For recruiters, 2013 could be the year that 2012 wasnt, according to career consulting firm Diamond Consultants.
Based on the firms proprietary data that tracks advisor movement and current conversations with advisors, transitions will pick up in the new year as recruiting deals reach a high water mark and wirehouse retention packages expire.
We observed that larger advisors (those with higher annual production and total assets under management) were exploring options and on the move to take advantage of the record high transition packages being offered by wirehouses and because frustration levels amongst the longest tenured advisors at these firms have increased substantially, Diamond Consultants president & CEO Mindy Diamond said in a statement. Our numbers correlate with the overall industry slowdown of advisor movement last year.
A number of last years deals remained on ice because of several variables including uncertainty in the regulatory environment and heightened interest in independent firms, which require more due diligence, Diamond said.
The Financial Industry Regulatory Authority announced toward the end of last year that it was considering a proposal to mandate that advisors disclose recruitment incentives above $50,000, which kept some advisors on the sidelines, Diamond Consultants said.
Some advisors made a move in 2012 to avoid this issue, but the majority chose to wait and see, the firm wrote.
Recruitment also slowed as advisors were taking time to vet independent firms, which can offer a recruitment deal ranging from nothing to 100% cash up front, according to Diamond.
Advisors tend to do due diligence in several channels before making a move, and dont choose independence for a short-term payday, rather than taking the long view, Diamond explained.
Moreover, fewer advisors moved to the bank channel as advisors lost interested cross selling, according to the firm. The bloom is off that rose, Diamond said.
This year, however, Diamond predicted that advisor transitions would thaw and movement would pick up, especially among larger teams. Transition packages look ripe, and wirehouse retention packages would be more forgivable, so it would cost those high producing teams less to move.
There are more and better ways to be a financial advisor than ever before and we believe 2013 will be the year that more thoughtful advisors choose to make well-timed moves, she concluded.