In the complex world of selling a financial advice firm, the devil is in the details. One such detail that can shape the entire transition process is the concept of “reasonable endeavours.”
If you’re selling your firm or stepping in as the new adviser, understanding what this term means and its impact on client retention is essential for a smooth transition.
A word of caution: if you don’t take the time to define and agree on what “reasonable” looks like, the interpretation may end up entirely at the buyer’s discretion – and that can lead to some unpleasant surprises.
🔍 Defining “Reasonable Endeavours”
In UK contract law, “reasonable endeavours” means that a party must make genuine and fair attempts to meet an obligation without sacrificing its own commercial interests. It’s a middle ground between doing the bare minimum and going all-out. The phrase pops up in contracts involving client retention clauses, deferred payments, or post-sale support, and it’s critical to get it right.
A notable example is the Jet2.com Ltd v Blackpool Airport Ltd (2012) case. In this case, the court ruled that “reasonable endeavours” meant taking more than token actions but not going so far as to endanger the business. The outcome provided a clear benchmark: make a genuine effort, but not at the expense of the firm’s stability.
🤝 What “Reasonable Endeavours” Look Like in Client Retention
For sellers, this term can mean putting systems and processes in place to ensure client confidence as they transition to the new adviser. Here’s what reasonable efforts to communicate with and retain clients might involve:
✅ Consistent Communication Plan: Sending timely updates about the change in ownership, explaining what clients can expect, and introducing the incoming adviser team through emails, calls, or newsletters.
✅ Personal Introductions: Organising meetings between key clients and the new advisers, either face-to-face or virtually, to build initial trust and connection.
✅ Client Assurance: Reassuring clients that the level of service they are accustomed to will continue. This could mean offering joint meetings with the outgoing and incoming advisers for a defined period.
✅ Transition Plan: Developing a documented strategy that outlines how client data will be handed over and how relationships will be nurtured throughout the transition.
✅ Feedback Mechanism: Establishing a way for clients to provide feedback during the transition period and adjusting based on their input.
🔄 The Impact on Incoming Advisers
While “reasonable endeavours” sounds straightforward, it can mean different things depending on which side of the table you’re on. For incoming advisers, here’s what it usually means and the challenges that come with it:
✅ Building Trust: Incoming advisers need to work hard to quickly earn the trust of clients who may have longstanding relationships with their former adviser. This requires authentic communication, active listening, and demonstrating your competence.
✅ Balancing Expectations: What’s considered reasonable can vary. While the seller may think ongoing check-ins are sufficient, incoming advisers may feel stretched if they have to continuously support high-touch client interactions for too long.
✅ Workload Pressure: The transition period can be intensive. New advisers are expected to meet client retention goals while managing their regular workload. Too much reliance on them for “reasonable endeavours” without defined limits can lead to stress and burnout.
What Do Incoming Advisers Consider Reasonable?
From the incoming team’s point of view, “reasonable endeavours” often means:
✅ Phased Introductions: A clear plan where clients are introduced over time, with the outgoing adviser’s involvement gradually decreasing.
✅ Support with Legacy Knowledge: Access to the seller or their team for a reasonable period post-sale to tap into their knowledge about client history and preferences.
✅ Time-Bound Support: Defining the support period, typically three to six months, after which the new team should be self-sufficient.
🛡️ Aligning on Expectations to Minimise Friction
Clarity is everything when it comes to defining “reasonable endeavours” in a contract. Sellers and incoming advisers should:
✅ Be Specific: Lay out expected actions and timelines in the contract to reduce ambiguity.
✅ Agree on What’s Practical: Align on what is achievable for both sides, balancing client retention with the workload of the new team.
✅ Maintain Transparent Communication: Ensure that both parties understand what is expected, including any feedback loops and performance metrics.
Final Thoughts
“Reasonable endeavours” can be a double-edged sword. For sellers, it’s about setting up the incoming team for success while ensuring clients feel valued and secure. For incoming advisers, it’s about managing expectations and resources to build relationships effectively without being overburdened.
In the end, clear definitions, practical agreements, and transparent communication can turn “reasonable endeavours” from a vague clause into a practical strategy that benefits everyone.
