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The acquisition will expand the already substantial depth of financial services strategic and transition consulting capabilities available at Elite Consulting Partners.

Moorestown, NJ – Today, Elite Consulting Partners, a national financial services industry transition and strategic consulting specialty firm, announced their acquisition of the New Jersey-based firm National Advisor Solutions. This acquisition is one more step in the strategic expansion of Elite Consulting Partners, one of the nation’s top financial services recruiting service companies. Celebrated for their advisor-first approach to transition consulting, Elite Consulting Partners offers financial services industry professionals insightful and strategic guidance, achieving for each advisor a transition to the firm most in  alignment with both their needs and their goals.

As stated by Elite Consulting Partners Founder and CEO, Frank LaRosa, “For years, we’ve focused on building the best possible experience for financial advisors and their teams when considering changing firms. With the acquisition, of National Advisor Solutions, we are able to expand our already talented team of transition consultants with the added value of existing relationships.”

David Pestrichello, owner of National Advisor Solutions, expresses, “I am extremely excited to become a part of Elite Consulting Partners and their service driven culture.  The market for transitioning advisors is an extremely diligent, detail-oriented undertaking. With today’s financial advisors expecting more and more unique broker dealer solutions which cater to their demanding client base, it’s has become more important than ever for them to work with a leading consulting firm. Elite Consulting Partners is a firm with the expansive industry relationships, broad reach, and depth of knowledge to provide such service. I look forward to the future as a part of their industry-leading team.”

Elite Consulting Partners team of expert transition consulting professionals services the lower 48 states, with offices in the Northeast, Midwest, and Southeast. Currently, the company is exploring further expansion opportunities on the West Coast including, in specific, California and Arizona office locations. Full roll-out of the Elite Consulting Partners strategic expansion strategy is anticipated to be complete by the end of 2020.

For more information on Elite Consulting Partners, visit www.ercadvisors.com or call 856-316-4651.

Rumors have been swirling throughout the industry that UBS may be considering the launch of an RIA platform. Though speculative in nature at this point, the prospect is certainly an interesting one and most certainly one I applaud if true.

In fact, while on the panel for the “Advisor Transitions” session at the 2018 AdvisorHub Conference, I was asked a question about which wire-house firm, currently without an independent option, did I foresee rolling out such a program.  My answer was simple, UBS, a firm which has consistently shown it views its advisors as mission-critical to overall success. UBS has distinguished themselves among other wire-houses by offering many of the same attributes as independent channels within the security of the W-2 environment that is appealing to many an advisor. Even when larger UBS teams have chosen to leave the firm, it is not for another wire-house but rather an RIA or independent firm, as was the case with the most recent move announced by former UBS advisors Daniel A. Conners and Michael P. Crawford, a $2 million team who left to form RIA enTrust Wealth Advisors in San Diego, CA. Further, UBS has displayed a forward-thinking business philosophy by allowing their advisors to be ‘free-thinkers’ when delivering services to their clients.

No specific details of a UBS RIA platform have been released or officially announced, which leaves many questions, similar to those raised when Wells Fargo announced their RIA platform. What will the minimums be if UBS does rolls out a program and how will brokerage business be handled? Will advisors need to give up their deferred compensation? How will branding and marketing be handled? Will advisors be able to operate within the existing branch system or need to secure their own space? Will UBS utilize their own RIA custodial platform? Interestingly, unlike the Wells RIA announcement, there are no whispers of UBS offering a “test market” or allowing current UBS advisors the ability to operate as a RIA. This seems to indicate, at least on the surface, that UBS is considering entering the RIA custody business rather than just offering another “channel”.

Choosing to launch an RIA platform would illustrate that UBS recognizes attrition, particularly on the higher end, is of top concern. While a step in the right direction, an RIA option alone will not be enough to combat this issue and so it is foreseeable that UBS will make other strategic plays.  As such, I continue to believe that UBS will quietly come back into the recruiting fray in search of top advisors. In addition, I think UBS will also realize that not being in protocol will – and is- hindering their recruiting efforts. UBS pulled out of protocol because they thought it would slow down recruiting. Perhaps this was true and recruiting has slowed somewhat though, on the flip-side, we will never know who might have left if UBS were to have stayed in protocol. One thing is certain; however, and that is advisors definitely don’t want to join UBS simply because they’re not in protocol. I have had conversations with transitioning advisors, who express a great deal of interest in UBS, only to move forward with choosing another firm because UBS is not in protocol. There is a comfort level with advisors when it comes to protocol and, without addressing this issue head-on, UBS can expect more of the same to continue when it comes to their recruiting efforts.

In terms of firm culture, UBS has stood out among other wirehouses by being supportive of its advisors who are looking to grow their wealth management businesses. Unlike many other wire-house firms, UBS gives their managers a great deal of autonomy when operating their local branches, allowing them to function like independent businesses based on the personality of their given market. This philosophy is further reflected in UBS branding, with UBS financial advisors running their own commercials geared towards the benefits of their individual practices and not just UBS as a company. This type of marketing is a testament to the fact that UBS allows its advisors to think outside the box and UBS senior management should be confident that this, and other advisor-focused efforts within the firm, will have the desired long-term effect in shoring up their industry position and assuring success for their business as a whole.

UBS has achieved solid footing within the industry and has what certainly seems to be a firm grasp on the needs of its advisors, and so its potential offering of an RIA platform could be a ‘drop the mic’ moment for the company. While the details may still be unknown, what most certainly is not is UBS’ commitment to their advisors that they will do what is required in financial services today for success – analyze, pivot, and change – or else run the risk of finding yourself left in the dust.

Elite Consulting Partners Founder & CEO, Frank LaRosa, quoted in a FinancialAdvisorIQ article discussing advisor movement.

Read Elite Consulting Partners Founder & CEO Frank LaRosa’s latest Voices column in Financial Planning,

LPL goes on a charm offensive. Will it work?

As seen on Advisor Hub.

Genstar Capital made news last week as reports surfaced the company is in active talks to secure a majority interest in Advisor Group from Lightyear. As of a late, Genstar has become a major player on the financial services acquisition playing field, only four months ago acquiring Cetera Financial Group for $1.72 billion dollars.

The acquisition as strategic growth strategy has proven to be, in my opinion, one of the most assured plays in financial services for shoring up market position and quickly establishing market dominance. In fact, we future-forecasted Genstar’s acquisition of Cetera in May of 2018 with an article in Financial Planning. What was true then holds true now. With any acquisition strategy, the process must be thoughtful, the business operations ramifications calculated, and the vision of the desired end result assured.

There’s a reason private equity is coming into the independent financial service space. It’s profitable and there’s a great deal of upside for those in it. As private equity pours more money into the financial services space – and specifically the independent/RIA space – these types of acquisitions will continue to make independence a bigger and bigger threat to the retail and wirehouse model.  Transactions such as this put advisors at the focal point in order to make these deals successful.  In turn, firms will need to stay competitive to successfully retain advisors and their clients. It can be assured firms and their evolution will continue through improved technology, services, pricing, compliance, and culture, among others, and that these improvements will only make it better and better for both financial advisors and their clients. Further, it only follows that these improvements and offerings will make independent firms even more appealing to financial advisors than they have already proved to be. Barring a dramatic philosophical shift, wirehouse and retail firms such as Wells Fargo and Morgan Stanley can expect the growing strength of the independent model to result in continued attrition within their own firms as the exodus of large teams moving away from them and into the independent arena shows no signs of ceasing.

In the case of Genstar and the proposed acquisition to assume the majority position in Advisor Group, the acquisition itself would be a smooth road to market leadership as its upside is not only in the majority interest in Advisor Group but in what it represents for strategic leverage in the future. Scenarios being speculated upon by industry insiders and the media include among them Lightyear’s remaining position in Advisor Group converting into shares of Cetera’s parent holding company and Genstar combining operations of its two acquisitions resulting in an IBD network of near equal market position to long-time leader LPL Financial.

Further, regardless of scenario, the story in the numbers being reported show strong positives to Genstar were the acquisition of Advisor Group come to pass. In the IBD arena, Genstar’s combined assets would have an estimated 16,000 advisors leading the charge to a projected $3.6 billion in revenues. By merging Advisor Group’s four broker dealers and Cetera’s six, Genstar could eliminate up to $100 million in debt. Additionally, with the proposed discussions between Genstar and Lightyear assuming an acquisition price of 10-times EBITA, near the same metric as the Genstar acquisition of Cetera, a similar financial benefit is feasible. The $1.72 billion acquisition price of Cetera resulted in $171 million EBITA for Genstar.

The acquisition upside of Advisor Group to Genstar continues when looking at business operations themselves. Advisor Group’s most desirable attribute is its Wealth Management technology platform. Arguably one of the most robust platforms in the industry, Wealth Management is a direct reflection of Advisor Group’s consistent and insightful investment in emerging technology. A Genstar acquisition of Advisor Group would give them the keys to the Wealth Management kingdom, immediately pushing them to the forefront of financial services technology and filling a much needed gap in their overall business model, where up until recently, technology has taken a back seat to other interests and investments.  With Cetera’s recent and continuing improvement to their technology platform, picking up some of the advanced technology Advisor Group has, could catapult them to the front of the line with independent broker-dealer technology platforms.

Ultimately, the proposed Genstar acquisition of Advisor Group, while still theoretical in nature, is a smart power move regardless of outcome. Genstar is being fearless in showing its hand that it has plans to take a major role in the IBD space. And to that end, whether that role will be assumed by acquisition or other means, Genstar has most assuredly put the industry and other IBDS – most notably LPL – on notice.

Co-Authored by
Frank LaRosa, CEO – Elite Consulting Partners & Lou Hanna, Director of Business Development, Elite Consulting Partners

As Seen On AdvisorHub

It was a snowy Sunday, January 13th, morning in the Northeast, around 1AM when a LinkedIn post indicated the Schultz team, a Wells Fargo Private Client Group team based in Berwyn PA, was the “first to be ‘permitted’ to transition to the Wells RIA Pilot Program. This struck an odd cord with industry insiders. Why was a news-worthy move of this magnitude communicated during the wee hours of a Sunday via an advisor’s LinkedIn profile update and post and not handled by the Wells Fargo public relations team? Sunday came and went. Monday morning came and went. It wasn’t until Monday afternoon when the story became officially public with the publication of an AdvisorHub article.

As stated in the AdvisorHub piece, Carl A. Schultz, a 15-year broker with Wells, will be affiliating his newly minted Forefront Wealth Management RIA with the Wells Fargo RIA Pilot Program with two major caveats. According to his own words as quoted in AdvisorHub, Schultz will be relinquishing “relatively significant” deferred compensation for the RIA opportunity. Further, Wells will be prohibiting its brokers from soliciting Schultz’s clients for a scant 30-day limit. Which brings up interesting questions for which there seems no answer. Why did Wells force Schultz to give up his deferred compensation and why is Wells allowing it’s brokers to solicit Schultz’s clients in the first place? This leads one to speculate as to the real Wells Fargo game plan. While the AdvisorHub article alluded to “more details to come” by John Peluso, the head of Wells Fargo Advisors First Clearing, there were no clear statements as to the intentions and goals of the RIA Pilot Program provided by Wells leadership.

The launch of the Pilot Program is certainly an acknowledgement of the attractiveness of the RIA model to wirehouse advisors and it also confirms Wells intention to stem the outflow of advisors, teams, and their client’s assets to the RIA channel. While sound in its intent and purpose, though, the Pilot Program has – even at its outset – begun the downward spiral emblematic of Wells Fargo as a firm in crisis. Consider the problematic and disjointed messaging surrounding the Pilot Program launch. Initial statements about the program were made at the Market Counsel event in December, then quickly followed by radio silence, only to resurface again with a middle of the night LinkedIn notification. This disjointed messaging has sadly been a part of the ongoing Wells story as the firm seems too punch drunk to deliver a cohesive message to the press, it’s advisors, and the marketplace.

Even now, if one were to review the Forefront Wealth ADV and website, Wells has done nothing to differentiate their RIA Pilot Program. Instead they appear to be using a cookie-cutter, template website format to convey nothing more than that they are a #RIAUSTOO movement:
*Yes, we have a RIA!
*No, it is not differentiated.
*No, we might not offer what other RIAs do.
*But, Yes, we have a RIA!

What Wells has failed to realize is that the lack of structure and clear program messaging of the Pilot Program will do nothing to help them retain advisors and client assets and may ultimately drive more business away. Too many questions are open for interpretation at this point. Will there be a dissociation fee – reminiscent of those encountered by PCG advisors ‘permitted’ to transition to the FiNet platform – that results in a penalty if the advisor leaves or disassociates before their new Wells deal is up and forgivable note repaid? Can an advisor use more than Wells for custody? Will technology be open architecture or will it be limited to TradePMR and the existing Wells technology offerings?

What we do know from reading the Forefront Wealth ADV is that Forefront will offer family-office services and charge between .75-150bps. We also know from the Forefront Wealth ADV that First Clearing is listed as the custodian, which is either a typo or an effort to distance from Wells. First Clearing re-rebranded as Wells Fargo Clearing Services in the early stages of the Wells bad news bonanza. Perfect timing indeed.

Kudos to Wells for at least allowing a pilot RIA program and congrats to Forefront and the Schultz team for being the first. But we in the industry need to know more as too many details are left up for interpretation. At first glance, it appears as the though the Wells Pilot program is simply a reincarnation of the PCG offering with a RIA moniker whose only exception is that the RIA is fee-only. A more dubious consideration might be that the Wells RIA Pilot Program is the birth of an RIA custody business to rival and compete with the traditional RIA custodians such as Fidelity, Schwab, Pershing, and TD, while using its own advisors as a sacrificial lamb.

On the surface it appears there desire “to be first” with an RIA option, which I give them credit for, might have been too quick of a knee-jerk reaction to their ongoing attrition problems with large advisor practices. All options are on the table, and only time will reveal what their true intension might really be.

Wirehouse advisors who saw the new year free them from their 8/9 year forgivable loans no doubt found the turning of the calendar pages to 2019 especially poignant. Release from the forgivable loan deals presents a whole new wave of opportunity and freedom as it allows those same advisors to search for the best firm options to the benefit of both themselves and their clients.

Advisors coming off the forgivable loan deal should make it their New Year’s resolution to assess their business practices and confirm that their existing firm is in alignment with their goals and vision. Of course, such an evaluation includes the classic questions of what are my options and where do I want to be with my career, finances, and lifestyle. However, the more important considerations during this evaluation are whether the existing firm has a structure to support the advisor as they grow their practice, provides them with a solid strategy to monetize their book, and offers the framework for them to best service their clients.

No matter what answers are arrived at, it is vital for the wirehouse advisor to understand that there is no limit when it comes to their vision for their business. The scope of transition opportunities available today is vast and includes everything from going to another wirehouse to joining a regional, national full-service, independent broker-dealer, or RIA platform.  In essence, for the wirehouse advisor, the world is yours as the range of firm styles and choices has become as dynamic as the financial services industry itself. You owe it to both yourself and your clients to evaluate where the strongest prospects lie in 2019 and beyond.

One of the more interesting options recently to take hold for transitioning wirehouse advisors is the regional firm business model. The last five years has seen a definitive uptick in the viability of the firms, as regionals such as Raymond James, RBC, and Stifel have had significant recruiting success. The reason is simple – a regional firm offers the best of both worlds to advisors who have come up through – and our comfortable with – the wirehouse model.

In essence, regional firms are a throw back offering and solution to those wirehouse advisors (and quite frankly all advisors) craving the camaraderie of yesteryear’s robust product and solution offering combined with high touch service, direct access to management, and being part of a smaller group of advisors – in most cases generally less than 2000 advisors. By making a baby step away from the behemoth “manage to the lowest common denominator” mindset of wirehouse firms, an advisor loses nothing while gaining everything by not being treated like a number.

Regionals are now offer extremely attractive transition assistance packages on par with those available at the wirehouses. This is an attractive options for advisors who welcome the security of W-2 status when leveraged alongside the additional benefits of a fully-supported office environment, including local operations and sales support, health and retirement benefits, succession planning, and the ability to rely on a regional brand image.

When transitioning from a wirehouse to a regional, an advisor should see very little disruption in their business model as the regional advisor will be able to offer capital markets and trading expertise, investment banking, syndicate, financial planning, various investment services, and even technology that although not perfect, is sufficient for their needs. And so the regional baby step is uniquely beneficial to the advisor in that it offers a win-win-win through better culture, monetization of the book of business, and the most sought-after on the transitioning wirehouse advisor’s wish list – more love from the executive suite.

Whichever direction you choose for your practice, it is vital that you do choose and that you do not let your career be carried along by the tide caused by your comfort with your existing firm. The potential upsides of a transition are too great in todays financial services climate to not be seriously considered. In the end, just imagine where such a transition could take you. The prospects are limitless when you consider them.

Recently excerpted in Financial Planning

At the MarketCounsel Summit, David Kowach, president of WellsFargo Advisors, announced the latest in Wells’s seemingly endless attempts to repair both brand image and advisor attrition. According to Kowach, Wells will offer an RIA pilot program in 2019, with roll-out planned in multiple cities. We have known since September 2018, that Wells Fargo had already selected 10 advisors from its Private Client Group (PCG) to serve in the test RIA program, the terms of which required that those advisors choosing to go the RIA route with Wells Fargo would not be allowed to take brokerage business with them.  Wells Fargo will serve as the custodian of its RIA channel while tapping Trade PMR, its long-term strategic partner, as the RIA.

While the RIA business model is undoubtedly the golden child of financial services, offering the most flexible and supportive framework for advisors, how this translates into the Wells Fargo we all know is questionable. How will Wells be able to deliver autonomy, independence, and an unsullied brand image to support their new RIA advisors when they have clearly had difficulty achieving that result in all of their other business channels? Consider first how the RIA program is being managed with Wells as the custodian and Trade PMR as the RIA. The RIA space is powered by next-generation technology, which Wells has yet to provide to its current advisors, instead opting for dated legacy technology layered with a band-aid of Wells self-described ‘new tech’. The strategy could be to allow Investment Advisors to have access to the more open-architecture platform TradePMR currently offers it’s RIA’s as a third party technology and First Clearing re-seller. Which brings up an even bigger elephant in the room, and that is how is a firm so widely known for being in-flexible to advisors who are interested in things such as billing for financial planning, real social medial marketing, advisor website development, multi-custody access, true account aggregation etc. going to be able to handle Investment Advisors who want to those things and even more. How are they going to change their compliance stripes to allow more flexibility and outside the box thinking.  In the end, the Wells Fargo RIA test program leaves more questions than answers as to not only the motivation behind the program, but its ability to be successful.

Further, as one might suspect, a great deal of the advisor assets are in products that are not easily convertible to an advisory fee structure due to potential tax implications or back-end fees from annuities.. This will put every advisor considering this option in a position, by default, to look at alternatives firms other than Wells Fargo where they might be able to gain the flexibilities they desire from an RIA but still be able to maintain all of their accounts. The benefits of going RIA with a more established firm partner, with demonstrated success, advisor support, and technology sophistication, will be undeniable. Additionally, many RIAs are eager to grow through acquisition and actively pursue successful advisor teams with lucrative transition deals. While the Wells RIA program is meant to entice advisors to stay with the firm it may have the opposite effect by planting the seed that makes the advisor look elsewhere for the best RIA fit. Even if, after evaluating all of their alternatives and the other firms available in the RIA space, the advisor does choose to go the RIA route with Wells Fargo the real benefit is questionable and can only be viewed as strategic in so much as it would keep other PCG advisors away from their practice’s client assets.

Giving credit where credit is due, Wells Fargo will be the first wirehouse to enter the RIA space in a move which required foresight, fortitude, and humility. What remains to be seen is whether Wells intention to enter the RIA space is grounded in strength and courage or fear and futility. After all, this is not the first time Wells has engaged in first-mover behavior. Many years ago, Wells tip-toed into the ‘independent’ advisor channel by offering top producing advisors and teams the option of ‘profit formula’. Depending upon who you ask (advisors or Wells execs) ‘profit formula’ devolved or evolved into their FiNet option. And, let’s face it, there has almost always been an independent option through their white-labeled correspondent clearing firm, Wells Fargo Clearing formerly First Clearing.

This is not to say there is no silver lining when in comes to the Wells RIA roll-out. One would hope that the real motivation behind the program is a recognition by Wells Fargo leadership that their advisor’s happiness and compensation is more important than the bottom line, instead of being just another last ditch effort to retain unhappy and discontent PCG or FINET advisors. Additionally, Wells RIA program conveys a realization by the company that the RIA model proves to be an attractive landing spot for their advisors relative to its current, captive W-2 Private Client Group.

So which Wells Fargo will the recent RIA announcement represent – the wirehouse wizard or floundering failure, grasping at everything and anything? It seems there are more questions raised than answered by Wells RIA move, be it brave or simply bold, and it will be their advisors response – in the end – that provides the answers.

Elite Consulting Partners consulted the $850 million Pennsylvania-based Stonebridge team on their move from Wells Fargo FiNET to Triad and was featured recently in trade media articles on the subject. These include “Wells Fargo FiNET Loses $850 Million Team to Triad” in WealthManagement and the Financial Planning article, “Wells Fargo FiNET team grows to more than $850 Million, Bolts for Triad Advisors”.

I recently discussed my viewpoints on wirehouse succession plans in a Voices article, featured in OnWallStreet.

Expanding on those ideas, it is important to consider how a  wirehouse advisor, who is ready to craft a retirement of their own design, should approach their exit strategy. Whether you have spent all or part of your career at a wirehouse or retail wealth management firm, retirement or pre-retirementis an ideal time to consider a transition to independenceor even another retail firm. A myriad of options exist to structure such a move, even at the threshold of retirement,that will allow you to monetize your business twice,but below are three simple options advisors might want to consider before selling at a discount to their current firm.

For those advisors who are simply more comfortable with staying within the retail universe of firms, we would suggest a “dual-monetization” strategy.  A dual-monetization strategy consists of two deliberate steps to monetize your business twice.  Step one is to enter into a shorter transition deal at the new firm than the typical 9 or 10 year deals.  Since these deals are shorter than a traditional deal, the bonus paid will be less, but on par with what the retiring advisor might get if retiring at their firm.  I call this the “bird in the hand” component because a large portion of the deals are awarded on the transition date, with the other payments following shortly thereafter.  For most firm succession plans it’s “two in the bush” because not only do your client’s need to stay around after you leave, but the acquiring advisor needs to continue to generate revenue on your client assets, which is what you ultimately are getting paid with.  This is tantamount to you paying yourself with your own money at retirement, and the firms know it.  Although there is some level of risk in moving your clients to the new firm, it is very common for transitioning advisors to move more than 80% of their existing clients.  Step two of the dual-monetization strategy is to then enter into the aforementioned, lack luster, succession planning deal most firms offer advisors to retire at their firms.  Although dual-monetization comes with a bit more work at the beginning, most firms will be more than willing to provide significant support to help the advisor successfully transition to their firm, because they know they will ultimately be acquiring that practice for the long-run.

The second is to structure a move to an independent firm now, but sell and retire later. Regardless of the path chosen to independence, the financial upside for the retiring advisor is lucrative when it comes to succession planning. When selling your book of business in the independence space, you reap the benefit of a sizable purchasing pool of independent firms eager to edge out their competition through strategic growth via acquisition. This simple case of supply and demand means a retiring advisor can command a hefty price for their life’s work – often at 2x to 3x total revenue. Additionally, succession deals made in the independent space can be structured as capital gains and, thus, completely sidestep the regular income tax implications that are unavoidable with wire-house succession deals.

A third option is for an advisor to simply sell their book of business outright to an independent firm in the independent market.  Although an outright sale and immediate retirement (less than 3 years) comes with a discount to the 2x-3x multiple, a retiring advisor can still benefit to going into a more competitive market where buyers will be more than happy to bid higher and higher for your practice. As stated above, there are still positive tax benefits for making the transition as an independent advisor. Like any good consultant, we would highly suggest you work with an accountant who understands the financial services profession and tax implications of selling your practice.

When actively evaluating their succession options, and determining the valuation of their book of business, it would benefit the retiring advisor to seek counsel from a reputable consultant familiar with transitioning and the deal structure for selling a book of business.  Don’t make the mistake many retiring advisors make by not looking at your practice as a “real asset”, like your house, and simply sell it to a friend at a discount because it was easy.  It wasn’t easy to build it so you shouldn’t sell it internally just because it’s easy. Which begs the question to the retiring advisor, why not consider a transition when there is so much to gain by selling in the independent space – and so much to lose in the wirehouse space?

Promoting, supporting, and recruiting female advisors is not only an over-arching diversity and inclusion effort on the part of financial services firms, but is simply smart business when you consider the statistics. According to the most recent Census Bureau reports, 58% of the civilian labor force is female and women make up almost 51% of the entire population. As reported in Investment News, the number of females holding positions in each of four key advisory roles – practicing partner, lead advisor, service advisor, and support advisor – have showed a marked increase in their ranks, 2018 over 2017. Further, many firms are actively putting into place aggressive recruiting plans to strengthen their female talent pool and to place more women in top leadership positions. The most recent to join these efforts is RBC. The company, as reported in Financial Planning, has announced strategic policies focused on placing more women in top ranking positions. Currently RBC boasts 40% of its leadership as female, also according to Financial Planning. Looking at the industry as a whole, most, if not all firms, have adopted a female recruiting annual conference, among them Raymond James, Advisor Group, and Lincoln Financial Network.

While these statistics indicate an upward swing of opportunity and recognition for the talent of the female advisor, they are equally as indicative of the emergence of a new trend in financial services. The fact is, the uptick in female advisors in top positions is less a reflection of the female advisors, who were always talented and capable of those jobs, and more of the changing ethos within the culture of the financial services firms themselves. What is most important is the fact that firms are valuing, attracting, recruiting and retaining female financial advisors for the right reasons. The firms which have most heavily invested in recruiting female talent tend to be those firms which have embraced diversity at multiple levels of their organization. Further, firms which support and encourage female advisors rising in the ranks have a demonstrated management style based on inclusion and leadership. These philosophies are strategically advantageous and have the ability to poise these firms for significant growth when executed properly.

Consider first the importance of diversity and its impact within an organization. Companies actively supporting women advisors as leaders tend to not just be diverse in their advisor teams, but also within their client base and product and service offerings as well. It is simply logical that customers will want to work with firms comprised of advisor talent who understand all aspects of their personal situations, from lifestyle needs and current financial goals to retirement and estate planning. By way of example, a study by Econsult Solutions, as reported in The Economist, recorded that 62% of women would be open to switching advisors in order to best achieve their investment goals as compared to 44% of men. Additionally, according to a Merrill Lynch study, women make it a point to educate themselves about their finances with 70% reviewing their bank accounts once a week or more and 53% having an emergency fund. Also in the same Merrill Lynch report, 41% of women say their biggest financial regret is not investing more.

A diverse group of advisors naturally draws, and will be reflected in, their diverse group of clients who are eager to work with a team that is not just knowledgeable but truly empathetic and customer-centric when it comes their focus. This, subsequently, trickles down into the firm’s products and services, which will need to be robust and varied in order to address the differing needs of their client segments.

Another key factor proving advantageous to firm’s recruiting female advisors can be found in their other recruiting efforts and strategic plans. Many of these firms have forward-thinking recruiting strategies when it comes to other advisor demographics. While there are plenty of firms focused on recruiting and hiring young advisors, firms should also have a sub-set focused on recruiting younger female advisors. Further, these firms tend to actively support their advisors, be it through technology, an open-door management style, or a discerning eye towards emerging resources and their most efficient integration. These characteristics lead to not only positive corporate culture, but a strong market position as they are indicative of efficiency, positive brand image, and scalability.

While hiring, recruiting, and promoting female advisors is an excellent way to build a more diverse firm, it is important that firms also look at developing programs to help male advisors better understand the female investor. There are many women investors that don’t have an affinity to a male or female advisor, but rather to the most qualified advisor that understands her needs today and tomorrow. Many firms miss the mark by only promoting female investors to female advisors, and subsequently gearing their programs toward that philosophy. This is the wrong approach if true success with female investors is the goal. In order for firms to win the business of the female investor, they need to make certain all of their advisors, not just the female advisors, understand the unique difference between their male and female clients.

The dawn of a new day has begun in financial services and it is one where those firms who walk the walk and talk the talk throughout every aspect of their organization will be the ones who succeed. Both advisors and customers are tired of beleaguered corporate brand images, ivory tower thinking, and disengaged client relationships. Those firms on the forefront of recruiting diversity will prove to be a shining example of how investing in the success of every advisor will result in the tangible rewards of a positive firm culture, stellar market image, and growing and sustainable bottom-line.

Co-authored by Elite Consulting Partners Founder & CEO Frank LaRosa and Elite Consulting Partners Director of Business Development and Senior Business and Transition Consultant Louis Hanna

The hybrid RIA model is alive and well as its attractiveness and flexibility continues to prompt advisors to maintain an affiliation with both the corporate RIA and their independent broker-dealer partner – a topic which I recently discussed in a Voices column for Financial Planning, “Independence is Seductive, But Even RIA’s Shouldn’t Go It Completely Alone“. There has been an industry-wide movement to fee-based business over the last 30 years for various reasons, including less risk for retail wealth management firms, the so-called “stickiness” of those assets, and the predictability of the recurring fee revenue stream. Yet, even with many firms implementing DOL-inspired compliance and operational policies, commission business in the form of variable annuities and other commissionable investment strategies have retained their appeal to both advisors and their clientele.

As a backdrop, it is instructive to analyze the first “breakaway advisor” movement which was prompted by the sullying of the names of the major wirehouses due to the credit crisis and Great Recession of 2008-2009. During that time, many large firms began losing their big name branding luster, a fact that was accelerated by the perception that these same firms’ mortgage banking, CDO, structured product, and trading desks created the mortgage and credit crisis in the first place. It was also during this time period when many wirehouse advisors and large teams began to breakaway to the independent financial advice platforms namely registered investment advisor (RIA) firms, with the rationale being the wirehouse firm’s brand was more of a liability than an asset to their financial advisory practice. And so began the first wave of break-away advisors migrating to the RIA space.

In charting this new course, many of the advisors decided to form, found, and operate their own independent RIA. In some cases, this meant relinquishing their Series 7 licenses and choosing not to register and affiliate with a broker-dealer. This positioned these advisors as both truly independent and fee-only, and entirely new concept in the industry at the time. However, much to the chagrin of the newly-minted fee-only independent RIAs, their existing and prospective clients still saw the value in allocating a portion of their assets to commission-based variable annuities, C share mutual funds, and individual securities including equites and municipal bonds. Thus, the client conversations with fee-only advisors went something like this, “If you can’t offer variable annuities or the ability to buy stocks, bonds, and mutual funds I’ll have to do that business through another financial advisor who still offers these products and services”. Anecdotally, many advisors at this point started to re-think their decision to no longer maintain FINRA registration and the broker-dealer affiliation necessary to execute commission-based investment strategies.

Flash forward approximately 10 years and Cerulli’s recent release of the research report, “U.S. RIA Marketplace 2018: Designing a Framework for Independence”. This study found that from 2012-2017, hybrid RIAs doubled their share in the advisor headcount market, from 4.1% to 8.8%. In addition, those hybrids showed better growth than their independent RIA peers in that same five-year period as measured by assets under management. The study also found that outperformance to be particularly acute between RIAs in the $100 million to $250 million AUM tier. It is no surprise then that the hybrid RIA model continues to flourish, and grow.

By conducting business under a hybrid RIA structure, financial advisors are in a position to serve their client’s commission-generating, individual securities and insurance/annuity business via their affiliation with their independent broker-dealer partners. Simultaneously, from a business owner perspective, hybrid RIAs are able to capture a diverse revenue stream comprised of fee-based and commission business. Thus the hybrid model provides greater autonomy for brokers while allowing them to continue to do commission-based business. The importance of commissions is evident in the hybrids’ product mix. The Cerulli study found that only 14% of independent RIAs sell variable annuities while 67% of hybrids sell VAs. Ultimately, though, it is not just the ability to commission business that has appealed to advisors, but also the support provided by hybrid RIAs’ broker-dealer which includes, among others, practice acquisition, practice management, operations, and compliance.

In somewhat of a contradiction to the findings of the recent Cerulli Report, Commonwealth Financial is assisting many of their advisors in going “fee only” and dropping their Series 7 licenses. Commonwealth executives refer to their firm as an “infrastructure provider” more than a BD and have stated identifying as a BD does a “gigantic disservice” to its menu of offerings for advisors. According to Commonwealth CEO Wayne Bloom, the industry has seen a “rapid acceleration” of advisors ditching their FINRA registrations. He also cited the firm’s expanding count of fee-only advisors in his keynote speech at the firm’s annual conference and noted many more advisors are exploring moves to fee-only as well. Said Bloom,

“As the transition to fees continues to accelerate throughout the industry I think we’re on the front end of a wave of advisors dropping their FINRA licenses to be exclusively fee-based.”

While the evolution of the advisor sector is ever in process, what is clear is the RIA, hybrid RIA, and independent broker dealer spaces are constantly morphing to meet the real and perceived needs of a multitude of interests, from the advisor to the SEC and regulatory environments. I believe the premature ringing of the death knell for commission business and independent broker-dealers is premature and, more than likely, just plain inaccurate. There is no silver bullet or magical business model to acquire, support ,and service advisors as well as their clientele. Each affiliation model has it’s positives/negatives and trade-offs. In the end, only time will tell which advisory structure will come out on top, be it the hybrid RIA/independent broker-dealer model or the fee-only independent RIA, supported by a broker-dealer masquerading as service provider, consultant, and RIA concierge.

The Solo Advisor may appear to be the lone wolf of the financial services industry. As we discussed in Part 1 of this series, the rise in competition presented by multi-advisor teams, the importance of service differentiators, and the customer perception of succession planning are all posing a threat to the Solo Advisor’s ability to achieve. It is important not to mistake adversity for failure, however. The Solo Advisor can be successful in the financial services industry of today by employing a few key strategies, among them redefining business operations, carving out a client niche, and embracing new technology.

When it comes to business operations, the imperative for the Solo Advisor is mindset. We often hear from Solo Advisors who complain that their business ‘isn’t scaling’. In truth, this is usually code for ‘my business is getting bigger but this isn’t getting any easier’. To understand this sentiment, it is important to understand the real struggle of the Solo Advisor. For most Solo Advisors, they have built a firm that is comprised of a diverse set of clients, each with different needs, different plans, and different goals. Imagine crossing the threshold of 300 – 400 clients and having to manage 1000 – 1800 accounts separately using different products and services, paperwork, client calls, etc. This lack of efficiency would be, and is for most Solo Advisors, overwhelming. It is impossible to scale your business and grow if you are constantly treading water and trying to stay afloat with the current workload. What often follows is the Solo Advisor will throw money at the problem and hire more staff, all in an attempt to better manage their business. The end result; though, is far from the desired outcome as with more staff to manage and more expense, the Solo Advisor slips further down the rabbit hole and the business inefficiencies only become magnified.

So where does the Solo Advisor find the panacea for the problem? By setting a firm definition of the client target market and outlining a consistent product and service solution that will meet the needs of those clients, the Solo Advisor has the ability to stabilize what they have now and open the door of opportunity for growth in the future. Every Solo Advisor needs to take a hard look at their business plan with an eye toward understanding the client categories which they can best serve, which product and services meet the goals of those clients, and how to best create a replicable solution that allows for efficient client and time management. With those key areas addressed, the Solo Advisor, by maintaining clear vision of their client/service offering and simply duplicating it, will then have the ability to grow their practice revenue exponentially while simultaneously maintaining a cohesive – and successful – business structure.

It’s important to recognize, in defining the client target market for the Solo Advisor, that a further challenge remains in the marketing aspect of their business strategy. For the Solo Advisor, reaching new clients and differentiating themselves can prove daunting when you consider the competitive playing field. Solo Advisors are facing off against over 80,000 other Certified Financial Planners, independent advisors, RIA’s, along with every advisor at major broker dealer who has thrown their hat into the financial planning ring. Consider that many of these firms are 100 to even 1,000 times larger than a Solo Advisory firm and the idea of a Solo Advisor out-marketing the competition becomes even more difficult.

When it comes to addressing the marketing problem, it is vital that the Solo Advisor not look to external factors but look to themselves in order to find the solution. While it is true that Solo Advisors can often go deeper in understanding a client’s needs than a larger practice might want, Solo Advisors have the ability to be more specialized and showcase relevant expertise, the fact is most don’t. Many Solo Advisors choose to operate as generalists, which is unfortunate as they are bypassing the opportunities presented by their greatest strength which is one area of expertise. It comes down to focus. By zeroing in on the specialized niche outlined in their refined business plan and translating that into an understandable marketing message, the Solo Advisor has the ability to impact their bottom line as well as their long-term growth in an immensely positive way.

Once business operations and client relationships are on solid footing, it becomes imperative for the Solo Advisor to explore technological resources, both existing and emerging. Technology in financial services has proven to be a great equalizer. The comprehensive and affordable technology platforms available today better enable the Solo Advisor to compete on par with firms larger than themselves. Technology essentials for any Solo Advisor include a solid CRM, an email marketing system, and a website builder. These technologies can be integrated by working with a specialized consultant in each category, or by partnering with a comprehensive technology firm offering one-stop shopping for all technology needs. By embracing technology in this way, the competitive position of the Solo Advisor if further stabilized and the ability to achieve even greater business efficiencies, streamline costs, better engage customers, and improve overall business management becomes more and more the reality.

The bottom line is the Solo Advisor is far from extinction. While the financial services industry may be a jungle, difficult to navigate and full of predators, the opportunity remains for the Solo Advisor to survive and thrive. It comes down to how willing the Solo Advisor is to focus, do the hard work of redefining their business, and capitalize on the technologies and resources available to maximize efficiency and ultimately revenue. There are many benefits to being a lone wolf and by recognizing them the Solo Advisor has the chance to be a part of the evolution that is financial services.

The Dodo Bird, the Tasmanian Tiger, the Woolly Mammoth – the one thing these animals have in common is that their inability to adapt, evolve, or weather change in their environment ultimately resulted in their extinction. Translate this to today’s financial services industry. The Solo Advisor appears to be on the precipice of extinction. With the rise and rapid growth of advisor teams, the legacy presence of wirehouses, and the dynamic shifts occurring through mergers and acquisitions, the place of the Solo Advisor within the financial services industry may seem questionable at best and non-existent at worst. This doesn’t have to be the case. The ability of the Solo Advisor to understand the competitive landscape, redefine their role in the industry, and evolve their strategies to insure relevance with their clients in the future may just be the key to assuring their survival.

There is an old adage that states ‘what got you to where you are will not get you to where you want to go’. Nothing could be more true when looking at today’s Solo Advisor. Statistics released this year from Tiburon Strategic Advisors and published in Financial Planning show the variances that exist today within each financial industry sector. Between 2008 and 2015, the number of independent broker-dealers dropped 6.8%. Compare this to a 2.8% drop in wirehouses and the simultaneous strong growth of the RIA and dually registered advisor at 1.8% and 9% and the full story begins to unfold as to which types advisors are the ones now poised for success.

Throughout my career, I’ve worked with many successful, Solo Advisors who, through diligent management of their book of business, being selective with clientele, and providing exceptional service and results, have not only netted a comfortable six-figure income, but have enjoyed the luxuries that come with entrepreneurship such as free time to spend with family and the ability to pursue personal interests. The danger for these Solo Advisors comes when comfort becomes complacency and results in a lack of strategic thinking to address competitive threats which can ultimately erode, if not completely wipe-out, the hard work that got them to where they are. Without a serious evaluation of their business plan and practices, Solo Advisors who were once producing $700,0000 may find themselves producing $350,000 and wondering what on earth happened.

So what is the Solo Advisor to do? The first area of weakness that needs attention is the client relationship itself. If you are a Solo Advisor there is a good chance you have received a phone call from what you thought was a solid client that started with, ‘You know I think you’re great, but I am moving my accounts to a different GROUP.’ A call such as this probably has put you on the defensive. You believe your business models are great, your clients think your great, and they love your sales assistant. It has to be about them and not you. This can’t be your thinking. It’s time to take a hard look at the services you are supplying and how you have positioned yourself competitively with your customers. Are you optimally managing day-to-day operations and your client assets? Have you taken advantage of new technologies which enable more efficient management of client portfolios? Do you have platforms in place to provide your customers transparent and efficient access to their account information in real-time? Are you employing the most current communications innovations to continually market your business – not just to prospects but to current clients? If the answer to any of these questions is ‘No’, then your firm is vulnerable to the competitive threats and strategic advantages presented by multi-advisor firms and wirehouses.

Advisor teams have the ability to scale at a better rate, cover more markets, invest in social media strategies, and develop marketing channels which will lead to more business. Take for instance the recent news coming from UBS. The firm is investing heavily in technology platform tools including collaborating on an advisor desktop with Broadridge Financial Solutions which will be rolled out over the next 3 years. The company also released plans to have 2/3 of its U.S. advisors work on teams over that same time frame through leveraging productivity and specialization. The UBS strategy of dynamic platform development to assist advisor growth is not unique and similar to those already unveiled or employed at other firms including Morgan Stanley and Raymond James.

Another strategic advantage of advisor teams is their ability to deliver a high-level service model that takes advantage of both their human and technological capital to meet the needs of their clients. This not the ‘virtual team’ concept that has been much touted in recent media but a true collaborative environment based on every professional being vested in the company’s success and being compensated for the growth or failure of the practice. Everyone in an Advisor Team environment wears the same jersey, so to speak, and through this affiliation share a mutual focus on and vision for the practice. Ultimately, this is the very best way to gain exponential growth and client retention.

Another competitive area that must be considered by the Solo Advisor, and one common theme we are seeing in our discussions with advisors now, is the need for succession planning. Succession planning today has little, if not nothing, to do with the retirement of the advisor and everything to do with the client and their concerns. Clients are comfortable with and trust their advisor. It is only natural for them to wonder what will happen and who will manage their money if something should happen to that trusted advisor. This presents the greatest weakness to the Solo advisor. Advisor Teams provide clients comfort in knowing that their financial planning, portfolio management, estate planning, and other services will continue in the way they are accustomed, regardless of who is responsible for it.

Make no mistake. While the competitive disadvantages faced by the Solo Advisor are hefty and may seem an insurmountable obstacle, all hope is not lost. Survival from extinction for the Individual Advisor comes down to understanding the risks of staying on their own and the competitive threats that exist in the market today. It requires thinking strategically and planning ahead so that their business does not become obsolete based on the future needs of clients. It demands differentiating yourself and focusing on best business practices. In the end, it means entering the jungle of financial services and doing what it takes to evolve and adapt to insure a place for the Solo Advisor in the years to come. So, let’s enter the wild and figure out how to make that happen in Part Two of this series, Welcome to The Jungle: The Solo Advisor and Survival of the Fittest.

The relationship between advisors and clients is changing and it is important that advisors not only understand the current playing field but prepare for the new game ahead. Recent statistics reported by the Wall Street Journal show that advisor fees are dipping below 1%, driven primarily by emerging technology and millennial customers. Both of these factors have a lot in common as they represent a shift to a more level playing field between advisor and customer through easier access to information, which has ultimately driven advisor fees down by absorbing some of the duties normally left to the advisor.

Take for instance emerging technology. Firms are rolling out what has been dubbed “robo-advisor” technology, which allows customers to directly monitor, engage with, and make changes to their product portfolio without ever directly interacting with their human advisor. Person-to-person advisor interactions, under this scenario, become limited to portfolio reviews and more granular financial changes and tasks which require the advisor’s oversite. While efficient and functional, the outcome of “robo-advisor” technology is less time with the advisor and thus a lower fee.

Bear in mind, technology attributes do not lead to lower fees in all cases. For instance, the compressed model, or bionic approach, is a human-assisted version of the technology which uses “robo-advisor” technology as support to the advisor and in the process maintains and enhances the financial advisor relationship with the client. In this scenario, fees are minimally impacted – if at all – and an advisor putting this technology scenario to savvy use is able to add value, provide stellar service, and appeal to a wider market segment such as the millennial customer.

Turning to the millennial customer, this market segment is more technologically and informationally savvy than any generation before it. Not only have they come of age accustomed to receiving instant information via the Internet and social media, they have also become adept at using multiple resources to assimilate any gaps in their knowledge base with a surprising level of ease. This skill set has given the millennial client an edge up in that much of their research, product planning, and portfolio strategy will have been researched and outlined by the client themselves prior to meeting with the advisor. Additionally, the millennial client will have done their due diligence in evaluating potential advisors for their account, making the competition for their business even more stiff than in other customer market sectors. The end result is the reduction of fees in order for the advisor to stay competitive with the millennial customer.

While technology and millennial customers are two factors currently impacting fees, it is assured that over time with the now defunct DOL rules and unclear regulatory path that more issues will present themselves that will impact advisor fees in the negative. Which begs the question, how can an advisor adapt and thrive given both the known and unknown factors impacting their fees? The answer is simple and it comes down to business basics. Look to your competitive differentiators to grow internally.

It will be those firms and advisors which best have the flexibility to meet the client where they are at, provide insight and guidance in an engaging way, and deliver a superior customer experience that will best be able to maintain their fee structure. No other firm structure or advisor paradigm is better positioned to achieve and maintain those goals than the RIA, Hybrid, and Independent. By nature, these firms thrive on transparency and nimble business operations with the veil between executive, advisor, and client pulled away, enabling greater engagement at all levels. This translates to a better fee structure for the advisor achieved through the client’s greater understanding of the advisor role and its direct impact on their personal financial success.

The flip-side of the strength of the RIA, Hybrid, and Independent when it comes to current and future fee structures is the negative position of the large wirehouse firms. These firms have an “ivory tower” image that has fostered disengagement with the customer, the direct impact of which can be seen in the astronomical growth of the RIA sector. Further, the public relations woes of large wirehouses, in particular Wells Fargo, have done nothing to solidify trust with the customer. It can be expected that clients of the large wirehouses have already started – and will continue to have – a ‘what are we paying for’ mentality which will lead to a questioning and deterioration of advisor fees out of competitive necessity.

Another important area that should be focused on, and one which also has a vital impact on fees, is a firm’s business plan, with particular attention to acquisition opportunities. As we continue to see fee and price compression industry-wide, acquiring assets via mergers, roll-ups, succession planning, and other strategic pursuits becomes even more important to healthy revenue stability at any practice. With the aging of the advisor population, as well as continued regulatory pressures, there has never been a better time to make acquisitions.

If you reading the article from the inside of a retail wealth management office, you are probably wondering what I’m talking about because you know the folks in your office and none of them are retiring. If this is the case, you’ve picked up on yet again another disadvantage of not becoming an independent advisor or RIA, where the acquisition opportunities are plentiful. Acquisition opportunities are one of the biggest reasons we see independent advisors and RIA’s growing at such a rapid pace. There’s is simply no better way to deal with fee compression than through one acquisition transaction bringing in an additional 50mm, 100mm, 200mm, or beyond.

As the saying goes, by failing to prepare you are preparing to fail. Understand the whys impacting fee structure, the whos in terms of what type of firm is best poised to weather the shift in fees, and the hows of retaining client loyalty. These are the keys to insure fee stability and best position an advisor for prosperity, whatever the future holds.

Wells Fargo is under siege from every angle and it is easy to understand why. The mountain of corporate missteps, questionable ethics, and outright fraud have resulted in a series of investigations and fines for the once storied wirehouse, the ramifications of which have yet to be fully realized. There is seemingly no end insight for the Wells Fargo storm and it is in the best interest of Wells Fargo advisors to take full stock of the situation, use common sense and sound judgement, and understand that things are going to get worse before they get better.

As a proud youth football coach for the last 11 years, I have taught my players that the best offensive play is to watch the opponents feet and hips to determine where they’re going.  Translated to the case of Wells Fargo, advisors should watch the feet, i.e. intentions, of the Wells management team. The recently announced strategic decision by Wells Fargo’s C-Suite to cut 10% of their support staff over the next 3 years is a pretty big tell. If Wells Fargo leadership was anticipating revenue and profit growth in the near-term, they would not be cutting 10% of their staff. Further, staff cuts will inevitably hurt service initiatives and create even more stress for advisors in the field. Once again, Wells Fargo senior management is sending the message, indirectly at least, that they are still not out of the weeds when it comes to their troubles and don’t expect to be for quite some time.

Imagine a bonfire with everything reduced to charcoal and fragments. This is the situation at Wells Fargo. The company lost substantial personnel assets over the last two years and it is projected future losses on the PCG-side will be massive. Effects can already be seen at the branch level where efforts to consolidate have resulted in huge margin losses, management and leadership departures, and support cuts. These short-term issues will only magnify the problems at Wells and lead more assets to leave, particularly when geography comes into play. Most assuredly, with the FiNet wait list at 9 months and a lack of any internal options, Wells Fargo can anticipate more high quality clients taking their business elsewhere with their advisor pool following not far behind.

Profits and corporate structure aside, Wells advisors should also be concerned about the fall-out subsequent to the resolution of their firm’s multiple regulatory and criminal investigations. There will be the sweeping compliance and oversight changes that the entire organization will have to deal with to show regulators that the company has learned from its mistakes.  This is an issue that, due to the gravity of the investigations, any reasonable person should expect  will result in dramatic changes for the Wells Fargo organization in its entirety.

What I find most interesting, given the consensus of the majority of people I speak with on a regular basis, is the recent publicized news that Wells has landed recruits of notable size.  With the number of quality firms in today’s market that an advisor can choose from, both on retail side and the independent side, one can only assume that these advisors joined Wells for the insane deals being thrown around right now.  Most experienced industry insiders – including recruiters, leaders at firms, and branch managers – would agree that the single biggest mistake an advisor can make when making a move is to move for the money.  When a firm, as is the case with Wells Fargo, is throwing around the cash deal of a lifetime, you should ask yourself one simple question. Why?

The only real answer in the case of Wells Fargo is they have to deal with their short-term negative press and cash is the only enticement they have left to solidify relationships with their advisors. If you are a Wells advisor or advisor prospect, given these facts, the guidance is clear. You should either stay where you are or look for a better option.  The after-tax difference in retail firm deals is not usually life altering, but being at the wrong firm can be if it leads to a significant loss of your client base and stress as it becomes harder to get the simple things done.

Don’t get me wrong. I don’t advise my clients to move for free, but I’m always concerned when they throw logic to the wind and look for the biggest check as these moves usually result in a wrong place, wrong time outcome for both the advisors practices and their clients. The mistake of being blinded by the glare of a “huge deal”, only to find out you would have been better off staying where you were, is ultimately not worth it. Do your homework. Consult with a transition consultant who works with multiple firms, and talk to advisors who have recently left the firm. In the end, if Wells advisors and prospects display the sound strategic thinking that the Wells company leadership didn’t, the advisors personal careers and future opportunities will be just fine.

Frank LaRosa, Elite Consulting Partners Founder/CEO, pens the OnWallStreet Voices column, “Why UBS is smart for not changing its compensation plan” https://onwallstreet.financial-planning.com/opinion/why-ubs-is-not-overhauling-its-compensation-plan-for-financial-advisors

LPL Financial wants to have it all and that, as it turns out, just may be its Achilles heel. The missteps by the nation’s number one broker dealer have their roots in 2017. First came the mismanaged acquisition of National Planning Holding assets. The $325 million deal netted LPL lack luster results, with only 1,900 of National Planning Holdings’ 3,200 advisors choosing to make the move. This news was rapidly followed by an announcement of internal policy changes for corporate RIAs whereby new advisors needed to have $50 million in assets before joining an LPL hybrid. The dissent which followed these decisions among the LPL ranks was quick and swift.

In an effort to appease their advisor teams and quell general dissatisfaction, LPL closed 2017 out with what it thought was an enticing offer. The firm released, with much fanfare, a new pricing structure which cut advisor fees on its strategic asset management platform to 5 basis points for $50 to $100 million and 3 basis points for $100 million or more. It didn’t work.

Looking at statistics for revenue, advisor attrition, and assets under management tell the tale. LPL Financial is on shaky ground and its competitors have been swiftly bridging the gap in an effort to usurp the leadership position LPL has held for so long. At the close of 2017, LPL revenue totaled $4,281.50 (M), maintaining only a thin margin over number two broker dealer Ameriprise Financial, who closed 2017 with revenue reports of $4,260.00 (M). Those numbers are telling, but even more so are the statistics related to LPL advisor headcount, which has taken a nose dive in 2018. Nine major teams have left LPL Financial to date, taking with them $13.6 billion AUM and 640 advisors.

The message is clear and it is one LPL Financial should heed. Growth is good when well managed with a deft touch, but when driven by an unquenchable thirst to achieve at any cost, the ultimate result will only be negative. Such is the LPL story. Its rise to the top can be highly attributed to the loyalty of its advisor teams. These same advisor teams initially stood by LPL, remained diligent, and optimistically hoped that the buy, grow, change mentality of company leadership would produce positive results. These hopes have never been realized and tensions have now reached a boiling point where the negative impacts of LPL policies far outweigh the positives for LPL advisors. What’s more, from the perspective of many an LPL advisor, the company service model has devolved into something so flawed and broken as to be beyond repair.

Sadly, LPL seems destined to join the growing ranks of other large firms who have disenfranchised their advisors to such a degree that jumping ship seems the best and most attractive option. Which begs the question, when will large firms wake-up from their ivory tower thinking, fueled by greed and arrogance, and put into place long-term strategies and internal policies that place both advisor needs and customer needs front and center? Unfortunately, when taking stock of the current state of the financial services industry, that day may never come. And so, expect to see more and more advisors heading for the door – at LPL and other firms like them – ready to seize their independence and craft a financial services future of their own design.

ST. PETERSBURG, Fla. – Raymond James welcomed financial advisors Thomas O’Neill, Jessica O’Neill, CFP^®, and Thomas O’Neill Jr. to Raymond James & Associates (RJA) – the firm’s traditional employee broker/dealer – in Mount Laurel, New Jersey, according to Tom Galvin, Northeast regional director for RJA.

Previously a sole practitioner, Tom O’Neill formed O’Neill Wealth Management five years ago with his two children, Jessica and Tom Jr. The team, including senior registered client relationship associate Danielle Takacs, joined Raymond James from Morgan Stanley, where the advisors managed approximately $203 million in client assets. Together they serve a variety of clients, with a focus on business owners, physicians and high-net-worth families.

“We were attracted to Raymond James because of the firm’s culture, technology offerings, and the emphasis on wealth management,” said Tom, senior vice president of investments. “The tenure and retention rate of the advisors at Raymond James was another positive indication of the culture at the firm. We are looking forward to leveraging the resources and support at Raymond James as we serve our clients and continue to grow our practice.”

Tom brings more than 35 years of financial services industry experience, having worked at firms including Merrill Lynch, A.G. Edwards, UBS and most recently, Morgan Stanley. He attended Susquehanna University, where he pursued his degree in Business Administration/Economics.

Jessica, financial advisor and a CERTIFIED FINANCIAL PLANNER™ practitioner, began her financial services career in 2014 with Morgan Stanley. She received her bachelor’s degree from The Ohio State University.

Tom Jr. began his career as a financial advisor at Morgan Stanley in 2016. He graduated with his bachelor’s degree from The Smeal College of Business at Penn State University. He is pursuing his MBA at La Salle University and now with Raymond James is currently in the firm’s Advisor Mastery Program.

“I am pleased to welcome Tom, Jessica and Tom Jr. to the firm, as Raymond James continues strategic expansion in the Northeast,” said Galvin. “They are a team that is focused on growth and above all, doing what’s best for their clients. We’re proud that Raymond James’ unique culture and advisor support continue to resonate with and attract outstanding advisory teams like O’Neill Wealth Management.”

The financial services industry is constantly evolving and the firms committed to being successful within it must be equally change resilient. There is no surer way to achieve this goal than through building an elite team of advisors through a sound recruiting and retention strategy which secures a mix of both seasoned advisors, female advisors, and new talent. Collectively, this staff dynamic insures a firm has a pool of advisors on hand of varied skill sets and industry perspectives, each able to positively influence firm culture and revenue in equal measure.

First consider the seasoned advisor. Recruiting seasoned advisors offers profound advantages to a firm. Seasoned advisors have had the client-facing experience necessary to build significant books of business. Existing clients often follow their legacy advisors when they transition to a new firm subsequently offering a much welcome revenue injection into the acquiring firm. Seasoned advisors also have the depth of industry knowledge that makes them highly intelligent problem solvers as they have likely navigated a myriad of financial industry complexities throughout their careers.

Similarly, rising new talent and female advisors prove beneficial additions to a firm. As it relates to the young advisor, their out-of-the box thinking, adaptability to new technology and other innovations, and propensity towards efficiency make them a complementary counterpoint to veteran advisor perspectives on the team. With advisors running more and more of their clients money, bringing younger advisors in early, to give them an understanding of how they handle portfolios, will ultimately give clients the reassurance that their money will be managed in the same successful manner that they have become accustom to. In terms of the female advisor, building out an inclusive team that includes a female perspective that mirrors the diversity found in the client base of the firm itself achieves a more successful and relatable approach to the advisor/client dynamic. Additionally, women advisors tend to attract and retain female clients as their understanding of what another women is going through as it relates to their personal and family financial concerns proves particularly advantageous.

Given the differences between all types of advisors, the process by which to recruit and retain seasoned, female, and young advisors is remarkably similar. These advisors are looking for corporate cultures which thrive on management transparency, independent thought, and personal accountability. They seek firms which are innovative both operationally and technologically. Additionally, each type of advisor is eager to gather new knowledge and partner with firms that offer the tools, resources, and training necessary to allow the advisor to achieve for both their clients and themselves.

Alternately, there is an important strategic point of note a firm must take into consideration when recruiting seasoned advisor talent. Many of these advisors, especially those who run their own client money, have a business model that is not necessarily easy for a new firm or successor advisor to take over. Merging these books of business into an existing firm structure requires thoughtful planning in terms of both client migration marketing and internal process management in order to execute a seamless transition when onboarding the seasoned advisor. Furthermore, many seasoned advisors, while diligent in their planning of client retirements, have spent little thought in planning their own. The thinking among seasoned advisors seems to be they will always have more time or that setting up a plan can wait until tomorrow. A firm interested in transitioning a seasoned advisor to their team needs to bring the issue of long-term planning to the forefront. The answer to the retirement question for an advisor – be it a traditional retirement or an acquisition of their book of business by a firm or individual – will have direct ramifications on the structure of any recruitment offers put in place today.

A plain vanilla financial services corporate structure of C-suite executives, middle managers, advisors, and support staff will no longer be the business model which defines the financial services industry of today. The firms where the barrier of knowledge between traditional and new blurs and where growth and achievement are fueled by an empowered advisor staff will be the ones which best exemplify where the financial services industry has been and the opportunity of where the industry is heading in the future.

The financial services industry is changing, as evidenced by numerous data points released in the 2018 FINRA Industry Snapshot. Among the report’s statistical highlights, industry-wide topline growth rose a remarkable 14% over the past two years to $309 billion. The report also showed an increase in the number of advisors leaving their firm for another, with a total of 26,908 transfers in 2017. Additionally, the FINRA report notes that small firms now make up an inconceivably large 90% of the financial services industry. So what does all of this mean? With numbers such as those illustrated in the FINRA report, combined with the anecdotal evidence we hear on the street every day from advisors, all indicators point in one direction – that there is new paradigm for success in financial services and it’s leaders are RIAs, Hybrids, and Independents.

The industry-wide push towards a more evolved financial services business model has been coming for quite some time. Advisors have become weary of the inaccessibility of management, lack of support, operational inflexibility, and overall culture stagnation and negativity which rule the day at Wirehouses. In order to achieve for their clients, and recognize financial upside for themselves, advisors need to be able to act smart, quick, and efficient. These strategies, operationally speaking, are simply impossible at Wirehouses who are themselves defined by their hierarchical and slow moving management structure. As such, advisors are looking elsewhere for the systems and processes which will support their book of business as it must be managed today, and they are finding their answer in RIA, Hybrid, and Independent firms.

RIA, Hybrid, and Independent firms offer the best of what a financial services firm can be and are everything a Wirehouse is not. These firms thrive on an open access management style which gives advisors the ability to obtain quick feedback and strategic direction. The technology available to advisors at RIAs, Hybrids, and Independents is also superior as these tools are selected and integrated using collaborative, company-wide feedback. This results in operational systems which truly reflect the needs of the advisors and not just the “this is what we think you need” edict of a C-suite manager, as is the case at the Wirehouses. Additionally, the flexibility and more forgiving compliance structure of an RIA, Hybrid, or Independent firm frees an advisor in such a way that success is based on their merits alone and the financial benefits they reap for their customers and themselves is a reflection of their expertise and effort.

It should be noted that the changes occurring today in financial services are not only being driven by the advisors, but also by the customers, whose evolution has resulted in the catalytic shift in our modern economy. Gone are the days when the fact that you are a big bank with an imposing lobby was enough to impress a potential customer and garner their business. Today, customers not only require but demand immediate access to information and utter transparency from their financial partners. This shift in client thinking has proved dramatically unsupportive of the dated management philosophies found at most Wirehouse firms, whose endless hidden agendas, and constantly shifting and confusing corporate policies prove both ineffectual and disingenuous to the customer. Here enters the advantages of the RIA, Hybrid, or Independent. With nimble business structures and corporate philosophies which thrive on engagement and change, smaller and independent firms are better able to service the needs of the modern financial services customer.

Which brings us to the RIAs, Hybrids, and Independents, themselves. The trajectory of the financial services industry certainly proves that the power position of these firms will become an evermore vital component of the world economy. It then becomes imperative to understand which competitive differentiators the RIA, Hybrids, and Independents must navigate amongst themselves in order to stand out from the rest. The one key factor that is, and will remain, the most successful way for an RIA, Hybrid, or Independent to gain competitive advantage is the firm’s ability to most successfully recruit advisors. Attracting and retaining the best of the best from the advisor pool results in a stable, growing, and lucrative book of business. Whether a firm has a sustainable and ongoing recruiting policy in place can certainly be viewed as the benchmark as to whether the firm is positioned to grow and thrive in step with the industry as a whole.

A new economic era has begun and it is with the RIA, Hybrid, and Independent firm at the forefront. Rest assured, we have not seen the end of the Wirehouse  as the size of these firms, which is only matched by their coffers and egos, will not let them go down without a fight. What will ensue is certain to be the financial services version of the David and Goliath tale, the result of which will define our industry for decades to come.

Change is on the horizon for the financial services industry and it is arriving in the form of technological advancement. Seemingly futuristic financial technology upgrades are either currently available or on the horizon including face recognition CRM software, distributed ledger technology, and robo-advice platforms. Many of these technologies represent quantum shifts in advancement for financial services information management, customer service paradigms, and record and accountability tracking protocols.

The new technologies available and evolving in financial services, while on the surface disruptive in their nature, offer firms nothing but upside revenue and operational potential and a competitive advantage against virtually-based banking and financial start-up companies. All that is required to take advantage of the technology opportunity is some forward-thinking and strategic planning on the part of a firm’s leadership to best reap the benefits these new systems offer.

Integrating new technology first requires firm leadership to thoroughly evaluate the current state of the firm’s technology operations. It is important to know what technology platform is currently employed, which services it can be integrated with, and the scalability of the data and systems used. Armed with that information, a firm should search for a technological partner that provides seamless transition as to assure little to no perceivable shift in operations. A clear understanding of the technology partner’s commitment to the organization in the form of ongoing maintenance, service upgrades, and staff training is also a vital component as it determines the overall long-term viability of the technology investment.

Additionally, in order to effectively integrate new technology a firm must have a clear corporate vision and specific goals for growth, operations, and customer care. It is then possible to evaluate how available technology resources can best assist in their achievement. Current technology resources available in financial services are expansive and cover every imaginable business operation from managing client portfolios, to housing data, projection modeling, and even client lifestyle and goal modeling. Knowing in specific what services your firm is and will be supplying as a competitive differentiator will be vital to navigating through the multitude of technological choices available and landing on the right options that best suit your specific business model.

Once the specific technology protocols are selected for implementation by a firm, a clearly outlined training program needs to be established for staff in order to teach them to successfully use and integrate these new tools into their daily business practices. While it may seem an obvious step, many a firm has faltered after making a significant investment in new technology only to find that their team members on the front lines were ill-prepared to use the new technology. Such a situation causes advisors and staff to devote time away from profit generating activities as they struggle to utilize the new technology, which ultimately leads to poor service to customers and technology resistance on the part of the advisor. This can all be avoided by providing advisors and other staff the education and clearly outlined structure for technology best business practices well in advance of the roll-out of any new technology platforms.

Finally, having a solid understanding of who the firm’s primary customer is, what their financial goals are, and how technology resources can assist them in managing and achieving those goals is key when it comes to client interfacing platforms. These technologies need to walk the fine line between robust and user-friendly. Client data should be both secure while remaining easily accessible to the client themselves. Most importantly, dynamic features, planning tools, forecast modeling, and unique interface systems will be necessary in order to solidify a firm’s image of forward-thinking technological savvy with its customers while engaging them to utilize the new technology services at the same time.

Technology is a symbolic fountain of youth for financial services as through its innovation the industry has the opportunity to reinvent its structure, service level, and results, again and again. Adequately preparing for the technology journey with a clear sense of vision will embolden financial services firms as they venture towards the new horizon of unlimited potential afforded by these remarkable and evolving innovations.

Wirehouse firms are scrambling for attrition solutions as more and more of their advisors show their discontent by heading for the door. Most recently, large firms have attempted to pacify their advisors in the form of early release of 2019 compensation plans. These compensation plans are being used as perceived enticements to advisors to not only stay on board, but to drive revenue to where the firm sees a need for growth. The most recent wirehouse to join the early release party is Morgan Stanley, which announced its advisor compensation plan for 2019 last week, well in advance of the traditional November release for the firm. The change to Morgan’s compensation plan will take effect in April 2019 and, while the core compensation plan will not change, new incentives have been added such as a 15 basis point bonus on the cash balance funds of clients that brokers drive into Morgan’s banking services and up to a 3 point bump for increased financial planning activities and NET acquired asset increases. Additionally, Morgan has boosted their lending growth award payout substantially, nearly doubling the amount seen in previous years. The Morgan plan is not the first of its kind as it follows very closely the one released several months ago by Merrill Lynch, which relies heavily on advisors driving new household growth income in order to achieve top level bonuses.

As ever, what the wirehouse firms fail to realize is that incremental strategies, such as early compensation plan announcements, when used to address advisor dissatisfaction merely put a band-aid on a gaping wound. Further many of the strategies are masks meant to hide the ultimate self-serving nature of the wirehouse protocols. Take for instant Morgan Stanley’s 15 basis point bonus. This bonus is structured in such a way that it will not move the needle for most of the firm’s advisors unless the advisor is managing a large pension fund. Further, Morgan Stanley has consistently gone with a market top narrative which allows the firm to make money on cash while simultaneously driving a wedge between the advisor and client. Regardless of the perceived bells and whistles of a new compensation plan, Morgan has once again hamstringed their advisors into a position where they will see decreasing personal financial benefit as their ability to service clients optimally continues to deteriorate.

The same sort of slight of hand holds true with the Merrill Lynch plan as well. Merrill has been floating numbers in the media that seem to show their revised compensation plan is working and resulting in financial growth. If losing $15BB year-to-date means your plan is working, then Merrill’s right on target. However, in the real world the $15BB Merrill has lost so far this year, second only to Wells Fargo’s $21BB, is a further indicator that both their advisors and their customers have not bought into the firm’s vision, policies, or results.

In order to remedy their monumental problems, the wirehouses must come to grips with the fact that both long-term vision and a true shift in the financial services paradigm needs to occur to achieve the desired result. It is important to understand that the wirehouse firms, each of which is owned by a bank, operate under dated logic. For instance, wirehouses will say that it makes sense for compensation and incentives to be tied to loans, cross selling, mortgages, or cash management as this achieves a holistic wealth management approach for both the advisor and the firm. While the wirehouses may believe this, many in the industry do not as seen in the ever-increasing numbers of advisors joining Hybrid, RIA, and Independent firms. Independent firms provide the best solution for both the client and the advisor through their innate structure that supports unconflicted, non-proprietary holistic solutions. Clients benefit by receiving more competitive pricing, not tied to the bank-owned wirehouse profit and loss statement. The advisors – and their paychecks – benefit through their ability to offer a flexible array of financial products such as lending services, outsourced high-touch fixed income, and traditional and alternative asset management options, among many others. And, ultimately, both the advisor and the client benefit through the solid and sustainable business relationship that is achieved.

The wirehouses may shout from their bullhorns that change is being made, that they hear their advisors and customers, and are making strides to solve their core systemic issues. It is become readily apparent; however, that for wirehouses the strategies they are willing to employ come from the same play book that has been used again and again, always with lackluster results. Perhaps, in the end, the wirehouses should take a look at their competition at the independent firms, realize that financial services is heading in a different direction, and decide whether they want to get back in the game by playing on the field that exists today.

Many executives in the financial services industry, primarily in the wirehouse universe, are misguided when it comes to recruiting in that they view recruiting efforts as strictly an expense against income. This simply isn’t the case if done the right way. Recruiting is one of the most assured ways to positively impact the bottom line of a financial services company.  

Over the years, there have been a few firms that thought the most successful strategy was to go after advisors with an open checkbook and essentially buy assets at any cost.  That strategy usually doesn’t deliver the financial results which sustain a positive return on the investment.  Interestingly enough, many of these firms are the same firms that have announced they are getting out of the recruiting game and broker-protocol.  However, there are some firms that are managing these one by one “business acquisitions”, which is what recruiting truly is, correctly and not overpaying for advisors that may not deliver the returns they are hoping for.  

Take the example of Ameriprise, which recently announced strong Q2 numbers that held the additional promise of future sustainable growth. Ameriprise attributed their success not to merger & acquisition strategy, as many of their peers did, but to strategic recruiting coupled with technology investment. Raymond James is also another example of a company confident in the financial returns which will be yielded by investing in recruiting. Raymond James has released its 2018 plans to spend $247 million on forgivable recruiting and retention loans with no qualms that the investment will be recouped. Understanding in what ways recruiting can have a positive impact on your company’s financials is key to applying the successful principles used at Ameriprise and Raymond James to reap those same benefits for yourself.

First and foremost, recruiting strategically can achieve revenue gains for a company by providing a targeted hiring effort, seeking out only highly skilled advisors with solid client lists and verifiable results. This is in lieu of the broad stroke ‘place an ad and see what comes of it’ approach which sadly many firms still utilize and which yield little talent while resulting in a significant waste of time and ultimately revenue. By seeking out the alternative and partnering with a recruiting firm or establishing an internal company recruiting protocol that brings in only the best of the best, you insure that your investment in hiring is returned multiple times once the talented advisors you have selected become part of your organization.

Additionally, recruiting can impact financial returns via the ancillary marketing achieved through such efforts. Actively recruiting creates a perception among advisors and customers alike of company growth, strength, and stability. These sentiments naturally lead to a more satisfied and secure client base and greater market recognition, which bring with it the prospect of new customers and thus additional financial growth.

Recruiting strategies also result in positive financial gains for a company in that, when appropriately executed, they prevent future attrition within a company’s ranks. Recruiting strategies are meant to not only find talented individuals, but to insure those individuals are aligned with a company’s culture, goals, and strategic vision. Hiring a financial advisor who is not only talented but optimally matched to your firm’s ideals sets the stage for a long-term relationship that thereby yields long-term profits. 

Recruiting and hiring skilled advisors is not only beneficial in terms of the new hire themselves, there’s also the phycological impact of existing advisors seeing more and more quality advisors joining their firm.  As the saying goes “financial advisors vote with their feet” and when advisors see a firm a like Ameriprise, Raymond James, Stifel, and others hiring one large team after another, advisors across the industry start to take those firms more seriously than those not growing through successful recruiting, or worse yet, losing advisors.  The opposite is true as well with firms like Wells Fargo, Morgan Stanley, and LPL where we see advisors “voting” to leave for greener pastures.  If the firm doesn’t have the culture that was promised, advisors will quickly turn on the firm that they were so happy to join based on false promises.  They may not be able to leave immediately, but they will remain at the firm and spread an air of anger and contempt.

These few examples are merely the tip of the iceberg when it comes to how recruiting, when well-planned and thoughtfully executed, can result in a marked financial shift for your company. In the current financial services climate, it will be those firms – both large and small alike – that through putting this guidance into practice have the best opportunity to gather serious assets and generate the profits that assure their companies are built on solid financial ground now and well into the future.

For more information on Elite Consulting Partners, visit www.ercadvisors.com.

Financial services is facing a renaissance, and it isn’t just within the firms or the regulatory bodies that govern them where we can find change. One of the most vital shifts occurring is in the customer base itself and understanding who the clients of the future will be, how they choose their financial advisors, and what drives their major financial decisions will prove to be a necessary strategic component of any successful firm. The evolution of the customer to what many have coined to be “Next Generation” clients requires not so subtle advisor adjustments in thinking, portfolio planning, and client relationship management in order to successfully secure and retain this lucrative client segment.

Understanding who the Next Generation client is demographically sets the stage for optimally servicing these accounts and creating an organic and sustainable client relationship. Next Generation clients are those who are in their 20s and 30s today. You’ll find that unlike Baby Boomers, Next Generation clients statistically have delayed both marriage and raising a family. Spending more time workforce focused has enabled Next Generation clients to have significant capital at the ready to invest at an earlier stage of life than seen historically in other demographic sectors. Interestingly, while the family goals of the Next Generation clients are tracking at an extended timeline, once married and raising a family, many Next Generation clients follow an accelerated timeline as it relates to their investment strategy.

A recent Financial Planning article cited an example illustrating that a Next Generation client’s lifestyle evolves from carefree partying in their late 20s to nighttime baby feedings in their late 30s. This indicates a remarkably short 10-year shift in life goals and ultimately financial goals for the Next Generation client.

What all this means for a financial services professional servicing this market sector is that both the advisor and the firm should be as nimble and chameleon-like when it comes to change as the clients themselves. This can start with the firm culture which should be comprised of a mix of seasoned and young advisors and have the ability to offer a range of investment products to achieve results. You will find Next Generation clients cite 401K plan management as a high priority in their personal financial goals. Also, Next Generation clients will have used social media and the Internet to their advantage and will have done their due diligence and be fully aware of a firm’s product and service capabilities, as well as the success rates of the firm’s advisors. Lastly, Next Generation clients will expect their financial services firm to be as technologically savvy as they are through the availability of cutting-edge financial technology tools that enable both better portfolio management and better client relationship management.

Most importantly, when seeking out the business of a Next Generation customer, understand that these clients do not make buying decisions on relationship loyalty but on success and results. They have been raised in a fast-paced world based on instant access to information and the same type of access will be not just expected, but required of their financial advisor. Understanding this and fostering a relationship based on meeting the Next Generation client where they are at – not where your firm has been – will be the key to success long-term in maintaining the Next Generation client revenue stream.

For more information on Elite Consulting Partners, visit www.ercadvisors.com

The expertise of Frank LaRosa, CEO and Founder of Elite Consulting Partners, was sourced twice this week in trade media publication OnWallStreet. Frank penned the article “There’s a cure for what ails Wells Fargo Advisors” (https://onwallstreet.financial-planning.com/opinion/advisor-attrition-is-up-at-the-beleaguered-firm-but-it-doesnt-have-to-be). Additionally, Frank was quoted in the article “Merrill Lynch has lost big teams this year. Does it Matter?” (https://onwallstreet.financial-planning.com/news/merrill-lynch-has-lost-big-advisory-teams-this-year-does-it-matter). For more information on Frank LaRosa and his firm, Elite Consulting Partners, visit www.ercadvisors.com.

Technology is a hot topic in financial services today as the variety of robust, dynamic, and scalable solutions available are changing the industry in every facet. No longer do the large wirehouse firms run the board of the financial services chess game as technology has leveled the field where RIA, Independent, and Hybrid firms have the ability to provide services on a comparable scale and with equitable results.

The benefits of technology evolution in financial services has wide ranging implications that not only have the ability to positively impact a firm today, but present the opportunity of sustainable growth long into the future. At surface level, open architecture technology platforms offer advisors a necessary strategic advantage, allowing them to efficiently plan and manage their client’s portfolios while generating positive results and simultaneously freeing up time to steadily grow their firm’s business. Now, scratch the surface and envision what technology could mean to the long-term valuation of a firm and its client base.

One of the biggest issues that must be confronted by an RIA, Hybrid, or Independent firm is client succession planning which is key to a firm’s valuation in the case of a retiring advisor or sale of a practice. In these situations, RIA, Hybrid, and Independent firms often confront client thinking along the lines of ‘why should I stick around – if you are retiring, my portfolio is retiring too’. A firm which has successfully built a client base that does not need a specific advisor to service the account poses a stronger market valuation than one where client’s rely strictly on their advisor relationship in order to feel a sense of stability and opportunity for growth when it comes to their wealth management needs.

Here enters today’s open architecture technology platforms, which present a revolutionary opportunity for RIAs, Hybrids, and Independents to rethink their current valuation model and position themselves for prosperity in the event of a future sale.

Financial services technology platforms function in such a way that the advisor alone is not the only one who buys and sells an asset allocation. Various functions that traditionally have been managed strictly by the advisor themselves can now be outsourced to third parties resulting in a more predictable performance record. Add in the constant improvements being made in the technology space and the prospect of long-term results becomes documentable and thus supremely relevant to overall firm valuation.

Further, model portfolio marketplaces allow advisors to maintain a certain level of control over their client asset management activities. This opens the door to opportunities for more strategic thinking on how to structure and build a firm in such a way that your client base and service set are optimally aligned for future sale and ease of transfer to the successor.

All to often, when it comes to technology, conversation within the financial services industry turns to the topic of advisors not paying enough attention to technology importance or its long-term implications. By learning how to incorporate technology advances into their practices now, advisors shore themselves up and prevent either getting left behind, or its an even more troubling alternative of spending a career building a practice of no asset value. It’s important for advisors to think beyond today when considering technology platforms as the solutions on the market present themselves as a way to create a long-term sustainable business model that is lucrative in its valuation and boasts a lifespan that extends for generations.

For Wells Fargo, no sentimental commercial waxing nostalgic with stage coach imagery can help them now. Although it may be hard for the executives at Wells Fargo to stomach, the downward spiral of the company is in full effect, as evidenced by recent mid-year statistical reports.

The Wells Fargo second quarter results send a strong message from their customers. Every division of the company – from wealth management to banking and corporate – lost revenue. Further, the return per share for investors was a horrific 98 cents, attributable to the hefty $481 million tax charge levied as part of the company’s mortgage scandal. The signal which these numbers send is loud and clear – customers don’t trust Wells Fargo and do not see the bank as a successful partner in helping them meet their financial goals.

Beyond the loss of revenue and respectability that such sentiments by their customer base causes to the Wells Fargo enterprise – the true sinking of the ship can be seen in the number of advisors who have chosen to leave the company for smaller, independent firms such as Raymond James. According to Financial Planning, 133 advisors made moves so far this year with a whopping 60% of them coming from Wells Fargo.

While to some this news may be shocking, in the recruiting space we are not the least surprised. An advisor’s decision to move firms comes down to three key areas: resources, culture, and compensation. Taking a look at the Wells Fargo story, resources to support advisors are in short supply as management time is seemingly focused exclusively on daily damage control to enable the company to remain somewhat relevant now and in the months to come. Company culture is Wells Fargo’s true Achilles heel. How are the company’s advisors to be expected to come into the office, meet sales goals, and service clients with positivity when the company is constantly getting its teeth kicked in for what many consider to be continued illegal and questionable business practices? Lastly regarding compensation, the numbers tell the tale themselves as falling company revenues mean falling advisor paychecks.

With so many reason to go, the fact that Wells is losing advisors in droves makes perfect sense and it is interesting what former Wells Fargo advisors are conveying by choosing RIA, Hybrid, and Independent firms as their new homes. The financial services landscape has changed in such a way that favors a smaller firm with the management structure, staff size, and dynamic resource support that keep a company nimble and able to adjust rapidly to change. Smaller firms also are culturally more open to all employee ideas, not just edicts from the C-Suite, and thus foster a creative and solutions oriented environment that proves very attractive to today’s customer. Also, with fewer compliance restrictions and the ability to chart their own course, advisors reap the financial benefit of income driven by their personal dedication and commitment to performance.

With RIA, Hybrid, and Independent firms boasting such inclusive, stable, and resourceful corporate attributes it is no wonder Wells Fargo advisors see joining their ranks as having nothing but upside. Smaller firms are everything Wells Fargo is not. Further, Wells Fargo veered off course quite some time ago – not just recently as they would like to have you think with their ‘sorry you caught us, we made a mistake’ messaging. The financial means, management wherewithal, and at least some modicum of respectability simply don’t exist for Wells to survive and stop what will continue to be a hemorrhaging of customers, revenue, and advisors in equal measure. The only question that seems to remain is how long will it take?

Advisor Group, a division of Lightyear Capital, announced last week that it had purchased Signator Investors Inc. from John Hancock Financial Services for $50 billion in assets. The purchase of Signator, a retail brokerage valued in trade media at approximately $160 million, brings into the AdvisorGroup’s Royal Alliance fold 1,800 advisors in a deal that caused barely a ripple in the industry pond as it was fairly expected to occur.

The transaction, however, shouldn’t go without note as it raises the question of what value Signator brings to Royal Alliance and how the purchase of Signator impacts Lightyear’s quest as a purchaser of Cetera.

One of the primary issues brought to the forefront through Lightyear’s purchase of Signator is the doubling of Royal Alliance’s advisor headcount and now the ability to maintain service levels for their existing and new advisors thereby enabling those advisors to meet the needs of the firm’s clients – a consideration I am already hearing whispers of concern over as I speak to my sources on the street.

It can be assumed that Signator will be a straight-forward acquisition for Lightyear, with the advisors and assets being merged directly into the Royal Alliance division of AdvisorGroup. While simple to execute, the influx of Signator advisors will double the headcount of the firm and sow a tough road for the company for the foreseeable future as they will need to adjust processes and strategies to accommodate the increase in both company size and client account responsibilities.

Which leads us to the next obvious question of a possible Lightyear acquisition of Cetera Financial Group. While the integration of Signator into Royal Alliance/AdvisorGroup may serve as a distraction during the company’s pursuit of Cetera, it is certainly not a roadblock that prevents Lightyear from becoming Cetera’s purchaser.  Several reports indicate that this news will hit the street sometime over the next two weeks, and possibly as early as this week.

The consideration of whether Lightyear is financially able to purchase Cetera after purchasing Signator is a non-issue as the value of Signator was not remotely perceived in the industry as requiring enough capital to take Lightyear out of the Cetera game.

Additionally, the purchase of Cetera by Lightyear will not involve any type of firm consolidation, such as the one outlined here for Signator.  A Lightyear acquisition of Cetera would most likely follow an “If it ain’t broke, don’t fix it” approach, under which Lightyear would simply take over ownership of Cetera Financial Group. Given that Cetera has already gone through several large changes and consolidations of its underlying firms – for example transitioning VSR and JP Turner into Summit Brokerage as well as merging Girard Securities into Cetera Networks – this acquisition strategy is not only feasible, it makes the most sense while simultaneously allowing for the continuation of the existing Cetera management team to achieve the long-term goals they have worked so hard to achieve, among them bringing Cetera back from the  bankruptcy woes of it’s former parent RCAP.

Also, when evaluating what Lightyear’s endgame vision might be for acquiring Cetera, it’s important to focus in on Cetera’s debt as an asset in the acquisition process. As my previous article on May 22^nd in Financial Planning outlined in detail, a refinancing of Cetera debt will lead to $20-$30mm in annual debt savings according to industry experts and comments made by the President Robert Moore.  Based on this information, should Lightyear be the ultimate buyer of this gem of a firm, I do see the rationale, down the road, under which there could be some significant consolidation, cost saving, and better pricing due to scale, by merging Advisor Group firms into Cetera Financial Group firms.

Finally, the ultimate value of Cetera to Lightyear can be seen in Cetera’s existing technology platform. Cetera has spent an estimated $130mm on “MyAdviceArchitect”, a technology platform system coveted by nearly every purchaser courting Cetera at this time. By purchasing Cetera, Lightyear could eliminate the expense and necessity to conduct a technology upgrade for the AdvisorGroup firms as it would not make sense for a sister firm to do so when they could just tap into an existing technology platform resource such as the one developed by Cetera.

No matter who the ultimate purchaser of Cetera will be, whether Lightyear or some other firm, it will be interesting to watch the firms in the game keep their poker faces on as they execute their desired acquisition strategy. Stay tuned as there is certainly more to come.

For more information on Elite Consulting Partners, our complete suite of services, most recent moves, or other strategic advice that can help you, visit www.ercadvisors.com.

The importance of hiring and retaining advisor talent is an issue at the forefront of every financial services firm as teams have seemingly played hopscotch back and forth among Wirehouses, Independents, Hybrids, and RIAs. These advisors are in search of greater freedoms including the freedom to manage client accounts, business strategies, and compliance processes in a way more aligned with a customer-centric and advisor-success focused corporate philosophy. The latest firm to make changes in recognition of this advisor shuffle is LPL Financial. Ranked the number one Independent Broker-Dealer, LPL Financial announced this week that the company’s President of Business Development, Bill Morrissey, will be stepping down in mid-August.

The fact that Morrissey is leaving LPL does not come as a shock to those in the industry. Morrissey was the face, voice, and architect of LPL’s lack-luster retention strategy upon acquiring National Planning Holdings. Additionally, Morrissey’s recent press statements boasting about the financial strength and operational scale of LPL as its prime competitor differentiator, while simultaneously arguing that it was time to shrink the firm to maintain personal client relationships, left many confused. The waters were further muddied when LPL announced a requirement that incoming advisors must place $50 million dollars in business in the company RIA. What followed these back-to-back errors was a prompt ratcheting up of the LPL advisor migration – including the loss of seven financially lucrative Hybrid RIA practices – and what ultimately can be argued as the demise of Morrissey’s LPL career.

Here’s where things get interesting; however. As the replacement for Morrissey, LPL has tapped UBS’ Chief Digital Officer Richard Steinmeier. Prior to UBS, Steinmeier worked at Merrill Lynch in various positions that mainly focused on Advisor Center and Merrill Edge, which is Merrill Lynch’s call center program for the mass affluent. Key to this point, Steinmeier’s roles working in the mass-affluent “small account” world and call-center space display very little actual experience in the true advisor facing aspects of Merrill and UBS. Given that information, it is unusual that LPL’s own press announcement touts Steinmeier’s placement in the role of President of Business Development as a way to optimize how they attract and retain advisors, in addition to achieving new value across the entire firm itself.

Which leads us to one very important question – how on earth does hiring an executive that cut his teeth at large Wirehouses into the key leadership position at the number one Independent Broker-Dealer solve the problem of attracting and retaining advisor talent that craves a corporate culture thriving on more forward-thinking business practices?

The answer is – it doesn’t.

When firms talk about “unlocking new value” and “optimizing advisor retention strategies”, it has been my experience that what they are really talking about in poorly veiled semantics is “how do we make more money off of our advisors and client assets”. That sort of thinking on behalf of firm executives most often leads to reduced advisor compensation, higher client account fees, increased transition fees, and the list goes on. All  of this in the name of increasing return on assets under management.

From there it is just a simple, logical deduction – higher fees for customers and reduced advisor compensation will lead to deteriorating advisor-client relationships. What naturally follows is a loss of revenue – not a gain – and subsequently a further loss in personnel as I predict LPL advisors will say enough is enough and decide to move on.

The continued confusion on the part of the executive suite – not just at LPL but at many large firms – just doesn’t make sense. In fact, when it comes to retaining advisor talent and, thereby growing your business revenue it’s an equation as easy as positive corporate culture + fair and dynamic compensation = advisor performance and satisfaction. Magical thinking, double talk, and a ‘let’s see if this idea works’ approach to internal strategic failures will not achieve a positive end result. Until the leadership at LPL and firms like them realize this, expect the child’s play and advisor hopscotch to continue.

To learn more about Elite Consulting Partners and your personal financial services career transition options, visit www.ercadvisors.com.

Elite Consulting Partners Founder and CEO Frank LaRosa is the featured writer of the just released OnWallStreet Voices article “Wells Fargo leadership team misses the mark again” – https://onwallstreet.financial-planning.com/opinion/wells-fargo-leadership-team-misses-the-mark-again-on-broker-protocol-restructuring

The death of the Fiduciary Rule is all but a foregone conclusion and its demise has put large firms in a position where they must create a new roadmap for the future when it comes to internal policies and procedures. When the DOL first introduced the Fiduciary Rule, many large firms scrambled to realign business processes with the Rule’s anticipated protocols. The end result was that many large firms made rash decisions and were overly cautious on vitally important matters including which products advisors could offer, what commissions would be paid, and how clients could be serviced by the advisor. All of this was done in order to align with what the Rule outlined as best practices on behalf of a client by a fiduciary.

With the Fiduciary Rule drifting into obscurity; however, many wirehouses are now capitalizing on the current regulatory environment and reeling back in the poor policy decisions that they made in haste when it seemed as though the principles of the Rule might still matter.

One such example is Merrill Lynch. Andy Sieg, head of Merrill Lynch Wealth Management, announced to the firm’s advisors last week that they were rescinding the company-wide edict that prohibited commission-based retirement accounts. This was a good move by Merrill and is the first of what will surely be similar actions taken by many firms as they unwind policies that have presented themselves over time as more restrictive than the actual prospectus dictates.

Another example of a firm that over-reached in its policy implementation is LPL Financial. LPL completely changed the pricing of its investment products to align with a perceived passage of the Rule. The company also restricted the purchase of no-load mutual funds in brokerage accounts and released a Mutual Fund program meant to eliminate perceived advisor conflicts of interest. Each of these policies, in turn, are now outmoded and have proven detrimental to the firm’s long-term success as an ever-increasing number of LPL advisors have chosen to jump ship and seek safe harbor elsewhere at another firm.

Anticipate more policy changes to come at many wirehouses. One prediction is that we will also see firms modify their transition deals away from only paying on the back-end of the deals  for NON-ERISA accounts and returning to paying on all assets.

The necessity for large firms to make yet another round of policy changes is not just indicative of the end of the Fiduciary Rule, but proves a good example of why wirehouses are losing favor with advisors and smaller regional and independent firms are gaining traction. Independent firms are able to be more nimble, structure their own business practices, and not fall prey to the pressures of regulatory whims.

Again looking at the Fiduciary Rule, most independents waited and choose not to implement any policy changes until they saw for certain that the DOL Rule was definitive. Granted, they had the new policies ready to go if the Rule passed. However, when the Rule faded to dust, it was as simple as the independents scrapping the game plan and going back to business as usual.

Not so with the larger firms as the size of these firms by nature meant it would take longer to implement new processes and thus the large firms were forced to jump the gun and put in place rules and structures that now need to be stripped away.

If you’re at a firm that has made changes to compensation, products, or client relations in light of the prospect of the DOL Fiduciary Rule yet you do not see a concerted effort to unwind those changes, ask yourself this – Why? Why would a large firm hold on to strategies that hurt advisors and perpetuate unfair compensation? Is your firm holding out for the DOL to come back and do their dirty work for them with yet another evolution of a plan limiting advisors in both their job functions and in their paychecks?

A hard look at the answers to those questions could mean that you are best served by considering a new, more independent firm that has the practical abilities and supportive culture best able to withstand whichever obstacles may come on your personal journey down the financial services road.

For more information on Elite Consulting Partners and how we can assist you with your career transition, visit www.ercadvisors.com/

The playing field of financial services is changing and technology has proven to be the Most Valuable Player. At present, technology makes up around 25% of the S&P 500 and has become essential to how information is communicated, assimilated, and applied. While most wire-house firms are busy playing in the AAA league, RIA and Hybrid firms are not just interested in succeeding but thriving, and have moved to the Major Leagues striving to remain at the forefront when it comes to integrating technological solutions into their business practices.

Just like any sports team, where the MVP can be characterized by their efficiency, performance, and – at times – dynamic personality, so too does technology bring these essential traits to an RIA or Hybrid firm’s practice. For financial services in particular, technology has the ability to maintain stable and efficient business operations, improve advisor performance and overall output, and provide a creative interface for client engagement. Technology is also a major deciding factor when it comes to which firm an advisor partners with.  Technology has been the catalyst behind some of the most recent moves of many large and lucrative teams to companies such as Raymond James, Triad Advisors, Kestra, and Dynasty to name a few.

Historically, the most outsourced component of an advisor’s practice was the CRM, and the same holds true today. Modern CRMs offer feature-rich, pliable solutions which seamlessly integrate into all other technology platforms in a firm’s practice. Additionally, CRMs provide a vital operational component, housing all essential data for clients and prospects alike. A number of stellar CRM options exist for the financial services professional, with companies such as Redtail providing targeted solutions specific to the industry.

At the heart of most advisors practices are a combination of financial planning and portfolio management tools, which most advisors tend to rely on daily to manage and achieve the goals established for their clients. A proven favorite for this solution among advisors is Envestnet, which earned its reputation for its management capabilities and is gaining traction as a planning software as well. Integrations to Envestnet such as Logix, which incorporates financial planning, and Tamarac include asset aggregation, rebalancing, and third-party integration are increasing the popularity of this platform.

Another important technology solution to consider is a financial planning and portfolio management tool, which most advisors tend to rely on daily to manage and achieve the goals established for their clients. A proven favorite for this solution among advisors is Envestnet, which earned its reputation for its management capabilities and is gaining traction as a planning software as well. Another portfolio management solution offering the right mix of functionality beneficial to an advisor is Logix, which incorporates financial planning, asset aggregation,, and third-party integration. Logix also conducted a recent upgrade to Tamarac for trading, a main driver in the ever-increasing popularity of this platform.

For financial planners, the technology space has become crowded though it has traditionally been led by Emoney, a company which continues to make the biggest advances in technologies that align advisors interests.  The level of detail and sophistication that can be brought out of the very simple, straight-forward Emoney software is impressive, thus endearing Emoney to the planning community due to its easy adaptability into business practices.

Portfolio managers have numerous technology choices available to them, though the most important software characteristic is the capacity to communicate well with other software or data feeds. This is vital to a portfolio manager’s efficiency in managing the abundance of investments transacted daily for their clientele. Two optimal solutions available on the market today which achieve this goal are Black Diamond and Orion. Black Diamond is prized for its rebalancing capabilities, while Orion is celebrated for reporting functionality.

Speaking of rebalancing, iRebal is renowned amongst traders and is a solution available on the TD Bank platform. TD Bank is unique in the technology space and should be applauded as the company that has taken a different approach to software and technology by opening their platform to most any Fintech out there. TD has uniquely achieved for advisors using its platform the ability to aggregate day-to-day operational tools on one screen, making the TD technology solution truly ahead of the rest in this regard.
On the other end of the spectrum, Raymond James has built a proprietary solution that is all encompassing in satisfying the technology needs for most advisors. Additionally, the Raymond James platform has proved disruptive as it has revolutionized the definition of a ground-up unified function.

Cutting-edge and forward thinking solutions are being developed at other firms as well, which make the prospects for financial services technology quite interesting. Cetera recently caused a stir by integrating facial recognition software into their unified software model. Also, keep an eye out for another emerging technology, Distributed Ledger, which, as the CEO of one of the largest firms in the world recently told me, is going to change the way the world has done banking. One of the most exciting new solutions emerging is turnkey technology, with efforts for development being spearheaded by firms such as Raymond James, Cetera with MyAdvice Architect, and Triad Advisors. Turnkey platforms are proprietary systems which allow firms to incorporate the top technology players in each of the service categories, from those for financial planners to those for portfolio managers, basically linking systems together with plug-and-play functionality that takes the guess work out of integration for the advisor.

When it comes to technology, each new day emerges with a new future solution that brings with it the prospect to revolutionize the way we play the financial services game. Understanding your technology choices, which software providers are proven, and which platforms have emerged as the most dynamic and creative prospects will be vital as you and your team work to choose the technology MVP best suited to your enterprise and its ability to achieve its goals.

The financial services industry is finally taking note – women are a valuable advisor employee asset and an important component of a firm’s growth potential. Just this week, Ritholtz Wealth Management LLC made headlines by recruiting Blair duQuesnay, a well-regarded 36-year-old financial services advisor with a stellar resume that includes stints at both UBS and ThirtyNorth Investments, LLC. This week also saw Google Alphabet Inc. employees team up with investors to push for change in the C-suite, tying executive compensation to achieving workplace diversity.

Recruiting female talent makes sense for firms of all sizes when looking at the hard and fast numbers. Women advisors are statistically equal to, if not slightly better than, male advisors when it comes to success in achieving results for their clients, a statement supported by the Bank of Montreal report that in the U.S., 51% of the wealth is controlled by women.  Additionally, female talent attracts and retains customers from the very lucrative affluent female market demographic, evidenced by the Financial Planning Association study affirming the correlation between a firm’s female advisor headcount and retaining high NET worth women clients. Further, the Insured Retirement Institute conducted a study showing 70% of women looking for a financial advisor will look to hire another woman. Also, women advisors statistically control more of their client’s assets than their male counterparts – a number which continues to grow annually. By way of example, Forbes list of Top 200 female advisors manage $210 billion dollars for their high wealth clientele.

The important consideration which needs to be made by firms wishing to reap the benefits of hiring skilled female advisors is creating and maintaining an inclusive work environment. Inclusive work environments do not simply happen but are strategically planned to include more of the benefits and culture attributes which attract and retain female talent. Work and life balance, mentorship opportunities, chances for continuing skill development and education, and a female executive leadership presence are just some of the firm attributes which secure the best of the best in female recruits.

At Elite Consulting we have experienced first-hand the remarkable level of talent women recruits can offer a firm and the importance of these firms maintaining the characteristics most desired by female recruits. Female leaders bring to the table the same skill sets as their male counter parts and, in our opinion, it is foreseeable that the number of women advisors will rise dramatically from its current 15% in years to come. This rise will be achieved not only by greater acceptance and inclusiveness in the industry overall, but also by a culture shift within the firms themselves to become more driven by holistic planning and less focused on transaction business. Additionally, as the number RIA and Hybrid firms continues to grow, so to will the number of women advisors as, in general, the intellectual capital and leadership of a RIA or Hybrid have built their firms to celebrate an inclusive, modern culture.

As a business consultant to many large teams, part of our advice will always be to focus on bringing in a successful female producer. Not only will this help capture assets vital to a team’s achievement and growth but having women as part of team offers an essential viewpoint to many key business factors vital to helping businesses grow.

For more information on Elite Consulting Partners, our complete suite of services, most recent moves, or other strategic advice that can help you, visit www.ercadvisors.com.

Wells Fargo seems to be the soap opera of the financial services industry. A disturbing, and bordering on ridiculous, series of missteps, poor business choices, and down-right fraudulent activity is the Wells Fargo status quo. This week’s installment of the drama brought news that Wells Fargo is pulling out of Indiana, Ohio, and Michigan completely – as well as shuttering four locations in Wisconsin. The acquiring company for the Wells Fargo assets is Flagstar Bancorp, a savings and loan with a strong mid-west regional presence. Flagstar will absorb 52 Wells Fargo locations for a purchase price just under $2.5 billion, paying a 7% premium on the $2.3 billion in assets leaving Wells Fargo’s coffers.

On the surface, this latest Wells Fargo move may seem to be more fall-out from the mounting indiscretions which continue to plague the company’s reputation. Wells Fargo’s fall from grace began two years ago with their well-documented fraudulent account and mortgage scandals. In April of this year, Wells Fargo agreed to pay a $1 billion fine to federal regulators over mortgage and auto loan violations that resulted in customers paying extra fees.   The $1 billion fine was the latest setback for Wells Fargo as it struggles to regain customer trust after a huge unauthorized accounts scandal.  Last year, it acknowledged that it created about 3.5 million bank and credit-card accounts not authorized by customers, and it paid $185 million in penalties. The company is now suffering the consequences with home origination loans and sales plummeting 43 percent first quarter of this year and continued negative returns anticipated for the second quarter as well. The mortgage scandal also resulted in a Federal Reserve mandated growth cap for Wells equal to their December 31, 2017 consolidated assets of $2 trillion.

The mortgage scandal and continually surfacing acts of impropriety and customer fraud have also rained a tsunami of fines rivaled only by the hemorrhaging of the Well Fargo bottom-line. $7.1 billion in advisor managed assets have left Wells in the first quarter of 2018 alone. The firm has agreed to a $480 million class action fine over the mortgage scandal while simultaneously staring down the barrel of a $1 billion federal fine for the same mortgage debacle.

Most recently, in the last 30 days, the Wells unraveling has accelerated. 15 employees from the Wells public finance department offices in Chicago, New York, and Los Angeles were dismissed as the underwriting business for the firm has plummeted from a ranking of 5th in the nation two years ago to an 8th ranked position at present. Wells was found guilty in a class-action lawsuit brought by California mortgage workers and ordered to pay $97.3 million dollars. The company was fired by the Police and Fire Department Pension Fund of Chattanooga, Tennessee after admitting they erroneously collected $15,000 in fee rebates which should have been given to the fund. And, a new Federal investigation looms on the horizon as the Department of Justice is currently investigating the firm after Wells released a regulatory filing that the company is internally reviewing inappropriate referrals or recommendations made by staff related to 401K roll-overs.

In light of Wells Fargo’s continued Hall of Mirrors business practices and propensity towards slight-of-hand, it must then be considered that Wells Fargo’s Mid-West play is not what it appears to be on the surface.

At first glance, one might think that Wells Fargo’s Mid-West sale is an effort to cull their books of smaller offices of limited profitability, thereby raising overall profitability by retaining larger accounts which generally result in higher commissions. Yet, the logic of this doesn’t make sense when you consider that a 52 office Mid-West unload by Wells doesn’t even scratch the surface of their profitability, nor does it ease the managerial responsibilities or compliance workload required of the overall firm.

Another scenario to consider is that Wells has widely been regarded the firm for the mass-affluent, while other firms like UBS, Merrill Lynch, and JP Morgan and have been focusing advisors on swimming up-stream to larger more profitable clients. Therefore, it might be argued, that the Mid-West sale is a shift in the overall Wells business model as they practice what others have preached and redirect their efforts to a new client demographic.

However, at this stage, it is hard to take anything from Wells Fargo for face value. Wells Fargo is like a petulant child, the sincerity of whose words are hard to trust. As I routinely ask my 14 year-old son; What’s the real-truth? What will the next Wells Fargo play be?  What new major news story is around the corner that will further impact clients and financial advisors?  The fact is, it’s anybody’s guess as I suspect this story has yet to completely unfold.  One thing is true, if you’re a financial advisor who’s concerned about firm headlines affecting your business, you should make sure you know where their exit doors are.

For more information on Elite Consulting Partners, our complete suite of services, most recent moves, or other strategic advice that can help you, visit www.ercadvisors.com

The well-publicized release of Merrill Lynch’s revamped advisor compensation plan has left the industry rumbling and Merrill advisors apprehensive. The goal touted by Merrill for the plan is to create cross-selling opportunity with Bank of America, increase new household client acquisition, and assist advisors in hitting their mid-year grid growth targets. The reality of the new plan; however, seems to be veering far from the outlined intent, at least from the advisors point of view.

First, the new compensation plan provides a 2-percentage point increase only to those advisors reaching the specified goal of two referrals to Bank of America – essentially limiting the potential for compensation bonuses that Merrill advisors have come to expect through previous year’s compensation plans. The new Merrill plan also brings with it a mandatory requirement of advisors securing accounts with $250,000 in new assets, taking away advisor flexibility in what types of new accounts they want to target for their business growth. Most importantly, the new Merrill plan is retroactive to the beginning of 2018 meaning advisors who don’t hit targets can have compensation they already received pulled back from future paychecks.

The motive of the Merrill Lynch compensation plan is confusing at best and downright foolhardy at worst. Under the plan’s structure, a top overall producer who does not hit new business growth goals would see a decrease in pay – never a good thing for morale. Additionally, the ‘must refer’ conditions create an environment where advisors may feel forced to put clients into products that might not be right for them to reach the company specified targets, which could result in a shockwave of dissatisfaction with both advisors and clients alike.

Ultimately, it is in Merrill’s revenue where today’s compensation decision may result in tomorrow’s future pain. Advisor talent is a firm’s biggest asset. Decrease your top producers pay and you can expect them to head for the doors and look for greener pastures elsewhere. The temporary gains Merrill may see from increasing their high-income household clientele may turn into a rapid loss if their confusingly executed compensation plan picks the pockets of too many of their leading advisors.

Growing assets is good as we all know, and is a primary driving goal for creating business synergies through cross-selling.  At what cost though will those efforts come to Merrill? Only time will tell as we see how advisors react to the now you see it now you don’t impact the new Merrill compensation plan has on their paychecks.

For more information on Elite Consulting Partners, our complete suite of services, most recent moves, or other strategic advice that can help you, visit www.ercadvisors.com.

HD Vest is asking its advisors to show them the money and their advisors are delivering. In a dramatic paradigm shift in recruiting and retention philosophy, HD Vest instituted a new plan last year to release low income producing advisors, focus attention on high worth advisors, and use recruitment modeling tools to convert its tax preparer pool into successful advisors. The strategy is paying off big time as HD Vest recently reported a more than 25% increase in productivity, a 10% increase in assets under administration, a 15% increase in assets under management, and a 10% increase in net income.

The success of the HD Vest model certainly begs the questions of will this strategy work long-term and can the policies be implemented at other similar firms with equal success? The answer to both questions certainly appears to be yes when you take a look at the practical nature of the HD Vest strategies.

Consider HD Vest’s leaner workforce policies. HD Vest set a minimum asset management requirement for all advisors with tiered growth targets over a two-year period. If an advisor doesn’t meet the target they are gone – pure and simple. The cut and dry nature of this model makes it an easy strategic addition to any firm’s operational policy. What’s more, it efficiently reduces costs and leaves behind talent which produces at a higher level resulting in increased profitability across the board. There is nothing but upside to be had here and the take away lesson is this – efficiently manage your business and your business will efficiently produce returns.

Next consider the HD Vest recruitment model. HD Vest is not only targeting advisor recruits with significant assets under management, but they are also using a modeling tool through strategic partner Drake Software to pinpoint those tax preparer recruits who show ability and growth potential in the advisor field. This is a fairly unique condition to HD Vest as its parent company Blucora is the owner Tax Act, giving it a pool of professionals to draw from. The software is working, though, with HD Vest’s tax preparer recruits passing their securities examinations 20 points higher than the average and reaching their commission targets in a fast 120 days.

Predictive modeling software is being ushered in as a new phase in recruitment strategy and, given the HD Vest success story, is certain to be considered by other firms looking to secure the right talent. In and of itself; however, predictive modeling software when applied to recruiting practices is not enough to secure the right recruit. HD Vest had an existing stable of talent to pull from and subsequently apply the modeling software to. For most firms, getting to the point of utilizing software tools requires the traditional and important recruiting practices of building relationships, ensuring a philosophical and corporate culture match, and aligning financial goals to the benefit of the recruit and the company. Only then, when the best of the best have been narrowed down for recruiting, does a predictive modeling software tool make sense for most firms.

Whether other firms choose to employ part or all of the HD Vest strategic template, the moral of the HD Vest story is this: manage your costs well, use the resources you have, set clear goals, and know how you measure success. These are business basics but every now and again its good to receive a reminder and the increased profits at HD Vest certainly show why.

For more information on Elite Consulting Partners, our complete suite of services, most recent moves, or other strategic advice that can help you, visit www.ercadvisors.com.

Frank LaRosa, CEO of Elite Consulting Partners, is the featured writer of Financial Planning’s Voices column, May 21, 2018. Read the article here:

“Will LPL or Lightyear buy Cetera? Either way, proceed with caution”

LPL Financial has been playing the game of The Price Is Right when it comes to their advisors and fees. It all started earlier this year when LPL announced they were lowering fees for advisors with $100 million or more on the LPL Strategic Asset Management (SAM) platform to a flat 3-point administrative fee. When this cost cut showed a slight glimmer of success in keeping advisors happy, LPL decided to go on a price cutting frenzy. Next up came advisors with $50 to $100 million on SAM to a flat 5-point fee and, most recently, those advisors with $25 to $50 million to an 8-point fee.

Admittedly, LPL Financial needed to find a way to play catch up. After the firm distracted themselves from other recruiting efforts with the National Planning Holdings (NPH) merger in late 2017 and early 2018, they had a lot of ground to cover. What’s more, that same merger with NPH under performed achieving only a two-thirds migration of advisors from NPH to LPL, which was far below the LPL projected minimum for success of 72%.

Attracting and retaining talent isn’t just a problem seen at LPL. Large firms industry-wide have put their thinking caps on trying to come up with the right policies and incentives to gain advisor trust and interest. What is new when it comes to LPL is that their initial cost cutting measure gained a modicum of interest from advisors and thus ensued the fee reduction tsunami. It seems like LPL is going with the school of thought that if a little of a good thing worked, then a lot of a good thing will work better and thus the continued announcements of fee reductions.

Although it remains to be seen if LPL’s strategy will be successful, initial speculation is not favorable. As with anything, short-term success does not guarantee long-term results and all indicators point that this will certainly hold true with LPL’s price reduction moves. Cost cutting simply puts a Band-Aid on a series of problems which must be addressed internally at LPL for advisor attrition to stop and positive recruitment efforts to resume.

If LPL were to be honest with itself as an organization and take a good hard look in the mirror, they would see it’s the way they treat their advisors, the tools they offer advisors to achieve success, and the revolving C-suite door that are the true source of their problems and not simply fees. In fact, cutting fees is simply a continuation of LPL’s advisor disrespect as it preys on the assumption that advisors are only interested in the bottom line and not in providing quality and insightful guidance to their customers.

What we must understand is that humans will be humans and an initial bottom-line bump will certainly gain – at least initially – the attention of advisors and recruits alike. However, without the addition of long-term systemic change, LPL will most likely find themselves right back where they started, with disenfranchised and unhappy advisors eager to find greener pastures and a wealth of potential recruits having their attention turned elsewhere.

For more information on Elite Consulting Partners, our complete suite of services, most recent moves, or other strategic advice that can help you, visit www.ercadvisors.com.

It’s becoming increasingly evident that the DOL is on life support. With outdated guidance, a lack of insight, and near zero influence seemingly ruling the day, it comes as no surprise that firms are re-evaluating their approach to DOL mandates.

At Elite Consulting Partners, we have spoken to quite a few firms that are making plans to bring back larger, back-end component deals which marks a decided shift in thinking. Up until now, many firms have been reluctant to maintain lucrative back-end deals that are paid on retirement accounts. With the bite of DOL going away, we are beginning to see firms throwing previous caution to the wind and talking about reinstating such back-end deals based on the advisor’s entire book of business, including retirement accounts.

Additionally, to continue to manage some of that risk, we also hear chatter about firms paying a higher back-end bonus on advisory business versus transaction business. There is no doubt that these new firm practices and policies will add fuel to the fire when it comes to the already scorching recruitment market that exists today.

Another unique twist when it comes to the relationship between DOL rules and financial services firms is firm manipulation to use the DOL as a cover to reduce business development risk. The vague and inconsequential nature of DOL rules created a climate where firms looking to reduce their business development risk could decrease the number of funds and VAs offered, which shoots direct fund business right onto the firm’s platform/grid, and results in reducing advisor recruiting costs and expenses. With firms figuring out the loopholes which make these lower business development costs possible, what happens to the DOL has become a non-event for many.

An even bigger issue is not whether the DOL survives or suffers a slow demise, but whether the ghost of its rules and regulations will continue to haunt the financial services industry. In the wealth management and broker dealer space, DOL policies of moving toward advice-driven and fee-based business, narrowing investment choices and funds, and creating more client-friendly pricing on variable annuities is here to stay and has created a long-term ripple effect of both decreased retirement asset revenue on recruiting deals and firms dropping out of protocol.

So, as taps plays softly in the background throughout the halls of the DOL, it leaves those of us in the industry the task of managing to the these and the myriad of other issues caused by the uneven DOL guidance as it exists today and strategizing for the impacts of the DOL Last Will and Testament in the future.

For more information on Elite Consulting Partners, our complete suite of services, most recent moves, or other strategic advice that can help you, visit www.ercadvisors.com.

Last week, DeVoe and Company released some interesting statistics related to RIA mergers & acquisitions. While the slight uptick in the first quarter of this year of 47 M&As over 46 M&As last year offers an indicator of strength, the most illuminating statistic comes when comparing who the mergers are occurring with. Almost half of the M&As Q1 this year were RIAs selling to other RIAs, meaning that advisors are choosing to sell their books of business to other advisors or small firms versus larger firms. Understanding the financial services M&A landscape and the nuances of long-term planning necessary to position your book of business for sale is key if you are interested in capitalizing on the upside financial potential such an opportunity presents.

First and foremost, successful RIAs build their book by establishing solid client relationships that span decades and that result in referral relationships. A successful sale of such a book of business requires that the company acquiring the accounts be able to service those clients with the same business philosophy, attention to detail, and customer care as the original RIA which held the account.

A second factor impacting the sale of an RIA’s book of business is technology as many RIAs utilize specific CRMs and advisor platforms to manage their client accounts. Merging with a firm offering a compatible technology and the IT staff to support the data transfer is key to migrating the legacy of important client data and files.

A third consideration are the products, services, and various portfolio models currently offered by the RIA and those of the firm they are merging with or being acquired by. The products should be nearly, if not, identical and afford the same benefits and outcomes to the client in both short and long-term forecasting.  When merging models, it’s important to make sure the models are either better than the acquiring models or a good compliment to the existing models.

Another consideration in choosing a potential acquisition partner would be the clearing and custody each party uses.  By combining forces you may be able to drive down your custody and clearing charges, and in turn, reduce the cost of service to your clients and/or increase overall profitability.

These are just a few of the myriad of issues which need to be addressed when an RIA chooses to sell their book of business, though, it is important to note that a fast, simple, and easy solution exists to bypass these issues and eliminate any potential M&A missteps. As Consultants, we work with advisors every day who are interested in joining an existing firm with the longterm intent to sell their book of business. This methodology for an M&A is particularly successful as the advisor themselves would be the one integrating their customer base into the acquiring firm. Additionally, the new firm’s technology platform, product and service offering, and guiding business philosophy would all be transitioned or established under the guidance of the advisor. Most importantly, when an advisor joins a firm in these situations, the financial end game and terms for acquiring the book of business are in place from the outset. With such a strong upside for conducting an M&A under this paradigm, it’s no wonder so many RIAs seek the guidance of a consultant to place them in the strongest position possible for selling their practice.

For more information on how Elite Consulting Partners can assist you in preparing your book of business for M&A, our complete suite of services, most recent moves, or other strategic advice that can help you, visit www.ercadvisors.com.

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. 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, 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

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.

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.

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.

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.

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.

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

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, 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. 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 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 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, 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, 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 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 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 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,…