From Edward Jones’ plan to reach 20,000 advisors by 2020 to RBC’s expansion in Southern California or Raymond James’ acquisition of Morgan Keegan, regional firms have been an aggressive push to bring in new talent and pull from competitors.
Many firms benefitted from a movement of wirehouse advisors who were looking for a smaller headcount and more intimate culture as Boston-based consulting firm Cerulli said in an October report that predicted wirehouses could shed advisors over the next three years.
“It’s a compelling story—the regional story—and I think that’s something that can be an alternative for folks that are looking for change,” said Alois Pirker, research director at Boston-based research and advisory firm Aite Group.
While those trends are likely to continue to play out, a few innovations will keep some of the “usual names” in the headlines for pulling in top talent, according to Pirker.
“There’s clearly great opportunity ahead for them,” he said.
Smaller firms that are able to offer different levels of independence for transitioning advisors are poised to tap into some of that opportunity, he said. He cites Raymond James’ Advisor Select program as an example of a regional firm offering more choices to stay competitive in the recruiting game. According to Pirker, these choices help lure advisors to the employee side of the business.
“The multitude of channels they have available helps in employee channel significantly,” Pirker said.
That will help, but the successful recruiting firms will also be able to offer the most options for clients, according to Jack V. Nasi, president of JVN Global, a career-consulting firm for advisors. He cites Wells Fargo as an example of a firm that links portfolio managers, financial planners, and trust and estate attorneys in a way that is attractive to clients and therefore, advisors.
“I’ve had the most success placing people into that model,” Nasi said. “It’s all based on the clients and clients have bigger and broader needs and you can service it all in one place.”
Mergers and acquisitions are also likely to play a role in this coming year as well. Similar to Raymond James’ acquisition of Morgan Keegan or Stifel Nicolaus’ buying KBW, firms who have a solid amount of cash on tap are keeping their eyes out, Pirker said. He cited RBC, which has the strength of its Canadian operations behind it, as a strong player, but said that some of the regional players in general are in a good position because they are not finding themselves deleveraging or in front of regulators as frequently as some of the big-name banks.
“One indicator for being able to move on [recruitment opportunities] is financials, who’s financially sound and can move on an opportunity like Morgan Keegan,” he said.
As the industry continues to wade into social media, that could also give the smaller firms a good opportunity for additional marketing of their brand to advisors, Pirker added.
“[Some have] an aggressive social media strategy, more than Morgan Stanley has or any of the big firms because they feel like there’s something that helps them,” Pirker explained.
The competition next year is likely going to focus around the large practice teams rather than the smaller and mid-sized brokers who seem to have mostly found their niche, according to Pirker. He expected that retention contracts will elapse for some large producers and advisors who are around three years away from their bonuses will be more apt to make a move come 2012.
“We’re still going to see heightened movement,” Pirker said. “Because ultimately our assumption on long term is that the lock in bonuses handed out to large brokers in the top third of firms are losing effectiveness with each day that they have in place.”