimizing client anxiety and building trust during an account transfer.
2. Embrace Automation: Automate as many steps as possible in the transfer process to reduce manual effort, minimize errors, and improve efficiency.
3. Invest in Data Validation: Implement a rigorous data validation process to ensure the accuracy and completeness of transferred data.
4. Establish a Dedicated Project Manager: A dedicated project manager can oversee the entire transfer process, ensuring that tasks are completed on time and within budget.
5. Plan, Plan, Plan: Develop a detailed project plan outlining all steps involved in the transfer process, including timelines, responsibilities, and communication protocols.

About Golden Door Asset

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