If you are a successful financial adviser, of whatever type or channel, in terms of opportunities available, this is your Golden Age. Sometimes “eras” are hard to recognize while they are happening; as the cliché says, hindsight is always 20/20. I suspect that in five years there will be a group of advisers who will smugly know they took advantage of the confluence of events that are making this a special time while a second group will smack themselves for not recognizing the opportunities and acting on them.
What makes this such a special time?
1. Supply and Demand
The average age of a million dollar producer, irrespective of the channel, is over 50. At the same time, the biggest firms who have trained generations of advisers have stopped training twice over the last ten years. And the success rate of those trainees has only fallen. Reduced supply makes everybody look more attractive. Succession planning for big books in big firms will become a hotter and hotter issue over the next ten years. Meanwhile, both choices and recruiting dollars have never been greater. Keep reading……
2. Independence is not just for the lower producers and many indies are enjoying new found attention
I do not subscribe to the idea that advisers at the wirehouses are “flocking to independence.” That said, virtually everyone that I speak with is at least thinking about whether it is applicable to them or not. Concurrently, wirehouse branch managers are making their case with their large checkbooks to induce the indies who might be tired of running a business and a practice to join them. These worlds are overlapping more than ever.
3. New firms have capabilities, panache, credibility, and capital
Born from the ashes of the financial crisis and the emboldened capabilities of the large custodians, there has never been a group of credible start-ups in this industry like we see today. HighTower Advisers, Focus Financial, Fieldpoint Private, Benjamin Edwards, Dynasty Financial, and Washington Wealth Management are just some of the more prominent new names out there. In my opinion, in five years there will be hundreds of advisers who will beat themselves up for not exploring the equity/partnership opportunities that are available today.
4 Regional firms have capabilities, checkbooks, culture, and loyalty
There is an appeal to feeling special amongst a smaller group, the proverbial big fish in the smaller pond. Not all of them have figured out how to keep growing, or how to differentiate themselves from their wirehouse bigger brothers; however, it's impossible to ignore that they are a legitimate attractive alternative to a significant group of Advisers who like the flexibility, attention and cultures of a smaller firm without the perceived risk of a start up.
5. Wirehouse deals are humongous
Put yourself in the shoes of a wirehouse senior executive (calm down; this is a hypothetical exercise….NEVER give up your book). While your own advisers age, retire, go independent, and take deals from your primary competitors, your choices for growth are limited. You can acquire a smaller firm or merge (at best a crap shoot), you can train (big investment, small return) or you can recruit a proven commodity. In that context, it is easy to see why big firm deals are so attractive.
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