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Of Myths and Moving 2022

Every day, some advisors choose to don a new jersey or make the leap to independence. And in an industry that has exploded with options over recent years, it’s no surprise that movement continues to break records.

Yet, despite all of this activity, advisors who are either on the cusp of change or simply curious about their options share some common concerns. So nearly two decades ago, I started writing this regular installment for to dispel the “myths” that can stall an advisor’s plans to realize their full potential.

So what are the most common misconceptions that advisors share these days?

1. “There aren’t good options for big wirehouse teams.”

As competition for top talent has become fierce, most firms have upped their games in ways like never before.

For example, there is often the perception that “all wirehouses are the same,” yet in recent years, these firms have expanded their suite of offerings for ultra- and high-net-worth clients and the advisors who serve them. With enhanced multi-family office resources, access to private investment opportunities and much more, they’re investing heavily in their platforms to provide greater differentiation.

Likewise, regional firms like RBC, Raymond James and Stifel are knocking it out of the park with expanded footprints, competitive transition packages, and a less bureaucratic and more advisor-centric culture.

It’s the boutique firms—like First Republic Wealth Management and Rockefeller Capital Management—that have been the hottest landing spots for top talent. Their models offer a more elite experience, combining the support and infrastructure of a big firm with greater freedom and control.

And, of course, independence is more attractive than ever. The burgeoning ecosystem to scaffold breakaways offers access to capital, turnkey support and everything an advisor needs to build and run a successful business.

2. “I’m a senior advisor with less than 10 years to retirement contemplating my firm’s retire-in-place program, and I think it’s the only smart way to monetize my life’s work.”

For advisors who fully expect to retire from their firms, it’s an easy pathway to monetize their life’s work, while next gen advisors stand to grow their asset base.

But both stakeholders are finding that the expanded landscape offers more than one path to monetization and succession. For example, senior advisors who are not quite ready to retire nor feel their firm is the right legacy for their business often opt to change firms and later sign on to the new firm’s retire-in-place program—essentially moving once and monetizing twice.

Alternatively, there are teams that choose to make the leap to independence and design their own succession plan—selling the business to the next gen or on the open market.

Either way, we suggest senior and next gen advisors make the decision with their eyes wide open. Senior advisors often find out too late that they are bound to their firm beyond the life of the agreement, while successors lose their optionality and ability to be free agents.

3. “If I move, my firm will come after me.”

The reality is that those who do not give their firms reason to retaliate typically part ways with little to worry about. In the rare cases where legal action is taken, it is because an advisor cut corners or didn’t adhere to the advice of counsel.

No doubt that while Broker Protocol moves offer the greatest amount of cover, non-Protocol moves are successfully accomplished each and every day. But it’s critical to follow the strict advice of legal counsel. And in the case of a non-Protocol move, be meticulous in adhering to the non-solicitation rules outlined in the employment agreement.

4. “If I move to a firm that does not have a bank affiliation, how will I serve my clients’ lending needs?”

Surely, advisors who work at bank-owned firms have an easy way to satisfy all lending needs. Yet smart firms not affiliated with a bank, have leveled the playing field by offering advisors access to lending via third-party banks. Firms like Rockefeller have actually found an advantage by providing more choice, allowing advisors to shop for the best rates and options to suit their clients’ needs.

Likewise, independent advisors have found that the ability to “shop the Street” has opened up a new world of choice and price competition for their clients—which many advisors find to be one of the most attractive features of the model.

5. “I’m reluctant to move because I’m worried clients won’t follow me.”

This is always one of the most common concerns among advisors considering change. In fact, the apprehension is valid for those who do not have strong relationships with their clients. Yet, the reality is that it has become far more typical for clients to develop longstanding relationships with their trusted advisors—not the firm they represent.

For advisors who have always put their clients’ interests first, by our experience, 80% to 90% of the clients they wanted to take with them did move to the new firm.

Prior to any move, advisors need to assess their relationships and book to determine if concerns about portability are legitimate. Review any non-portable positions, and be aware of the impact that leaving them behind would have on the overall business.

Whether you’re considering a move or not, it’s important to always know there are options and to make decisions based on facts, not myths; those misconceptions can create barriers to achieving greater success.

Mindy Diamond is CEO of Diamond Consultants in Morristown, N.J., a nationally recognized boutique search and consulting firm in the financial services industry.

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