Business is booming.

Avantax Expands Recruiting Focus Beyond Newly Licensed Advisors


Avantax Wealth Management, the tax-centric broker/dealer created from the acquisitions of HD Vest and 1st Global, said it recruited 85 advisors in the first quarter to both its traditional independent broker/dealer and in-house RIA, Avantax Planning Partners, setting a record in recruited assets for the quarter at $529 million. That represents 56% of what the firm did in all of 2021, and that’s up from 49 new recruits representing nearly $290 million in new assets in the fourth quarter.

On a net basis, head count was just about flat, with the firm ending the first quarter at 3,409 total advisors, compared with 3,416 advisors at the end of the fourth quarter 2021. The firm ended the first quarter 2021 at 3,718 advisors.

Todd Mackay, president of Avantax, attributes the flat head count to the firm’s shift in its recruiting strategy and the advisor segments they’re going after.

“Our focus is really on the recruiting of more-tenured advisors that have larger practices already,” Mackay said. “So we focus much more around the production numbers that advisors have versus the net count.”

Ninety-two percent of first quarter advisor attrition was driven by nonproducers, those with less than $50,000 in rolling gross production, the firm said, in its quarterly earnings results.

Mackay said the firm’s legacy businesses, including HD Vest and 1st Global, had historically focused on recruiting newly licensed financial professionals—tax professionals, accountants and CPAs that have been in the wealth management business before. And while that segment is still a focus, Avantax has broadened its recruiting strategy to focus on three other segments as well: existing financial professionals that are also tax professionals or CPAs at other broker/dealers; financial professionals who are not tax professionals or CPAs but are looking for a strong alignment with tax planning to offer more comprehensive planning and grow their businesses faster; and midsize and large accounting firms that are looking to expand into wealth management.

“It’s been a shift from a lot of the focus on recruiting that some of our legacy businesses had that were really just focused on one of those buckets, which was the newly licensed folks that were just entering the business,” Mackay said. “And now by expanding our focus and our breadth across all four areas, we’re able to capture much more of the market of tax-focused professionals or financial professionals that believe that aligning with tax professionals or CPAs is going to drive further success in their business.”

Mackay says the firm’s “recruiting structures and incentives” have not changed. He argues that a lot of advisors are realizing the growth opportunities involved in partnering with tax professionals.

“Our network of tax professionals that has millions of tax clients has the biggest opportunity in the market for firms to grow and prospect new clients, and that particularly holds true with recruits that we see that come to us who aren’t tax professionals today, but are at other firms that are looking for ways to grow,” Mackay said. “They come to us and we’re able to immediately align them with some of our tax professionals who want to partner with them on the wealth management side, and all of a sudden they have thousands of prospects that they can continue to grow their business. It’s been a very effective tool for us.”

The firm recently hired Elvis Medica, former executive vice president and chief growth officer at Financial Advocates, a large office of supervisory jurisdiction of LPL Financial, as business development director.

Last year, RIA and investor Ancora started a public proxy battle with executives of Blucora, the parent company of Avantax, arguing that the company was mismanaging Avantax, resulting in a net loss of 100 advisors over the previous year and more than 700 advisors during the past five years. Ancora ultimately lost that battle.

Some former advisors who left Avantax told WealthManagement.com that service levels suffered and fees rose after Blucora acquired and combined their broker/dealers.

Blucora faced another proxy battle earlier this year, when activist investor Engine Capital issued an open letter to Blucora shareholders, seeking three seats on the public company’s board of directors. But in March, Engine Capital withdrew its nomination of candidates for election to Blucora’s board.



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