Among the thousands of financial advisers we have met over the years, very few have spent their entire careers at one firm.

Advisors are a mobile group. According to the Boston-based research and consulting firm, Cerulli Associates, 12% to 13% change firms in a typical year. During the industry upheaval of 2008 and 2009, the percentages were much greater.

A cynical observer might suggest that this movement is all about money and individual advisor greed. While these are definitely factors, there are overriding macro and micro industry cultural forces that drive this syndrome.

Wall Street culture rewards defectors seemingly at the expense of loyal employees. The current industry trend is to keep expenses supporting existing advisors lean while lavishing increasingly lucrative recruiting packages on advisors from the competition. Each year, most advisors learn that they must do more business to maintain or expand their supporting cast while the recruiting deals continue to grow.

The message is clear: the money is flowing to recruits, not existing advisors.

So why are most of the major firms operating in this fashion? Every firm we talk to wants to grow, yet few are willing to grow organically. Developing new talent takes time. Most often, it takes a new advisor three to five years to build a meaningful business and make a positive contribution to the bottom line.

As we know, the odds are stacked against the new advisor surviving, let alone turning profitable. Organic growth takes time, which is a commodity in short supply on Wall Street. I often joke that long term on the street is next Thursday. The reality is that those running the major firms are expected to get immediate results. Earnings fall under the scrutiny of shareholders, who are typically less interested in what is being done today that will benefit earnings years down the line.

Our industry has put the brakes on training programs over the last decade. Because these programs are expensive and the failure rate is high, firms have justified slowing or shuttering their programs.

These days, it is rare to find a successful financial advisor who has been in the business for less than 10 years. We are losing more to retirement, death, burnout, and termination than the combined training programs are creating.

So we are faced with a supply/demand problem. Despite a dwindling pool of financial advisors, almost every firm is forecasting headcount growth. As a result, the value of a successful advisor continues to climb and deals they are being offered continues to soar.

Merrill Lynch seems to be addressing the supply issue. Merrill Lynch had traditionally had the largest and, many would argue, most successful training program. Many of today's industry stars got their start at "Mother Merrill." Like those of its peers, this program has been less robust in recent years, but now the firm has signaled a change.

Merrill Lynch did an analysis of its retail revenue and determined that approximately 80% of production comes from advisors who trained at the firm.

So the firm sees the wisdom of recommitting to the role of training leader and plans to hire 2,500 trainees this year. And why not? The pool of talented people seeking employment might be the greatest of our lifetimes. The firm is receiving as many as 36,000 applications a month to fill 300 to 400 positions.

If Merrill Lynch's move starts an industry trend, the supply problem might dissipate over time, but what in the meantime is being done to reward loyalty and enhance retention?

By the end of last decade, most firms paid their most successful advisors some form of retention bonuses. While these plans have helped keep many in their seats, we believe that scores of folks see their packages as a countdown to departure.

Advisors are besieged by solicitations from recruiters like me, as well as direct calls from managers of competing firms.

One of the most frequent responses we hear is, "I can't move now because of the obligation created by my retention package." If indeed that is the primary reason for remaining at a firm, it is pretty clear what is going to happen when time is served and the shackles are released.

The countdown to freedom will likely inspire greater numbers to change firms as they reach expiring years. Retention bonuses have been an expensive short-term fix, but might prove to be the catalyst to a larger future exodus.

Indeed, Wall Street culture truly encourages advisor movement. While offering advisors from the competition record signing bonuses, they impose expense controls and cost cutting to their loyal employees. And to keep the best of these loyal, they offered retention bonuses that for many have become their primary reason for staying aboard.

The macro culture sends a message, but it is the micro culture, that of the individual firms preached by their branch managers, that tends to trigger the actual moves.

Most major life decisions are inspired by love and money. While firms and their branch managers cannot control the money being offer their advisors, they must allow advisors to "feel the love" in order retain their key employees.

Managers who truly care about their advisors and succeed in forming strong positive relationships create loyalty and enhance retention. Advisors who feel that their manager and the firm truly care about them, and are genuinely committed to their success, rarely leave.

The majority of advisors who become our candidates lack a positive tie to their managers and firms. They often feel ignored, taken for granted, or otherwise disconnected.

Obviously, there have been huge changes at all of the largest firms. UBS has an entirely new management team, and Wells Fargo, Merrill Lynch and Morgan Stanley have had complex mergers.

Surely not all of the changes are for the worse. However, it does leave many with a sense that their firm is a different place than they originally chose to join, perhaps now a place where they feel no connection, and have become open to change.

Branch managers who serve as the primary link between the advisor and firm are charged with overcoming these challenges and developing relationships that enhance morale. That's not an easy task for today's managers who, because of industry-wide complexing, are now asked to supervise many more advisors. Furthermore, today's managers must spend much of their time recruiting if they wish to survive.

So consider the impact of a successful recruiting campaign. It can easily offend a manager's existing crew. To his advisors, it appears that money is being thrown at the unknown while they are subject to penny pinching. It seems the new recruits have negotiated the best office space and disproportionate measures of support staff.

Advisors know that changing firms is hard work, but some think they must if the want to be paid fairly and treated with respect.

Surely Wall Street would like to find a solution to the recruitment merry-go-round. Retention bonuses and record recruiting packages have not been kind to the collective bottom line. The constant movement is not beneficial to clients, nor does it enhance the industry's already scarred public image. Firms must focus on growing organically and assign their top people to the task of building better training. Why not install a real reward system for the loyal rather than spending record sums on recruits?


William P. (Bill) Willis is founder and president of Willis Consulting Inc.,
a financial services recruiting firm based in Palos Verdes Estates, Calif.