Retention contracts at wirehouses winding down; more confidence in going indie
A lawyer who works with breakaway brokers says his workload so far this year is double what it was in the early months of 2011. And he expects that pace to continue.
“They have had enough,” Brian S. Hamburger, founder and managing director of MarketCounsel, said about the mood of many brokers he has advised. “They pay a lot for a logo that doesn't open doors the same way it did years ago.”
In an interview on the sidelines of the Financial Planning Association's Business Solutions Conference Tuesday, Mr. Hamburger noted that retention contracts are winding down and more and more reps are becoming more confident that they can make a successful transition to independence.
The biggest driver, he said, is a growing perception that wirehouse reps are paying for brands that have lost much of the goodwill that once made them an asset.
The financial crisis has tarnished the big financial names so much so that being associated with a big name, such as Bank of America Merrill Lynch, can sometimes work against them, many brokers have told him.
“Many believe that they no longer are getting enough in return for the 60% to 70% they give to the house,” Mr. Hamburger said.
A call made at 1:00 EST to BofA seeking comment for this story was not immediately returned.
Mr. Hamburger did acknowledge that wirehouses are “showing more love” to their most successful teams by making better offers as the time comes for them to renew contracts — particularly if management gets a sense that a particular team is becoming less loyal, Mr. Hamburger said.
“But advisers are skeptical.”