How Wirehouse Recruiting Cuts Affect All Advisors
Recent reductions in advisor recruiting at wirehouses will affect all advisors, even those planning to stay put, Mindy Diamond writes on WealthManagement.com.
Over the past year, Morgan Stanley, Merrill Lynch and UBS have announced plans to cut back on recruiting experienced advisors. The firms have said they plan to divert those resources to their existing advisors and grow those advisors’ assets under management. But it may not necessarily play out in the favor of those advisors, according to Diamond, president and CEO of recruiting and consulting firm Diamond Consultants.
For starters, if there’s less competition for advisors among the wirehouses, the firms get more power over the advisors. Recruiting “keeps firms honest,” writes Diamond, because it encourages them to continuously improve their operations to appeal to the top advisors in the industry. Teams looking to bring on the next generation of talent may have a harder time attracting younger but established advisors, such as those with $300,000 to $1 million in production, she claims.
The recruiting cuts also mean wirehouses have less incentive to keep offering lucrative sunset programs to retiring advisors, according to Diamond.
And advisors may begin to feel trapped in their current positions as a result of the cuts. If wirehouses don’t anticipate much to gain from recruiting but fear attrition, they may eventually abandon the Protocol for Broker Recruiting, she writes.
There are still plenty of great recruiting packages out there, Diamond insists. Meanwhile, the wirehouses have been putting more energy into supporting their existing advisors, she writes. Nonetheless, advisors weighing their options mustn’t rely on hope or fear, but instead focus on how the industry landscape is changing their own goals and those of their clients, according to Diamond.