A game of musical chairs at wirehouses

Big incentive packages and adviser frustration mark new momentum as turnover picks up

Sep 8, 2013 @ 12:01 am


Wirehouse financial advisers are playing musical chairs this summer after a year and a half of tepid turnover in the wealth management industry.

Recently, Bank of America Merrill Lynch landed four advisers overseeing a combined $533 million in assets under management, and Wells Fargo & Co. hired five advisers with a total of $966 million for its Private Client Group. All nine advisers were recruited from other wirehouses — moves that could point to new hiring momentum, according to recruiters.

Merrill Lynch's hires, who hail from rivals Morgan Stanley Wealth Management and Wells Fargo Advisors, moved to the firm last month. The advisers who have joined Wells Fargo Advisors' stand-alone branches this summer departed from Morgan Stanley and UBS Wealth Management Americas.

The hires come amid increased adviser movement at the four wirehouses during the summer, shaking up what had been anemic turnover through much of the year.

“We've entered a perfect storm for adviser movement,” said recruiter Mindy Diamond, president of Diamond Consultants LLC.

'Pent-up demand'

She said she saw a drag on adviser movement during 2012 and through most of this year, but she thinks that this resistance created “pent-up demand,” resulting in more turnover in the last couple of months.

Now four forces are pushing advisers to consider jumping ship, Ms. Diamond said.

First, wirehouse incentive packages are at a high-water mark.

Second, the shadow cast by the Financial Industry Regulatory Authority Inc.'s consideration of the broker disclosure rule is creating concerns about the regulatory environment.

Third, retention packages are down from their peak, and with every day that goes by, advisers are amortizing more of the money from those packages.


And fourth, bank parents to wealth management arms are prone to be overly controlling of their advisers while also creating bureaucratic hiccups, which yield frustration.

“This creates a dissonance,” Ms. Diamond said.

“Advisers want to be treated like entrepreneurs with a large degree of flexibility and freedom. The frustration comes from a lack of or loss of control,” Ms. Diamond said.

“In the last couple of months, there's been more movement,” she said. “And a lot of that movement has been from the wirehouses to the independent space.”

But Bill Willis, president and chief executive of financial services recruiting firm Willis Consulting Inc., said that turnover at the wirehouses is still “encumbered by retention deals,” a product of the post-2008 climate.

The advisers joining Merrill Lynch include Charles Phelps, who has $201.8 million in assets under management and joined the San Mateo, Calif., office from Morgan Stanley. Also from Morgan Stanley, Abtin Zarrabi, who has $191.9 million in assets under management, joined Merrill's Pinnacle Peak, Ariz., office.

Robert Bezzone and Joseph Marotta joined Merrill in Morristown, N.J., from Wells Fargo with $139.5 million in assets under management.

William “Bill” Black, Courtenay Hathcock and Frederick Rossetter joined Wells Fargo's New York-Penn Center branch from UBS with $418 million in assets under management. Lou Walsh joined the Jacksonville, Fla., branch from UBS with his 17 years of experience in the industry and $287 million in assets under management.

Eric Zakarin joined Wells Fargo at the Westfield, N.J., branch, from Morgan Stanley. He has 26 years of experience in the industry and $261 million in assets under management.


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