Wells Fargo recently announced a new recruiter incentive commission to any recruiters that refer advisors to Wells Fargo.
Wells Fargo recently announced a new recruiter incentive commission to any recruiters that refer advisors to Wells Fargo. Historically, the industry standard for a fee paid to a recruiter is typically 6% of the advisors trailing twelve months of production. Wells Fargo is offering an aggressive enhanced incentive of 10% to recruiters who are willing to introduce recruits to Wells Fargo.
Clearly, based on the message this new commission rate is telling, Wells is having a difficult time acquiring recruits. The most obvious reasoning is due to the almost daily waves of poor press they are receiving, including most recently the potential $1 billion fine for mortgage and auto business misdeeds. Wells Fargo’s own data shows a downward trend with 145 advisors departing the firm in the first quarter. Additionally, Wells Fargo total advisor head count is down 2% in the first quarter when compared to the same period last year. Moving firms is challenging enough without having to decide whether you want to move to a firm that has been routinely on the bad-side of news every day.
This effort to offer enhanced fees to recruiters suggests to me that even their competitive recruiting deals are not enough to persuade quality advisors to join Wells Fargo in any of their wealth management channels. In financial advisor commission terms, this new Wells Fargo 10% recruiting fee, as well as the actual Wells Fargo transition deal, is liken to the outdated and shunned upon B-Share mutual fund that came with a big upfront commission to the advisor, but years of backend penalties if the client decided to get out of the fund family. Don’t get B-Shared by a Wells Fargo recruiter. To make matters worse, if Wells continues to have attrition problems and a lack of new practices joining, leaving protocol could very well be on the table.
So, buyer “advisor” beware…step gingerly when working with a recruiter who’s trying to convince you why Wells Fargo is “the place to be”. Don’t be pressured or lured by a high-pressure recruiter offering an aggressive Wells transition deal when Wells’ success given its current practices is questionable. If the recruiter you are working with is only talking to you about Wells Fargo, you may now know why. It could very well be that their advice is being bought by Wells Fargo and may not be in your best interest. It could also be that the recruiter you’re working with only works with Wells so they simply don’t know any better, and the advice they’re giving you is not only skewed by a high commission, but also flawed due to the lack of competitive knowledge.
A recruiter, and a true consultant, will have the ability to, and should always, present several options that best meet an advisor’s goals. A true consultant will be able to introduce advisor clients to any number of firms, all of which generally pay the consultant the same amount. By working with this type of consultant you can be assured that the advice your receiving is unbiased, from a financial point of view, and based on a broader knowledge of the competition, more in-depth and sound.
A side note to recruiters . . . recruiters beware of your reputation. If the advisor is going to a firm where the probability of frustrations is high, that advisor may never trust you again. All too often we speak with advisors who are being “helped” by a recruiter that clearly has one agenda…. The B-Share. In a profession that prides itself on giving the right advice where commissions should be a secondary factor, it is obvious Wells Fargo leadership has again miscalculated what the right thing to do is by creating the wrong incentives. This is the same behavior that has gotten them in trouble in the first place, and leading to all the bad press.
As a financial services professional for over 20+ years, I have seen or worked with almost every type of advisor practice. Over time, I have developed biases towards certain firms because of what I witness or experience through my interactions with senior leadership, hear directly from advisors at those firms, from advisor who left a given firm, and other industry research that verify various observations. Based on many of these factors, we provide guidance and advice to advisor based on what we truly believe is the right direction for our clients. For this reason, we implore our clients to not hold back when we are talking about their hopes, dreams, and goals for their practice during a transition. Our advice is only as good as the information we have to work with. So don’t hold back on what your true goals are for a move in the short-term and the long-term. The more information you can provide us, the better our advice will be.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com.
Last week, UBS unveiled its Advice Advantage Platform, a service platform which allows customers to transact their business virtually with a human-assisted robo-advisor.
Last week, UBS unveiled its Advice Advantage Platform, a service platform which allows customers to transact their business virtually with a human-assisted robo-advisor. UBS’ platform is targeted at affluent investors with $10,000 or more. For a charge of 75 base points, UBS’s Advice Advantage gives customers real-time access to account analytics, goal tracking, and portfolio diagnostics, among others. The release of Advice Advantage at UBS was most recently preceded by the launch of similar human assisted robo-advisor technologies at Morgan Stanley, Wells Fargo, and Merrill Lynch.
These latest technology innovations have been highly anticipated and are gaining industry-wide support, particularly from the advisors themselves. Large advisor teams seek out wirehouses offering assisted client services technology as preferable partners given current industry trends. Robo-advisor or AI-advisor, as the media has dubbed them, benefit the advisor by allowing them to service high-wealth clients at a supreme level of efficiency while maintaining control of the client relationship.
With day-to-day tracking, reporting, and statistical analysis handled by the robo-advisor platform, the advisor’s time is freed up to focus on the most important tasks of achieving results for their clients, such as monitoring investments, assessing risk, and maintaining a successful product portfolio. This high-level of client service, information access, and account transparency drives the client-advisor relationship forward and offers the potential for growth through expansion of the business relationship in terms of portfolio size and service offerings.
Additionally, the time-efficiency benefits of robo-advisor technologies continues by affording advisors the schedule flexibility necessary to procure new clients and cultivate the necessary rapport with them. This benefit proves to be invaluable – and the one most favored by advisors – in that client acquisition and growth is the main contributor to an advisor achieving increased earnings in the present and shoring up additional earnings potential for the future.
Though the buzz words of “AI” and “Robo” make these technology platforms sound futuristic, nothing could be further from the truth. Advisor-assisted, client management and services platforms are simply an evolution of technology, readily available today, that when applied successfully makes the best operational sense at every level of a large firm’s organization – from the client who wants both customer service and results, to the advisor eager to manage and grow their book of business, to the C-suite executive who expects to see profit margins rise.
It’s surprisingly refreshing to watch a technology trend like this developing at the wirehouses and it will be interesting to see if large firms continue this forward-thinking path to the benefit of the client, the advisor, and themselves.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com.
An interesting statistic emerged recently from Cerulli Associates that states independent advisors will control more assets than wirehouse firms by 2020. This information comes as no surprise to our team here at Elite Consulting Partners
An interesting statistic emerged recently from Cerulli Associates that states independent advisors will control more assets than wirehouse firms by 2020. This information comes as no surprise to our team here at Elite Consulting Partners, as every day we see more and more advisors making the move to independence. However, it is in going beyond this statistic, understanding the advisor mindset, and the trending desire for independence that shows where the true story lies in what is driving the financial services industry today.
Large firms have made a decided shift in recent years away from a business structure focused on supporting their team of advisors. Instead these firms have aligned themselves with a philosophy based on churning revenues with little focus on how those revenues can best be achieved. This alienating of advisors at the outset created a subtle mindset shift which now has become a loud rallying cry within the financial services industry. Advisors are pushing back and have come to question whether their firm is providing the necessary resources needed to achieve their own personal success.
Key operational issues such as management support, technology, ease of compliance, client acquisition strategies, and customer service, monetization, and control are just some of the many notable reasons advisors are making the decision to leave large firm stability and become independent. Put simply, independence offers options and puts the advisor is in the driver seat to make the key decisions for themselves.
For example, an independent advisor can choose which companies to align themselves with, as well as what portfolio of products and services they wish to offer. An independent advisor sets the strategic tone for their office, both in terms of theory and practice, driving a business culture forward that attracts and retains their most desired clientele. Also, this strategic control offers gives the advisor the ability to maintain the oversight over their brand and image; thereby avoiding the seemingly daily negative headline risk posed at the wirehouses. An independent advisor can also select supportive technology platforms that align best with their business processes and streamline day-to-day activities to achieve optimal results for both the client and themselves. Additionally, going RIA has an end game upside in so much as an advisor can sell their practice for much larger multiples in an open market versus within a larger firm’s complex or region.
It is no wonder that an advisor, who by nature is both results-driven and entrepreneurial at heart, would be attracted to the flexibility and growth potential offered by independence. Though, it is important to note that while the trend to independence has already firmly taken root with the advisors themselves, large firms have failed to make the adjustments to retain their talent and set up necessary protections from the seismic shift headed their way as more and more advisors choose to leave and open-up shop for themselves.
The siren song of independence is calling advisors in financial services today, though it is the large firms – not the advisors – headed for the cliffs if they don’t heed the message.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com
‘Fasten your seat belts, it’s going to be a bumpy ride’, might best describe life at Morgan Stanley as last week ushered in another round of dramatic leadership shifts within the organization.
The Winds of Change Continue to Blow at Morgan Stanley with the Departure of Key Technology Team Leadership Personnel
‘Fasten your seat belts, it’s going to be a bumpy ride’, might best describe life at Morgan Stanley as last week ushered in another round of dramatic leadership shifts within the organization. Four top Morgan Stanley executives, with key oversite responsibilities for Morgan’s technology platforms and planning, each departed to assume leadership positions at Advizr, a notable financial technology firm offering proprietary planning systems aimed at streamlining and supporting advisor day-to-day responsibilities with cross platform customer management and lead generation technology tools. The transitions of these four top Morgan execs follows closely on the heels of the departure of Morgan’s head of Wealth Management and Technology to Rockefeller Capital Management earlier this month.
This latest round of Morgan technology leadership departures may be harbinger that Morgan is pulling the reigns on what these former tech team leaders felt was necessary to keep up with technology resources and maintain flexibility for future migration and innovations, while actively addressing the logistical and revenue generating needs of the advisors on the front lines.
The apparent sentiment of Morgan, as it relates to technology, poses faulty logic and should serve as an education to other wire-houses and regionals who have hung on to their outdated, albeit expensive, legacy technology systems. The fact is, advisors are seeking a technology wish list of an open architecture platform that uses non-proprietary CRMs, data aggregation, asset allocation, and portfolio rebalancing solutions.
In a day and age where clients, and advisors want instant access to all of their information some firms are finding themselves behind the technology curve. This seems to be the case in many of the top retail wealth management firms that insist on keeping the “back-door” closed to plug in newer, more robust, technology from third-party providers like E-Money, Black-Diamond, Orion, and Addepar, just to name a few.
Perhaps it’s a function of not having the money to keep up with their proprietary technology system, or simply the unwillingness to invest what’s required in today’s competitive landscape. Either way, these firms are being left in the dust by new FINTECH firms coming into the space almost daily. The one-two punches these firms are now starting to get hit with is felt in the real assets these firms have, and that is in the human capital behind their technology systems.
It begs the question, if the financial industry recognizes the importance of technology, as do the advisors themselves, why do large firms feel the need to limit themselves, and their teams, with a bundle of outdated technology systems and processes? Turning a blind eye to what makes an advisor successful is fool-hardy naivete and will result in a continued revolving door at Morgan and firms like it as advisors seek greener pastures where technology is a support to them, not a hinderance.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com.
We are pulling out of the protocol because we are going to put more resources back into supporting our advisors. This is the line, more or less, touted by firms like Morgan Stanley, UBS and Citigroup at the end of 2017 as they departed the Protocol for Broker Recruiting in favor of their own internal structures and incentives to retain advisors thinking of making a move.
That may have sounded convincing to some, but has little basis in reality. In particular, when it came to leaving the protocol, resources are most likely not even a real factor for these firms, as being part of that agreement in fact requires no real resources at all.
Simply put, firms that pulled out of the protocol did so for a single reason: self-preservation. Many of these firms fall squarely in the categories of past, present or future net losers of advisors, and so have a high probability of being net losers of client assets.
Firms leaving the protocol are using strong-arm tactics such as restraining orders and other legal entanglements as intimidation to retain advisors who have attempted to move in a new direction.
This strategy is nothing but negative. It reinforces the message that these firms are not operating in the best interest of their clients and advisors, and it perpetuates an ethos of hostility and disenfranchisement — leading, ultimately, to lackluster advisor performance.
These litigation threats and strong-arm tactics are already starting to have less bite as TRO requests either get rejected by the courts or withdrawn by non-protocol firms as shaky bets.
Meanwhile, non-protocol firms have begun to say they’re using internal resources to help advisors grow and acquire new assets.
For example, Morgan Stanley recently announced the formation of a 66-person group to attract and service ultra-high-net clients. But these types of services have been offered to Morgan Stanley’s ultra-high-net worth clients for many years, so I’m not sure how pulling out of protocol was necessary to this supposed innovation.
On the other hand, Merrill Lynch, as of right now still in the protocol, has recently announced the same type of program — though it too has been conducting this kind of business for years.
These launches may be good business-development ideas, either from in or outside the Protocol, but they won’t stop outflows as firms continue to lose large teams due to the firms’ attitude toward the advisor/client relationship as demonstrated by the threat of TROs.
In truth, the main engine for growth of these firms is acquiring advisors from other firms. That’s how it is in every industry. And right now, in this industry, all the real acquiring is going on with independent RIAs and independent broker-dealers, every day.
Hiring and recruiting advisors in the W2 world shouldn’t be viewed any differently. Firms need to look at advisor recruiting like M&A deals, because that’s what they’re really doing, and need to do for real long-term growth.
It’s my belief that once these firms see the real impact that leaving the protocol has on net asset flows, they will be left with no choice but to opt back in.
However, the challenge they will face from being out of the recruitment game for an extended period will show up as lost momentum and having to play catch-up. The only way they’ll be able to counter this will be to come to the market with aggressive deals again.
They will most likely begin by pitching these deals as “one-time, special deals,” and not at all a new departure. But in reality, they will continue selling these new deals until they start seeing positive net asset flows again.
The bottom line: these firms had a knee-jerk reaction to advisor attrition. But the message they’re sending is far worse than the benefit they thought they’d get from blocking the exits. The message is a short-minded view of the profession and gives advisors a glimpse of who the firms believe controls the client relationship.
The firms would have been better off simply to slow down recruiting, pay more attention to their existing advisors, be more selective about who they offer deals to, and make those deals more reasonable to their bottom lines (like any successful M&A transaction).
This reality is bearing down on the non-protocol firms with each TRO defeat. Eventually they will have to admit the fault in their strategy, face up to the fact that hamstringing advisors is never a solution, and go back into the protocol with the intent to look at the real sources of their internal profitability concerns — which can be found in the management suite and not in the advisor’s chair.
So here’s the real question: will non-protocol firms have the courage it takes to come back?
This edition of Industry Perspectives from Frank LaRosa is currently featured on Financial Advisor IQ: http://financialadvisoriq.com/c/1915204/219504/brokerage_firms_left_protocol_what_will_drive_them_back?referrer_module=issueHeadline&module_order=6
The recent news of Oppenheimer offering an independent channel to bolster its traditional wealth management business, by tasking Derek Bruton, the former head of LPL Financials National Sales team, may not have come as a big surprise.
The recent news of Oppenheimer offering an independent channel to bolster its traditional wealth management business, by tasking Derek Bruton, the former head of LPL Financials National Sales team, may not have come as a big surprise. In late 2017 it was rumored that Oppenheimer was making a play to acquire Hightower Advisors. This was the first sign that Oppenheimer wasn’t going to sit idly by as the industry changed around them. This news is also clear evidence of the appeal of the independent entrepreneurial model to financial advisors and wealth management professionals, and that retail firms need to better prepare for this new level of competition, and that doesn’t mean pulling out of protocol.
Oppenheimer’s decision to get into the independent arena is a calculated, creative, and prudent business strategy to retain Oppenheimer advisors while also seeking to attract wire-house, breakaway, and regional advisors who are seeking greater autonomy, higher payouts, open architecture, control of their own destiny, and, in the case of Oppenheimer, affiliation with a firm possessing a true Wall Street pedigree.
By combining the Oppenheimer full-service boutique wealth management model with an independent (potentially hybrid RIA) offering, Oppenheimer will achieve what the admirable resurrection(s) of E.F. Hutton, Robinson Stephenson, and others have failed to accomplish; to modify their business model for they become a thing of the past.
Oppenheimer has survived and now re-positioned itself after being in the crosshairs of the SEC and FINRA for the last several years. However, in order to be truly successful with their independent model, Oppenheimer will need to operate the independent channel as truly independent and not simply a “halfway house” to independence or “independence on training wheels” such as Wells Fargo Financial Network (“FiNet”) or their “Profit Formula” option, which is not as “Profitable” as the advisors might think.
We have all heard rumors, speculated, and even suggested that wire-house and regional firms (outside of Wells) would and should launch/build out an independent channel or affiliated RIA. These rumors quickly get shot down by many of the biggest firms for fear that there would be a mass exodus of their advisors to the new independent channel. However, Oppenheimer has had the foresight and business acumen to actually go in this direction before anyone else.
It remains to be seen whether Oppenheimer’s telegraphed entry into the independent financial advisory space is a “me too”, convoluted version of their full service captive model, if you can’t beat them join them, or an enduring commitment to their advisor workforce by rolling out an independent advisory model.
If the latter, then Oppenheimer’s Independent channel will be appealing to its existing advisors, as well as potential new advisors, due to Oppenheimer’s pedigree, attractive economics, their appeal to HNW/UHNW investors, access to Capital Markets, Investment Banking, and Family Office services. In this scenario, what once was old is now new, not me too, and true.
In the financial services industry, change is the only guarantee and evaluating your practice, for your sake and that of your clients, to truly address strengths and weakness is the only way to give yourself the ability to strategically plan for ongoing success.
In the financial services industry, change is the only guarantee and evaluating your practice, for your sake and that of your clients, to truly address strengths and weakness is the only way to give yourself the ability to strategically plan for ongoing success.
It doesn’t matter which type of firm you are currently with. Your firm could be owned by a third party, may be backed by a bank, could be supported by strategic partnerships, or operate as an independent. No matter what the conditions may be, the key questions you need to ask yourself about your firm and its operations will guide you to an understanding if it is now – or will continue to be – the right place for you and your career path.
First and foremost, evaluate the advisor head count at your firm and compare it to overall firm financial data such as total firm revenue, growth projections, scale, and merger and acquisition strategies. These statistics will not only give you insight into your firm’s stability now, but also offers clear guidance as to how aggressively your firm is positioning itself for future growth and revenue opportunities.
Another consideration is the corporate culture of your firm and your confidence in the products and services you are pitching to your clients. Workplace satisfaction is a key driver of advisor performance and should not be overlooked. To come to an understanding of your workplace perception, evaluate how the management team is structured and what the motivations driving the policies of management are. Additionally, you’ll want to honestly review the product and service offering supported by your firm and its place in the market now and in the future. Your visceral happiness with how the company operates and how confident you are that you are giving clients the best solutions possible will be easily identifiable upon these considerations.
Remaining on the cutting-edge of technology and using new and innovative protocols to increase advisor efficiency and performance is another important factor in aligning your firm’s place in the financial services industry, now and ongoing. Understand the technology infrastructure that is currently available at your firm and its scalability. Also, consider whether your firm provides adequate back office support and can manage multiple advisor affiliation channels. Is there an investment strategy that allows for implementation of new technology and resources? It is important to realize that a firm which spreads itself too thin and does not plan for technological advancement and migration cannot offer advisors ongoing growth potential or stability.
Whether your assessment of your firm’s strategies, direction, and future vision leads you to the conclusion that you are in the right place for your career path or to the understanding that it might be time to make a move – taking the hard look at the enterprise you are partnered with can be nothing but beneficial and provide the strategic enlightenment you need to plan for your personal growth and success.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com.
Working as an independent advisor is the career path you want to take but your concerns about turning independence from a goal to a reality are mounting. Do you have enough revenue to support such a move?
Working as an independent advisor is the career path you want to take but your concerns about turning independence from a goal to a reality are mounting. Do you have enough revenue to support such a move? What steps do you need to take to get started? How do you finance an office so you don’t have to work from home? Will running the office take away from your revenue producing activities? The fact is these concerns and more can be assuaged by choosing a Plug-N-Play office with an independent firm to chart your new path.
Many established boutique and large independent firms have offices that an independent advisor can move into without having to become a partner in the firm or practice. Although choosing this option might result in a slightly lower net payout than opening your own office, many times the overall financial benefit can actually be greater than if you chose to finance 100% of the support, technology, rent, and utilities it customarily takes to set up office space. This doesn’t even take into consideration the opportunity cost and time saved by not having to deal with the day to day issues of running the office. Quite simply, some advisors are just not cut out to handle the management side of running an office.
There are other strategic benefits to Plug-N-Play offices, beyond the financial ones, which also make the solution a compelling one for newly independent advisors. Advisors who don’t want to start from scratch when launching their business as an independent practice will appreciate the continuity of an office environment and resources a Plug-N-Play office will provide. Additionally, the mental transition of leaving a retail/W-2 model is smoother and easier when you are simply dropping in to an existing office where the computers are working, phones are hooked up, systems are operational, the scanner and printers work, and the office is simply up and running.
Even better, Plug-N-Play office locations offer flexibility. An advisor can always secure their own office space at a later date when they become more confident – and financially stable – in their role as an independent advisor practice.
So, don’t let misgivings about office space expenses and the hassles of running an offer deter you from seizing the opportunities of independence. Plug into your future now by using Plug-In-Play independent office opportunity.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com.
Just as diversification is important to a portfolio, diversification in the types of advisors at a firm is equally important. While the industry is showing a decided shift to fee-based business or what is often considered “plain vanilla or packaged product offerings”, the fact is that commission business, investment banking, capital markets, and private placement business is not dead.
Moorestown, NJ – Just as diversification is important to a portfolio, diversification in the types of advisors at a firm is equally important. While the industry is showing a decided shift to fee-based business or what is often considered “plain vanilla or packaged product offerings”, the fact is that commission business, investment banking, capital markets, and private placement business is not dead. Old School/transactional advisors skilled in these types of products and services have a place in both wire-house, boutique regional firms, and independent broker-dealers who recognize the strategic advantages that make these types of products and services an integral part of their firm’s success.
Taking a look at today’s financial climate, many regulators would argue that placing clients in a fee-based account when they do not frequently trade or re-allocate their funds could be considered “reverse churning” on the part of the advisor. In other words, some clients will best benefit financially from being charged commission versus an annual AUM-based fee.
Recognizing this, larger firms and boutique firms from Manhattan, Boston, and Philadelphia to Southern Florida, Dallas, and Los Angeles have created a portfolio of product solutions that isn’t one size fits all but takes fee-based and packaged offerings and layers it with complimentary and diversifying transactional business to provide the best individual results for clients.
These firms have embraced the old school advisor as an essential part of their team and have made it a point to understand the mentality of a seasoned advisor, integrating their skill set and offerings a breadth of transactional services such as investment banking, syndicate, and private company access. In some cases, new wealth management boutiques have taken this hybrid transactional and fee-based approach a step further and have continued to offer and support C shares, broader VA options, investment banking, equity option overlay strategies, and capital markets business.
The fact is that these diversified offerings, whether at a large firm or small boutique firm, are exceptionally attractive to certain client segments – particularly wealthier or higher net worth clients. Wealthier clients crave access to first-mover private company capital raises, laddered municipal bond strategies, and equity/debt syndicate flow. They will seek out firms with the ability to provide both dynamic – and highly lucrative – investment banking deal flow executed by advisors with the acumen and expertise to drive results.
Whether you are at a boutique-style or large firm, best positioning yourself in today’s financial services market requires taking a hard look at your company, its product and services, package, fee structure, and the types of clients you wish to attract. It just may be that going “old school” from time to time is the change in dynamic needed to take your practice to the next level of achievement, growth, and success.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com.
You are intrigued by the prospect of going off on your own as an RIA, Hybrid, or Independent.
Just Because Your Friends Are Doing It Doesn’t Mean You Should Too . . . When Not to Go RIA, Hybrid, or Independent
Moorestown, NJ – You are intrigued by the prospect of going off on your own as an RIA, Hybrid, or Independent. Friends of yours in the industry have made the jump, are happy with their decision, and have shared with you the benefits they have experienced professionally, financially, and personally. But, how do you know the decision to make a transition is right for you? The fact is not everyone should go RIA, Hybrid, or Independent and there are a variety of reasons why.
From a professional standpoint, some advisors simply perform better in a more conformed retail environment. Running your own business requires a specific skill set and the management of day-to-day operations puts you in the position of “Chief Cook and Bottle Washer”, increasing both your responsibilities and restrictions on your time. You may discover you are better suited to and more successful when leaving those details to a larger retail firm and focusing solely on client-based activities.
From a financial perspective, the upside may not be as great as you think and requires a bit of evaluation as well. Certain types of practices simply do not benefit from the economic positive that you might expect when choosing to go RIA, Hybrid, or Independent. For example, advisors who rely on SMA managers for their asset management will find that it is more expensive to operate as an independent firm versus working as part of a wire-house or regional enterprise. Additionally, there are advisors who perform their job better utilizing the resources offered at a larger firm. The loss of those resources would likely result in a negative to their individual cash flow, making the cost of making a move unfeasible.
On a personal level, take a fair and honest assessment of where you are in your life and career and sincerely think through the impact of making a RIA, Hybrid, or Independent transition. For some, a smaller regional firm or a quasi-independent firm would offer the culture, freedom, and benefits they are seeking without necessarily making the jump to RIA, Hybrid, or Independent status. Also, going RIA, Hybrid, or Independent requires a wait for the higher NET payout opportunity cost of foregoing the large upfront check – on average about 5-6 years. As such, there are times when the immediate financial and personal needs of an advisor – perhaps paying for a child’s education or wedding – require the “big” check available today at a retail firm.
Understanding your capabilities and how to best put them to use for your success is important and that often means knowing when to say ‘No’ to something. Not every individual is cut out for going RIA, Hybrid, or Independent and that’s nothing to be ashamed of. Clearly and honestly evaluating yourself and your professional opportunities will most certainly lead you to the right decision in the end.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com.
As a young producer back in 1999, I successfully moved 90% of my clients from Prudential Securities to Smith Barney without violating any rules or regulations. Now, fast forward to 2004 when protocol came into play.
The Protocol Afterlife – It’s All About Preparation and Execution
Moorestown, NJ – As a young producer back in 1999, I successfully moved 90% of my clients from Prudential Securities to Smith Barney without violating any rules or regulations. Now, fast forward to 2004 when protocol came into play. It might seem as though leaving protocol would create roadblocks to advisors looking to move from one firm to another, but that is simply not the case. I have recruited advisors prior to broker-protocol and post broker-protocol, and not much has changed. Whether you are considering leaving a non-protocol or a protocol firm, the move can be successful if you are strategic throughout the process and follow a few key steps.
It’s important that you know the rules and follow them when leaving a non-protocol firm. One important consideration is what you can and cannot say to clients prior to making the move. This can cover everything from whether the client is happy with the firm and its pricing structure, whether you feel the current firm is hampering your professional growth and ability to service your clients, or whether or not you or client feel the firm is trying to direct or control the client relationship, as well as whether you can give the client your contact information or provide them with instructions on how to handle the situation when they call your office and you have moved on to a new position.
The other key consideration is your resignation and the move itself. Prior to your departure, under no circumstances should you modify or edit client accounts or files. You will not be able to take any client documents with you, so be prepared to begin making calls to your clients as soon as you leave your prior position to alert them to your choice of a new firm. If a client wishes to move with you, they can request that directly, and send a letter or paperwork to your old firm requesting the appropriate transfers. There is no temporary restraining order (TRO) that would ever prevent a client from moving their accounts to any other firm of their choosing, with your or without you. Finally, keep the resignation itself short, sweet, and without elaboration.
One final piece of advice for consideration – in November of last year Morgan Stanley chose to leave protocol completely to impose greater restraints on advisors considering the jump to another firm – a move which was quickly duplicated in January of this year by Citi and UBS. Morgan Stanley, in particular, has levied the threat of TROs against advisors choosing to move to another firm and subsequently contacting former clients. The fact is, these restraining orders hold no water if the clients are already speaking with you by the time the TRO is authorized, and should not deter you from making a move. Not only have they been soundly defeated in court, such as the case a few weeks ago where former Morgan brokers now with Ameriprise won a court battle with Morgan when a judge denied requests for temporary restraining orders against their practice, but this extreme reaction on the part of Morgan and other firms shows their true colors when it comes to the handling of advisor-client relationships.
In the end, be bold in your decision to make a firm transition. Follow the appropriate procedures and regulations and you can be confident that no firm, no matter how large or how scary their insinuated threat, can prevent you from making a move to a new firm that benefits your business and benefits your customer.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.ercadvisors.com.
Industry Trends Point to Larger Retail Firm Concerns About Advisors Going Independent
It is not uncommon to hear, on a daily basis, the news of significant multimillion-dollar advisor teams leaving one of the large retail houses to embrace the benefits of going independent.
Industry Trends Point to Larger Retail Firm Concerns About Advisors Going Independent
Moorestown, NJ – It is not uncommon to hear, on a daily basis, the news of significant multimillion-dollar advisor teams leaving one of the large retail houses to embrace the benefits of going independent. The perks of working as an independent with the right industry partner are certainly attractive when you consider the autonomy, increased income potential, compliance benefits, open architecture, and flexibility in perspective related to managerial support or lack thereof.
It’s no wonder then, with so many advisors looking at transition options, that we are witnessing a shift in thinking on the part of the large retail houses as they scramble to find a way to preserve their firms in an integral way by keeping their employees happy and committed to a future with the company.
A recent example of this trend is occurring at Wells Fargo, where existing company policy has undergone a radical shift and new procedures have been put in place to create an attractive model for advisors to move internally from the retail-side to the independent-side of the enterprise. To put this policy into practice in a way that is attractive to the advisors themselves, Wells Fargo has chosen to waive fees for a two-year term that an advisor making the transition would normally pay, ensuring the immediate financial benefit of the move is an attractive one.
Ultimately, although forgoing the residual income generated from fees, Wells Fargo puts themselves in a better financial situation overall with this new strategy as the loss of fee income is not as great to their bottom line as losing the advisors themselves or incurring the cost to recruit new advisors into the firm.
Perhaps, Wells Fargo’s creative policy maneuvering to preserve their advisor head count shows that they recognize their advisor’s discontent and are actively pursuing ways to modify their internal process to reduce their advisor attrition while still addressing their own needs for self-preservation.
In the end, though, while commendable these policies still do not solve core issues prompting advisor moves – most important among them the requirement of a three-year commitment to the firm, the lack of intellectual freedom to service clients, inferior technological resources, and an inflexible and unsupportive management and compliance structure.
For more information on Elite Consulting Partners, their complete suite of services, and most recent projects, visit www.ercadvisors.com.
Elite Consulting Partners Leads Transition of $1.1 Million Dollar Team from Wells Fargo FINET to Raymond James
Elite Consulting Partners, a national leader in financial services industry recruiting and transition management, is pleased to congratulate their client, Longview Wealth Solutions on their move from Wells Fargo/FINET to Raymond James effective January 17, 2018. Elite Consulting Partners handled all aspects of the transition of the $1.4 million-dollar Longview Wealth Solutions team and was pleased to put its company-wide skill set of customer-centric recruiting and transition management to work to find an ideal fit which matched Longview Wealth Solutions strategic and operational vision.
“Our most recent team transition is representative of an emerging trend in financial services whereby advisors are seeking a partner firm with the management support, independent thinking philosophy, compliance structure, better economics, and flexibility to allow them to service their client’s interests in the most efficient, successful, and service-oriented manner possible,” expresses Frank LaRosa, owner and founder of Elite Consulting Partners.
LaRosa continues, “In regards to Wells Fargo/FINET and the Profit Formula model, we are hearing directly from the advisors themselves that the ineffective leadership, compliance, operational issues, cost structure, and continued poor press have driven the advisor’s decision to leave and seek a better professional environment.”
Elite Consulting Partners is a national transition consultant, advisor practice management, and business consulting firm with a reputation for delivering superior advice and guidance to clients. Elite Consulting Partners offer unparalleled service, unbiased advice, and expert guidance to both advisor and corporate clients.
For more information on Elite Consulting Partners, their complete suite of services, and most recent projects, visit www.ercadvisors.com.
UBS recruited a team from Morgan Stanley that managed approximately $378 million in client assets, a spokesman confirmed.
UBS recruited a team from Morgan Stanley that managed approximately $378 million in client assets, a spokesman confirmed. This marks one of UBS’s newest hires since the firm unveiled sweeping changes to its comp plan.
In June, Tom Naratil, president of UBS Wealth Management Americas, revealed major changes to the wirehouse: a 40% cut to recruiting, more resources for advisers already at the firm and a simplified compensation plan for 2017. That latter move was somewhat unusual as the wirehouses typically release the coming year’s comp plan in November or December.
“We’re clearly moving money from column A to column B,” Naratil told On Wall Street in an June interview. “We are moving money that we would have paid to people to come here to people who are already here.”
In 2015, more advisors than ever are going independent.
A report from the Aite Group shows that independent houses have grown 110%, as opposed
In 2015, more advisors than ever are going independent.
A report from the Aite Group shows that independent houses have grown 110%, as opposed to the 15% growth of wire-houses. By 2018, independent channels are projected to take over the wirehouse channels, who will represent 31.3% of wealth assets rather than 41.3% in 2007.
The exodus of financial advisors from wirehouses can be equated to the deteriorating wire-house culture, which is known to serve the financial needs of the corporation rather than the needs of the clients. Culture, in the words of William C. Dudley, President of the Federal Reserve Bank of New York, is the “implicit norms that guide behavior in the absence of regulations or compliance rules”. He cited the importance of banking culture during a speech at the Workshop on ‘Reforming Culture and Behavior in the Financial Service Industry’. Culture, he says, exists in every firm, reflecting the behavior, morality, and mindset of both advisors and management.
The ‘culture’ of a firm remains to be one of the chief complaints of the moving financial advisor, and out of the biggest wirehouses, Wells Fargo continues to be one of the biggest offenders.
This could be equated to the acquiring of Wachovia during the 2008 financial crisis. An immediate culture clash occurred when a new group of employees and management entered the firm, along with the beefing up of the investment banking unit. The growth of Wells Fargo placed them in top ranks among the other big banks, where competition for high sales and revenue takes priority over the servicing of clients. The culture between the bank-minded senior management and client-serving advisors clash, causing many advisors within Wells Fargo to be unhappy. “The problems originate from the culture of the firms,” said Dudley, “And this culture is largely shaped by the firms’ leadership.”
Like a cancer spreading through the body, the culture of the leaders spreads through to mid-level and lower management, even oppressive home office support staff, not simply existing as a ‘top problem’ but permeating throughout all branches of the bank, including branches like the Private Client Group, and even Wells Fargo’s own independent branch, FiNet. Recently, a fiduciary team left Wells Fargo to form Berkely Capital Partners, a firm managing more than $400 million. They’ve expressed that FiNet, even as an independent branch, placed restrictions and limitations that made it difficult to manage money.
As with many bigger banks, daily, monthly, or annual quotas are set in place and must be met by the financial advisors and branch managers. An L.A Times article by E. Scott Reckard cites the ‘Wells Fargo pressure-cooker sales culture’, and consults with several Wells Fargo advisors and branch managers on their experience. Rita Murillo, a Wells Fargo branch manager, spoke about her experience with the firm’s overbearing sales culture. Any employee failing to meet their quota may be required to work unpaid overtime, or on weekends. Many advisors have quoted on feeling ‘trapped’ or ‘oppressed’ by the strict policies and quotas that Wells Fargo implements.
In order to perform to standard, Erick Estrada, a former Wells Fargo personal banker, cited that many branch managers forced unnecessary products onto clients in order to reach their sales goals or opened up multiple accounts.
“High-powered pay incentives linked to short-term profits, combined with a flexible and fluid job market, have also contributed to a lessening of firm loyalty … in an effort to generate larger bonuses,” said Dudley.
The Wall Street Journal recently reported that the cross-selling practices of Wells Fargo are currently under investigation. A lawsuit in May claimed that Wells Fargo employees had mislead customers into purchasing unwanted products, including opening multiple accounts without their permission. Wells Fargo employees from several states have claimed that the high hourly quotas pressured them into fraudulent action.
To top it off, Wells Fargo makes it difficult for financial advisors to potentially move or ensure control over their own practice. The clients belong to the bank rather than the advisor, and if the advisor tries to leave and continue his/her practice elsewhere, the bank will attempt to retain the clients. They make it difficult for the advisor to move his/her practice elsewhere, but also create retention bonuses that can be obtained the longer the advisor stays. This deferred compensation program does not exist for the benefit of the advisor but for the security of the bank. The longer the advisor stays, the harder and more costly it becomes for advisors to leave.
Two of my clients had issues with this culture clash at Wells Fargo. One client had sent in an already pre-approved letter only to endure the compliance department trying to ‘re-approve’ the letter. Another client was trying to make an investment for his client, but kept receiving different answers to the same question from the annuity department with every call that he made. When he finally tried to call and ask for clarification, the correspondent could not respond accordingly and simply and hung up on him.
Throughout this, some of the biggest advisors continue to go independent rather than continuing to tie themselves to an oppressive wirehouse culture. The freedom, flexibility and control that comes with an independent practice shifts the continual move of the big-name advisors away from Wells Fargo, including from their own independent arm, FiNet, where many feel the same oppression. The independent-minded advisors continue their practice with the client in mind, and are free to own their books and their business without the interference of a leeching wirehouse.
The numbers of fleeing advisors, the rise in independents, and the growing resentment for a deteriorating culture could initiate change and reassembling within Wells Fargo. However, change must start from the top in order for it to be fully effective.
“Correcting this problem must start with senior leadership of the firm. The ‘tone at the top’ and the example that senior leaders set is critical to an institution’s culture—it largely determines the ‘quality of the barrel’,” said Dudley, commenting on the way to improve bank culture, “Senior leaders must take responsibility for the solution and communicate frequently, credibly and consistently about the importance of culture. Boards of directors have a critical role to play in setting the tone and holding senior leaders accountable for delivering sustainable change. A healthy culture must be carefully nurtured for it to have any chance of becoming self-sustaining.”
But, perhaps, before any change could be seen, a full transfusion would first be required.
NEW YORK (Reuters) – U.S. investment bank and brokerage firm Raymond James Financial expects 2014 to be its best
NEW YORK (Reuters) – U.S. investment bank and brokerage firm Raymond James Financial expects 2014 to be its best recruiting year since the global financial crisis, at a time when top brokers are reluctant to change jobs, a senior executive at the firm said.
Tash Elwyn, president of Raymond James & Associates Private Client Group, said he expects to hire more advisers with a strong track record of generating revenue in 2014 than any time in the last five years. However, the firm may not end the year with more net new advisers than in 2013.
“We are well on pace for the best recruiting year ever, with the exception of 2008-2009, which was an anomaly,” said Elwyn, who oversees the branch-based arm of the parent brokerage firm Raymond James Financial, in an interview on Wednesday.
Raymond James’ roughly 6,200 financial advisers manage $462 billion in assets, in its traditional retail branches as well as broker-dealer offices that are owned by independent contractors.
In 2008 and 2009, when the financial crisis drove many advisers to take their clients and move, the firm attracted hundreds of brokers away from the industry’s four largest firms, Morgan Stanley, Bank of America Corp’s Merrill Lynch unit, Wells Fargo Advisors and UBS AG’s U.S. Wealth Management Americas.
A Raymond James spokeswoman declined to specify hiring numbers for 2008 and 2009.
For the first time since then, Elwyn said he expects an increase, of 50 percent this year over 2013, in the amount of trailing-12-months’ revenue produced by new hires.
Raymond James this year has hired at least 28 new financial advisers, who produced about $40.4 million in trailing-12-months’ revenue at their previous firms. In 2013 its 60 new financial advisers had about $30.4 million of revenue for the comparable period.
This year’s new advisers come from all top four U.S. brokerages as well as independent broker dealers and registered investment advisers, Reuters data show.
“They have a big recruiting sales force and they’re aggressive,” said Frank LaRosa, a former complex director for Morgan Stanley who heads Elite Recruiting & Consulting and has recruited advisers for Raymond James.
Raymond James offers signing bonuses for advisers hired to its retail branch that are in line with the industry and which top out near 150 percent of an adviser’s trailing-12-months’ revenue.
Unlike many other competitors, Raymond James allows its advisers to take their book of clients with them when they leave the firm.
The pace of adviser movement into and out of wirehouses picked up at the beginning of this year, compared with a slow 2012,
The pace of adviser movement into and out of wirehouses picked up at the beginning of this year, compared with a slow 2012, recruiters report. But advisers now appear to be in lock-down mode in the lead-up to tax-filing season.
“There’s a lull in the recruiting market now because we’re within a month of the tax-filing deadline,” said Frank LaRosa, chief executive of Elite Recruiting and Consulting.
With investors needing documentation from their brokerage firms to file their tax returns, an adviser’s moving prior to the filing deadline could cause some headaches for clients. “[Brokers] don’t want to give [clients] another reason not to follow them to a new firm,” Mr. LaRosa said.
NOT TILL AFTER APRIL 15
Danny Sarch, president of Leitner Sarch Consultants Ltd., agrees that the looming tax deadline is likely keeping on the sidelines any advisers contemplating a move. “Anytime an adviser moves, they’re putting their clients through a lot, and it’s awkward for them to make the move when clients have a lot of stuff going on.”
Mr. LaRosa is hopeful that the pace of movement in the industry will pick up after April 15. “A lot of big teams have their fingers on the trigger,” he said. “I think we’ll see a lot of movement in May.”
The week of Memorial Day is traditionally an active one for advisers making moves to new firms.
Another catalyst this year could be the recruiting bonus disclosure rule proposed by the Financial Industry Regulatory Authority Inc. If the rule is passed, it probably will be implemented next year. That might convince some advisers considering a move to act sooner rather than later.
“I still question whether [the bonus disclosure] will affect recruiting deals, but some advisers may want to move before it hits,” Mr. Sarch said.
The pace of adviser movement into and out of the wirehouses picked up at the beginning of this year compared to a slow 2012,
The pace of adviser movement into and out of the wirehouses picked up at the beginning of this year compared to a slow 2012, say recruiters. But advisers now appear to be in lock-down mode in the lead up to the tax filing season.
“There’s a lull in the recruiting market now because we’re within a month of the tax filing deadline,” said Frank LaRosa, chief executive of Elite Recruiting and Consulting.
With investors needing documentation from their brokerage firms to file their tax returns, an adviser moving prior to the filing deadline could cause some headaches for clients.…
The two heavyweights of the wirehouse world are going toe-to-toe.
Bank of America Merrill Lynch and Morgan Stanley Wealth Management
The two heavyweights of the wirehouse world are going toe-to-toe.
Bank of America Merrill Lynch and Morgan Stanley Wealth Management, the two largest wealth managers in the country, appear intent on taking advantage of each other’s weaknesses and embarrassments to lure away top financial advisers.
“The weak attract the attention of the strong. Retail brokerage has a Darwinian dynamic,” said recruiter Danny Sarch, president of Leitner Sarch Consultants Ltd.
“The slowest in the pack get eaten,” he said. “If you have a group that is vulnerable, others…
The two heavyweights of the wirehouse world are going toe-to-toe.
Bank of America Merrill Lynch and Morgan Stanley Wealth Management,
The two heavyweights of the wirehouse world are going toe-to-toe.
Bank of America Merrill Lynch and Morgan Stanley Wealth Management, the two largest wealth managers in the country, appear intent on taking advantage of each other’s weaknesses and embarrassments to lure away top financial advisers.
“The weak attract the attention of the strong,” said recruiter Danny Sarch, president of Leitner Sarch Consultants. “Retail brokerage has a Darwinian dynamic. The slowest in the pack get eaten. If you have a group that is vulnerable, others will look to take them down.” …
Morgan Stanley was widely seen as the winner in the deal announced last week to purchase Citigroup Inc.’s stake in Morgan
Morgan Stanley was widely seen as the winner in the deal announced last week to purchase Citigroup Inc.’s stake in Morgan Stanley Smith Barney LLC. But the company could end up on the losing side of its longer-term challenge: Expanding the retail-brokerage business.
Problems with MSSB’s technology platform pose the immediate challenge, but brokers and other observers say the bigger issue is a culture clash that has left legacy Smith Barney reps feeling demoralized, as well as continuing cost-cutting that could cause more of the firm’s brokers to jump ship.
One former Smith Barney broker,…