Results for "On Recruiting"

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

Oct 31, 2017, 3:13 PM EST

Morgan Stanley is waving the white flag on recruiting


By Danny Sarch

Morgan Stanley announced on Monday that it is leaving the Protocol for Broker Recruiting. This should not surprise anybody who has been paying attention for the last year. Almost exactly a year ago, Morgan Stanley cut its recruiting deals in response to the Department of Labor's FAQ release which prohibited back-end deals in retirement accounts. Then this summer, the firm announced that it was out of recruiting altogether, with a "move by Labor Day weekend or the deal is rescinded" ultimatum that shook the recruiting marketplace.MORGAN'S ANNOUNCEMENTHere is the paragraph from Monday's official press release in its entirety: "The Protocol was instituted in 2004 to limit litigation among member firms by establishing a universal set of rules for Advisors to follow when leaving one Protocol member firm and joining another." "However, over time the Protocol has become replete with opportunities for gamesmanship and loopholes: firms have... Read full post

Sep 11, 2017, 1:55 PM EST

Saying you are a fiduciary does not mean you are a fiduciary


By Danny Sarch

Have you noticed the plethora of recent headlines of bad advisers cheating clients? In case you missed them, here are a few from just the last few weeks: • SEC says RIA stole $1 million from clients, using some of it to support gambling habit• RIA adviser gets two years in prison for cherry-picking trades• Court orders RIA to pay nearly $2 million for defrauding athletes• Los Angeles RIA charged with defrauding athlete and wifeWhat do they have in common? All of the accused advisers were RIAs; that is, they were fiduciaries. More accurately, they were pretending to be fiduciaries in order to more easily cheat their clients. I ask that you try thinking for a moment like a criminal, who sets up a money management, financial advisory, financial planning practice with the true intent of cheating unsuspecting clients out of their money. Would you advertise yourself when you met with your prospects as operating under the... Read full post

May 30, 2017, 3:07 PM EST

As Merrill Lynch and Morgan Stanley cut back, what's next for recruiting deals?


By Danny Sarch

For the adviser seeking a big up front check from a wirehouse, the market just got tougher. In June 2016, Tom Naratil, president of UBS Americas, wrote an op-ed critical of the industry practice of "relentless recruiting." UBS has dramatically slowed its recruiting in the year since. In October 2016, the DOL came out with an FAQ section on its controversial fiduciary rule, which expressly forbids back-end incentives as part of recruiting deals. And in the last two weeks, both Merrill Lynch and Morgan Stanley announced they would also dramatically slow down their own recruiting. Of the four wirehouses, only Wells Fargo has decided to stay in the recruiting business. Wells Fargo plans to increase deals for established advisers in an effort, first, to take advantage of the pause by their peer firms, and, second, to overcome the departures of advisers frustrated by the ongoing disclosures in the Wells Fargo banking scandal.Let's face it:... Read full post

Mar 10, 2017, 3:10 PM EST

The bull market for wirehouse recruiting deals is over. What will happen next?


By Danny Sarch

For years, wirehouse executives privately complained about the high cost of recruiting experienced advisers. Yet the transition packages, commonly called "up-front money," only became more and more lucrative. Shrewd advisers would often play two ardent suitors against each other, squeezing concession after concession from firms desperate to gain assets under management from the top advisers who were willing to move.Back-end incentives, when added on to the front-end inducements, drove the total packages up to 350%, with whispers that even 400% deals were possible for the most attractive candidates. For example, a compliance clean, planning-based, fee-based adviser generating $2 million in production could move to a big firm and receive $8 million. The asterisk attached to this hypothetical transaction is that the adviser would need to meet aggressive asset and production targets in the first few years of employment at the new firm in... Read full post

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