Our News

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,…