Advisor movement continues to slow, but there’s a bright spot

Advisor recruiting is off to a slow start in 2023. The number of experienced advisors changing firms was down 15.9% through the end of March compared to the same period in 2022, and 16.2% lower than in 2021.

While overall recruiting activity was slower and remains well below the levels seen in the late 2010s, the trends this quarter varied significantly by channel. 

BANKS HOLD STEADY, FOR NOW

Banks lost only two experienced advisors on net to recruitment over the first quarter, compared with a net loss of 280 over the course of 2022. But any blowback from the regional banking crises that unfolded over the first months of the year hasn’t yet appeared in the quarterly numbers.

In the most prominent example, First Republic was bringing on new advisors as recently as March, but its implosion and pending acquisition by JPMorgan Chase & Co. now have its advisors scanning the exits. Some advisor teams reportedly bolted in April, and as Bruce Kelly recently noted, its current head count suggests many more have left.

The irony of JPMorgan wooing the firm’s remaining advisors is that the behemoth bank had been fertile recruiting ground for First Republic over the years. Since 2015, when First Republic really ramped up its recruitment efforts, 44 of the advisors it brought on, or nearly 20%, came from JPMorgan.

WIREHOUSE HEAD COUNT MURKY

Wirehouse losses of experienced advisors slowed relative to 2022, with 140 leaving on net, compared to 1,223 last year and 533 in the first quarter of 2022 alone.

There’s nothing new here — experienced advisors have consistently left wirehouses on net over the past decade, and the firms have focused on retaining their most productive reps while nurturing talent from within their own ranks.

But while the exodus of advisors may have slowed over the first quarter, it’s getting harder to put their recruiting into a broader context as the firms hold back U.S. head count data. This quarter, Wells Fargo became the latest to stop reporting head count, while a net 65 experienced advisors left the firm.

Wells follows Merrill Lynch and Morgan Stanley in limiting the head count data available in recent years. UBS, meanwhile, reports advisors for its broader Americas segment.

RIAS, IBDS GROW

Despite the broader slowdown in advisor recruiting over the first three months of the year, the RIA and independent broker-dealer channels have continued to bring on experienced advisors at a steady pace.

On net, 261 advisors joined RIAs from other channels and 234 joined IBDs, roughly pacing the 1,089 and 951 the channels gained, respectively, in 2022.

Recent declines in overall recruiting activity have done little to inhibit growth in these channels, and the industry can expect more of the same. According to recent Cerulli Associates projections, hybrid shops are expected to gain 8% in head count through 2025, while RIAs head count is expected to grow 4.2%.