Five questions wirehouse advisers need to ask themselves

Most wirehouse advisers don’t typically spend a lot of time thinking about their end game. And industry studies bear out that truth: It’s reported that some 70% of financial advisers do not have a formal or written succession plan.

With the average age of financial advisers in the late 50s, that’s a pretty alarming statistic.

Yet the reality is that many aging advisers really don’t have to think much about succession.

They work in a model that can take them from “cradle to grave” — that is, from novice in-house trainee to retire-in-place veteran. In fact, wirehouse sunset programs — which make it possible for advisers to monetize their life’s work without having to change firms — are just the safety net that they can rely upon.  

While the path of least resistance is to stay with a single firm for the entirety of one’s career, we’re hearing more and more from those who feel uncomfortable with the status quo — worrying that what got them “here” may not get them “there.”

As one adviser put it, “Despite the imperfections with my firm, if I knew with certainty that there would be no further changes from now until the day I retire, I’d be inclined to commit to spending the rest of my professional life here.”

Unfortunately, though, guarantees like that don’t exist.  

WHY THE STATUS QUO MAY NO LONGER BE 'GOOD ENOUGH'

Life at the wirehouses has changed a lot in the past decade — and the pace of change has accelerated in the last few years. Modifications to compensation, a hypervigilant compliance culture and a stringent regulatory environment have left advisers feeling vulnerable and with far less control over their business lives. And many struggle with their firms’ “corporate agenda” driving the bus, as well as with “management to the lowest common denominator” hindering creativity and growth.

But there’s even more at play: It’s the frustrations being voiced by next-gen partners and junior members of the team that are hard for a senior adviser to ignore. These younger advisers recognize that being bound to a firm for the life of the retiring partners’ sunset agreement could eliminate optionality and ultimately diminish the value of the business overall.

As a result, senior advisers are more often recognizing that what had been “good enough” may no longer be — compelling them to widen their lens and reconsider their futures. As such, they may be examining their options because:

1.  They’re thinking of their business as a business — and are more driven to maximize enterprise value.  

2.  They’re considering the legacy they will leave behind for their clients and next-gen advisers.

3.  They’re wondering if there could be another option that would allow them greater freedom and control.

The result of this thought process is that advisers often find their goals are out of sync with those of their firms.

Becoming aware of this incongruency has served as a resounding wake-up call for many senior advisers. To close the gap requires gaining further clarity on whether they should finish their careers where they are or opt to go elsewhere — and that process starts by answering these thought-provoking questions:

“How have the changes at my firm impacted me, my team and my business?”

“Am I limited in any way as to the products, services and technology I can access on my clients’ behalf?” 

“Am I 100% confident in my relationships with my clients?”

“Is my team committed to me and are we all on the same page regarding our collective futures?”

“What are the options beyond my firm?”

While every adviser should assess the alignment between where he is and where he wants to be on a regular basis, it doesn’t necessarily mean that the outcome is to make a move.

But it does mean that the most responsible and prudent course of action is for wirehouse advisers to be well-educated and self-aware — making certain that finishing their career in place is indeed congruent with the goals of the entire team.  

[More: 10 predictions for financial advisers in a post-crisis world]

Mindy Diamond is founder and CEO of Diamond Consultants, a financial recruiting firm.