Everything a Financial Advisor Needs to Know About Repapering

Repapering — which involves having your clients complete new contracts or other paperwork — can present a significant logistical challenge to even the most organized advisors. The more clients you have, the more complicated things can become. However, preparing for this possibility and exploring the available tech solutions can help you navigate a repapering event as smoothly as possible.

SmartAsset’s Advisor Marketing Platform (AMP) offers financial advisors services like client lead generation, automated marketing and more. Learn about SmartAsset AMP today.

When Repapering Is Necessary for Financial Advisors

Repapering is not something you’ll do every day. Typically, it’s only something you’ll encounter if one of the following is true:

• New regulations take effect, requiring you to make a change to client contracts to remain compliant.
• Your firm makes operational changes that require changes to client contracts or other documentation. For example, if you decide to move client assets to a new RIA custodian.
• You’re ready to make the move and go independent, or are transitioning to a new firm and taking your book of business with you.
• You’re seeking a graduated pathway to independence through an RIA aggregator.

Mergers can also prompt a need for repapering. After acquiring TD Ameritrade, Schwab faced the daunting task of transitioning approximately 17 million client accounts, something the brokerage aimed to do with as little repapering as possible.

Why Repapering Is Challenging for Advisors

Repapering often proves challenging because of the mechanics involved. Broadly speaking, it involves:

• Identifying all client contracts that need to be updated
• Verifying information for each client account
• Making changes to contracts that will be transitioned
• Obtaining client signatures for each contract

It seems simple enough, but it can get complicated when you have multiple clients with multiple accounts under your management, all of which require new documentation and signatures. And when you consider that the typical financial advisor has 50 to 150 clients, you may be looking at a months-long process.

For example, say you manage five accounts on average for each client and you have 50 clients in total. If each account requires a minimum of three new documents to be signed, you’re already looking at 750 documents. And don’t forget, actual scope of your repapering efforts could be much broader, depending on the complexity and number of accounts you manage.

Client cooperation also plays a part in determining how long repapering takes. In a perfect world, clients sign the updated documents and return them to you promptly, but that isn’t always the reality. Delays in signing can slow things down and make repapering more stressful.

Benefits of Repapering for Financial Advisors

While repapering is something many advisors would like to avoid if they could, there’s at least one potential upside. If you’re making the transition to a new firm or starting an independent RIA, a repapering event is an opportunity to cull your book of business of clients with whom you’re no longer aligned.

For instance, you may want to redirect your focus toward working with a high-net-worth clientele. As you prepare for the transition, it would make sense to review client accounts to determine which ones you want to retain.

Letting go of some clients frees up time, time that you could use to focus on:

• Developing new offerings to better serve your remaining clients
• Nurturing relationships with your existing clients to generate more referrals
• Fine-tuning your marketing strategy to attract more high-net-worth clients to your firm

There’s a benefit for the client in this, too. A client who is no longer a good fit for your firm’s growth strategy can find an advisor who’s attuned to their needs and equipped to serve them.

Repapering can also ensure that your firm is compliant with all applicable regulations. Compliance violations can have serious consequences, including penalties and damage to your brand reputation, which could cost you clients.

Repapering Solutions for Financial Advisors

Repapering involves a substantial amount of paperwork, and it usually isn’t something you want to undertake alone. Luckily, technology platforms and repapering specialists offer solutions to help make the transition easier.

Which one to use can depend on why you’re repapering. For example, if you need to update client contracts for compliance purposes, you might look to an AI-driven platform for help.

Here’s how this solution typically works.

• You share the contracts that need to be updated, indicating what needs to be reviewed.
• AI reviews the documents to identify outdated provisions and generate new contracts, following the parameters you set.
• You share those contracts with clients and obtain signatures electronically.

If you’re moving to a new firm or going independent, a repapering specialist can offer end-to-end assistance. Repapering specialists do the heavy lifting, which includes:

• Reviewing all client contracts and documents to identify which areas require revision
• Updating client documentation and obtaining all required signatures, either electronically or by paper mail
• Transitioning client accounts to a new RIA custodian, if needed

Your role would be reduced to providing client data, reaching out to clients to notify them of the transition, answering any questions they might have about it, and sending completed documents to the repapering specialist. You’ll pay a fee to coordinate with a repapering specialist, but it could be well worth it if you don’t have the time or know-how to manage everything yourself.

If you’re interested in taking this route, do your research and compare repapering services to assess the range of services offered, the level of support provided and the fees you’ll pay.

Frequently Asked Questions (FAQs)

What Is a Repapering Specialist?

A repapering specialist is a professional who assists financial advisors and other entities with reviewing and updating client contracts. Working with a repapering specialist could help to streamline each step while ensuring regulatory compliance.

How Long Does Repapering Take?

Repapering can take a few weeks to a few months for most advisors. Several factors affect the speed of the repapering process, such as the number of clients you have, the number of accounts you manage per client, and whether you use tech tools or the services of a repapering specialist to move things along.

Bottom Line

Repapering is sometimes a necessary step if you want to grow a thriving practice or keep up with regulatory changes. Understanding what’s involved can remove some of the dread you might feel should you need to repaper client accounts.

Tips for Growing Your Advisory Business

• If you’re launching a new RIA you’ll need a solid marketing plan to acquire clients. Working with an advisor marketing platform can help you gain valuable exposure for your brand. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service that financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
• Should you decide to handle repapering without the help of a specialist, it’s important to familiarize yourself with federal and state laws governing the process. For example, you may want to brush up on the requirements for positive and negative consent letters in your state, as not all states permit their use. Each letter places a different burden on the recipient to provide their consent to contract changes.

Photo credit: ©iStock.com/champpixs, ©iStock.com/Petar Chernaev, ©iStock.com/shapecharge