The big four, Merrill Lynch, Wells Fargo, Morgan Stanley and UBS are now losing more reps to independent broker-dealers than ever before. In the past, wirehouse advisors felt the need of a big brand like the bull at Merrill Lynch or the stagecoach at Wells Fargo to gain trust and assets, but that is far from the truth this year.
Bad publicity in Hollywood or other industries can be good, but it takes an opposite effect in the financial sector. As one example, negative publicity has been haunting Wells Fargo Advisors for the last few years with over 300 hundred advisors jumping off the wagon in the previous 24 months with no end in sight.
Fueling the fire, the Department of Justice has recently turned their attention to Wells Fargo allegedly pushing products that are not in the best fit of the customer. I would not want to be an advisor transitioning my office to Wells Fargo with that headline looming everywhere. Wells Fargo was also caught up in allegations about opening client accounts in the past without their consent.
It’s important that advisors understand that clients invest with people they like and trust, not with company brands and logos, but they are also better off with a BD that doesn’t continuously make negative headlines as well.
Recently, wirehouse firms have been removing themselves from a Broker-Dealer protocol rule implemented in 2004. This protocol protected advisors who chose to move their broker-dealer affiliation to another firm without TRO’s or other legal threats if they followed the rules. The recent elimination of the protocol at wirehouse firms show that those who remove themselves from the list value assets over their financial advisor employees, making them expendable.
As a business owner, I would never want my employees and partners to feel this way if they wanted to work somewhere else because I could not provide them with the tools and freedom to succeed.
While jumping to an independent broker-dealer can become a challenge, the ability to have the same or better technology, a much higher payout and a substantial business with value to sell down the road are just a few reasons to make the jump. The industry would call the leap to independence in the past as a leap of faith, but now it’s more like a leap of reason.
Advisors must still market for clients, build relationships, submit new account forms, work with a compliance manager, and deal with FINRA and the SEC- why not earn 30%-50% or more of what you’re making now? Your clients would recommend you to every person they knew if you achieved those kinds of returns in their investment portfolios. The job is the same, why not earn more?
There are advantages to a wirehouse model that cannot be overlooked. There are investment lines that cannot be attained on the independent side. Trading in futures, commodities and having clients out of the country are a few areas that independent firms do not allow. The ability for health coverage is a massive win with monthly premiums rising annually and most wirehouse firms guaranteeing coverage. This area becomes a decision maker to stay for older advisors or others with pre-existing conditions.
However, if you are managing assets, selling equities, mutual funds, variable annuities, life insurance and other typical investment vehicles, you could be earning north of 90% on every dollar you invest for your clients. In fact, you can receive over 95% at certain independent firms. Transitioning to one of these firms won’t earn you a big upfront check, but you will make more dollar for dollar once your up and running.
Changing broker-dealers and moving from a wirehouse firm to an independent BD is nothing to take lightly. Attrition can range from 3% to 30% or more in some cases, but the reward is tremendous. Take your time to make a decision, pray about it, get feedback from other advisors, clients, wholesalers and more importantly talk to a professional recruiter about your specific options before making a move. From start to finish, the process can take about six months and much longer for high net-worth teams. So don’t rush, but don’t stand still- sometimes the best move is not making a move at all, but sometimes the worst move is also staying in your comfort zone.
Success does not exist within comfortability- conforming to certain environments can hold you back from your full potential, and if you’re an advisor, your firm can be holding you back.
“Plans fail for lack of counsel, but with many advisers, they succeed. Proverbs 15:22”
Call us today for a full due diligence report on your firm or others that you may be open to learning more about. Your inquiry is completely confidential.
Dave Reyna – CEO/Executive Recruiter RepRecruit, LLC 661-266-0099
