Why advisers are sacrificing momentum to change firms or models

Many advisers are coming off their best year ever, spurred by increased client demands during the pandemic and a run-up in the financial markets. Yet, despite the growth and upward momentum they are experiencing, adviser movement is trending toward record levels, with many high-profile teams exiting their firms for new opportunities.

The fact is, regardless of where an adviser practices, there is no perfection. And even in a time when things seem “better than good,” there are plenty of advisers who are unhappy with changes at their firms or recognize what it means when some of their most respected peers choose to depart. That is, there may be a “better way.”


Yet even in normal times, advisers who are hitting their stride and bringing in new assets find it challenging to pick up their heads and pay attention to what’s going on in the outside world — so actually conducting due diligence or seriously considering making a change seems impossible.

Let’s level set: Any move is disruptive, a ton of work, carries plenty of risk and is not for the faint of heart. But for those who are in the steep part of their growth curve, the calculated decision to take a step back and reassess — or transition — is that much harder.

Put another way, the bar to move is well higher for an adviser who is on a growth tear because the opportunity cost of moving is magnified.

In the past, we wrote about the concept of “Shrink to Grow” — essentially, a strategic decision that results in an adviser making an outsized sacrifice in order to achieve a future outcome far greater than the status quo.

In the case of an adviser or team in growth mode, the potentially outsized sacrifice is a disruption to what may be, in many cases, record-breaking momentum.

But it’s a sacrifice that many are making.

[More: Get ready for a breakaway stampede in 2021]


Under what scenarios does it make sense for a rapidly growing adviser to even give a second thought to conducting due diligence or transitioning to another firm or model? Here are seven we’ve witnessed:
1. They are so unhappy with their current firm that they are willing to risk taking a step back — and expect that improvements will resolve their discontent and enable them to take many more steps forward.
2. They believe that clients are not best served in the current environment — and that it is the adviser’s fiduciary responsibility to explore other options.
3. They are finding less enjoyment and satisfaction in the day to day, even though they are growing and earning more than they ever have before — and are looking to regain their drive and motivation.
4. They have a vision to build an enterprise via organic or inorganic means (recruitment and acquisition) and have true ownership over their business — which they cannot see ever realizing within their current environment.
5. They’ve been presented with an opportunity to acquire a book of business, join a high-powered team that will help accelerate growth further, or tap into a unique referral source (such as leads from an RIA custodian’s retail network, referrals from a bank or downstream reinvestment opportunities from a stock or 401k plan) — and the opportunities are just too good to pass up.
6. They see signs of changes coming down the pike (for example, the firm pulling out of Protocol, strengthening employment agreements or cutting comp further) — and it makes sense to get out ahead of them.
7. They identify another firm or model that may help them serve their clients better or grow even faster — so while they may give up momentum in the near term, they anticipate even greater success in the future.

The reality is that changing firms — when done for the right reasons — has the potential to create greater opportunity for growth by improving the ability to serve clients, advancing technology and efficiency, increasing the ability to brand and market with less limitation, or perhaps creating a more bespoke platform to attract higher-end clients and increase wallet share with existing relationships.

Plus, advisers interested in independence often find additional revenue opportunities when they are free to expand their suite of services to include things like tax preparation, family office services, charging planning retainers, higher payouts on insurance or billing on assets held away.

Likewise, some advisers find they may be able to tap into a niche of clients they were unable to pursue while at their traditional firm.

For instance, ex-UBS adviser Matt Kilgroe shares in an upcoming podcast episode that as independent firm Cyndeo Wealth Partners, he and his team gained the ability to launch an athlete- and entertainer focused-segment which is now the fastest area of growth for his firm. It was a client segment they could not pursue to the fullest potential because of the limits set by UBS on what they could advise on, how they could structure their team and the types of services they could offer.

It makes sound business sense to stay informed on the changing dynamics of the industry and the opportunities available — even if you are content and growing. Because that knowledge allows advisers to make proactive decisions from a position of strength, as opposed to reacting to changes in the environment.

Keep in mind that growth is the engine that fuels all businesses. So investing in the sustained growth of the business can be a worthwhile trade-off to a short-term disruption — provided the decision to make a change is done in a knowledgeable, thoughtful and strategic way.

[More: Five questions wirehouse advisers need to ask themselves]

Louis Diamond is president of Diamond Consultants.

The post Why advisers are sacrificing momentum to change firms or models appeared first on InvestmentNews.

As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.

You May Also Like

Leave a Reply

Your email address will not be published. Required fields are marked *