Results for "On Recruiting"

Aug 14, 2019, 11:14 AM EST

As wealth management firms try to hold onto assets, they don't always get what they pay for


By Danny Sarch

The average adviser in the wealth management industry is over 50 years old. A significant percentage of the best performers are over 60. What does this mean for the industry over the next 10 years?If you talk with the top wirehouse advisers and ask them how they built their practices, the stories they tell you will make you chuckle. Strangers actually answered their home telephones, listened patiently to the callers, and then sent them checks to buy municipal bonds. In suburban offices, prospective clients lined up on the street for hours to buy certificates of deposit paying 15% interest and up. Seminars that promised free lunches and financial wizardry were packed and resulted in accounts being opened on the spot. [Recommended video: Race is on to boost diversity of the advice business]Perhaps there are a few practitioners out there still doing seminars and cold calling, but I think it's safe to say that they are no longer the... Read full post

Jul 8, 2019, 2:33 PM EST

Independence means different things to different people in wealth management


By Danny Sarch

With the July 4 holiday fresh in our minds, it strikes me that the word "independence" by itself no longer accurately describes the phenomenon that is changing the wealth management industry today.Back in the 1980s and 1990s, it seemed that the only way to go independent was when wirehouse brokers answered an ad for Robert Thomas or LPL that was in the back of Registered Rep magazine.Breakaway brokers were mostly struggling wirehouse advisers who sought to increase their payout. Today, of course, some of the largest teams in the industry are departing the big firms to go "independent," defined as starting their own companies.More: What does it mean when superstar breakaway brokers bolt again?But the RIA side of the industry will argue that going to an independent broker-dealer does not truly lead to independence. IBD advisers are restricted to the offerings of their broker-dealers, while theoretically RIAs can offer the entire universe ... Read full post

May 8, 2019, 2:36 PM EST

Wirehouses are losing the war for client assets


By Danny Sarch

As a headhunter, I tend to define the war for assets in the wealth management industry in terms of where advisers leave and where they go. And the industry follows that very closely, too, since it is interesting and newsworthy when large teams move, regardless of the destination.Advisers are very likely to take most of their client assets with them when they change firms, and the hiring firms (or enabling custodians) want the revenue that these assets represent. The war for talent, then, is really just a proxy for the war for client assets.Like all companies, the public wealth management companies release their results every quarter. One of the metrics that everybody seems to follow is the count of the total number of advisers. The trend for the wirehouses is downward; there were over 60,000 financial advisers in the big four firms at the time of the financial crisis and now there are less than 45,000.Unfortunately, we can't trust... Read full post

Mar 27, 2019, 2:23 PM EST

Regional firms provide an alternative to wirehouses


By Danny Sarch

"Independence is not for everyone." So said my friend, a senior brokerage firm executive, after reading my last column on corporate culture.And, of course, he is right.While going independent with a registered investment adviser or an independent broker-dealer gets a lot of attention, more than half of the advisers who have left wirehouses have joined regional firms.There are a few reasons why wirehouses are shrinking, and so-called regionals are appealing.1. Bigger is no longer better, either with technology or with brand.In the computer era that was pre-internet, the technology in the industry was "client-server." Big servers crunched the data and cost big money. For years, wirehouse advisers saw going to a small firm as a compromise in the services and products they could provide to their clients. The internet and the cloud revolutions have "democratized" these services to the point that even a client who is willing to buy the right ... Read full post

Feb 20, 2019, 12:29 PM EST

Wirehouse culture driving the move to independence


By Danny Sarch

As a professional headhunter, I always discuss the culture of my client firms with the financial advisers with whom I work. Quite often, instead of inspiring curiosity, I get an eye roll, as if I had told my teenage daughter to clean her room. Corporate culture, of course, has unfortunately become an overused cliché when talking about a company. Is culture actually something tangible that an interested job candidate needs to learn about to see if he or she is a proper fit? Or is the term deserving of palpable cynicism — i.e., the eye roll? Wells Fargo is facing the challenge of reinventing and restating its culture. In January, it published an extraordinary, 100-plus page Business Standards Report called: "Learning from the past, transforming for the future."​ In the executive summary on page four, Wells Fargo identifies its past culture as one of the root causes of its 2016 problems: "The causes included... Read full post

Jan 10, 2019, 4:13 PM EST

RIA deals starting to mirror excesses of wirehouse world


By Danny Sarch

For those of us who have been in the wealth management industry for many years, the new reality of top advisers fleeing the wirehouses to go independent as opposed to the decades-long wirehouse to wirehouse "prisoner exchange" is as strange as Vietnam becoming a popular tourist destination. Yet, here we are.There are many factors that account for this trend. Some are "push factors" that are driving advisers away from the wirehouses, such as annual payout changes, relentless reorganizations, and managing all advisers the same, regardless of compliance history, productivity or client satisfaction. Independence is attractive because it solves for these problems, for this aggravation.Top candidates at wirehouses now are reluctant to move to another wirehouse because even with a big payday, moving from one large firm to another usually does not solve these "push" factors. More importantly, these traditional moves are increasingly harder to ... Read full post

Sep 25, 2018, 11:44 AM EST

Will Merrill Lynch leave the broker recruiting protocol?


By Danny Sarch

Will Merrill Lynch leave the broker recruiting protocol?This is, by far, the question I have been asked most frequently during 2018. Let's examine the issues. In the fourth quarter of 2017, both UBS and Morgan Stanley departed the protocol, shocking the recruiting marketplace. While I was as surprised as everyone else, I saw the moves as logical: If you are not recruiting in as many as you are losing out, for several years in a row, making it easier for advisers to leave is just plain stupid. It does not give me any joy to say this, but in terms of slowing adviser departures, the strategy has worked.Recruited attrition at both firms has fallen this year, though I strongly suspect that at least for the first half of the year, the numbers were artificially low. When both firms announced their intentions, they experienced a wave of departures as advisers accelerated their plans to take advantage of the protocol rules while they still... Read full post

Mar 13, 2018, 11:51 AM EST

Wirehouse advisers: time to unionize?


By Danny Sarch

Wirehouse advisers must feel like they are under siege. Within their own firms, payouts seem to change annually. Compensation plans are the size of a novelette. More and more compensation is held hostage — "deferred" — in order to keep advisers in place. In 2019, UBS will attach deferred compensation to what one attorney told me is the "best written non-solicit language" he has ever seen. While some advisers have indeed departed without being sued, the new language explicitly forbids the "inform but do not solicit" strategy. Lacking confidence that advisers will happily stay because UBS and Morgan Stanley are great places to work, lacking confidence that clients are attached to the firm and not the adviser, these firms are pulling out all stops to protect their franchises.While employee advisers remain free to work anywhere they choose, Morgan Stanley and UBS are taking advantage of the gigantic logistical challenge that... Read full post

Jan 16, 2018, 5:47 PM EST

Delay in fiduciary rule does not take any wealth managers off the hook


By Danny Sarch

The DOL fiduciary rule implementation has been delayed. While consumer advocates applauded the new oversight, very few within the wealth management industry felt the regulation was anything but awkward and clunky. Fewer still believe that nonretirement accounts should have a different, lesser standard of care than retirement accounts. The debate brought the fiduciary vs. suitability discussion to a head. Indeed, InvestmentNews has reported that the Securities and Exchange Commission, under Chairman Jay Clayton, is close to a fiduciary standard regulation that would encompass all investment accounts in the wealth management industry, not just the retirement accounts which were affected by the DOL fiduciary rule. Can both brokers and registered investment advisers recognize each other's strengths and weaknesses so that the public gains the benefits of both protection and choice?To the RIAs: While you denigrate the brokerage industry... Read full post

Nov 27, 2017, 5:32 PM EST

UBS broker-protocol exit puts firm before clients

Finger Pointing

By Danny Sarch

Jerry Seinfeld has a routine, a "bit", where he makes fun of fans of professional sports. When a player is part of the team you root for, you cheer him on. When he departs, you scream that he's a bum. In fact, he says, you actually are just rooting for the laundry, not the people. Well, with UBS' exit from the broker protocol, it looks like the wealth management industry is becoming Seinfeldian. According to the UBS and Morgan Stanley announcements, these firms believe that their advisers are the "best" and "world class."The clients of Morgan Stanley and UBS were most likely brought into their respective firms by the efforts of their advisers. The clients were presumably serviced and nurtured in a "world class" way by those same advisers. But the implicit threat in leaving the protocol is that if you choose to "change uniforms" you will be enjoined from talking to those clients again. ADVISER UNIFORMSAnyone else wearing that same "old... Read full post

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