Cultural change and business opportunities mean advisors will keep looking to move, either to another firm or to independence. Chris Dupuy, a former longtime Merrill Lynch regional executive, discusses how his current firm, Focus Financial Partners, seeks out advisors looking to break away. Independence is not for everyone, says the executive, who is head of Focus Connections, Focus Financial's service for breakaway advisors.
Are you confident there are many more wirehouse teams to move?
Yes. When I first came to Focus, one of our stated goals was to become part of the conversation when elite advisors were deciding what to do for their business and clients. Based on the growing number of calls that I am getting, we are part of that conversation.
How many advisors are you looking to recruit?
We actually don't have a goal. If there were dozens that we felt were terrific and entrepreneurial and growth-oriented and confident that the full fiduciary model was for them, then we'd work with all of them.
If there is no one that fits those criteria, then we won't work with them. That is what sets us apart from the typical firm.
We discourage way more folks than we actually talk to about making that next step. We might rule out that independence is the route today.
I may give counsel about what firm may be best for them and their clients.
You might suggest to an advisor to look at another firm?
Absolutely. I have those conversations every day. Each of the major firms has its pros and cons.
Even if there was dramatic change to the landscape, and I believe there will be, there are probably advisors who should only work in that [wirehouse] environment.
Part of my role is to explain what we represent and what we are about. I think there's still a little bit of mystery about us in the wirehouses.
Still a "bit of mystery"?
It's definitely heading in the right direction. But there are still some folks who say, Oh, what do you guys do again? Are you recruiters?
You want to make sure the messaging is the correct one. I hear, "Well, tell me about your platform."
Whenever I get that request, it's an opportunity to explain that we are silent noncontrolling partners. We only thrive if they do. Because it's different, it's an opportunity to tell them more.
How do you see yourself in relation to the HighTowers and Dynastys of the world when recruiting?
I get that question often. You go to HighTower because they are co-branding with you, whereas with our partner firms, you may never hear the name Focus.
The way I view it is those two firms are not competitors. They are alternatives for advisors looking for options.
It's not a slight on any business; some businesses are better for some people than others.
Our biggest competitor right now is inertia. There's a good market out there right now. There's always an element in any firm that you make hay while the sun is shining. It's easier to overlook culture shifts and other shifts that may be problematic.
A lot of wirehouse advisors have been moving to the regional firms. Are they competition for you?
I don't feel it's a competitive pressure.
When I got into the business, there were so many firms. There was E.F. Hutton and Prudential and on and on. That consolidation in the 1990s and early 2000s resulted in the four superpowers. What you are seeing now is that pendulum swinging the other way.
Regionals would be part of that, but it's much more diverse. It includes ours and others. I don't view that as a competitive pressure to us.
Who is the type of the advisor you want to partner with?
It's qualitative and quantitative. When we partner with a team and create a path with them, it's a multi-month and many man-hour process.
For us to make that effort and ultimately our capital, it needs to be a big group. It needs to have hundreds of millions in assets. They need to have a commitment to or direction toward a full fiduciary.
And we are looking for an entrepreneurial mindset — someone driven to grow, with a vision for their firm, something that would leave a lasting impact. Not everyone has that. That's the qualitative piece we look for.
Part of the reason I was brought on was to help identify that.