Pandemic breakaways: Why advisors are going indie despite coronavirus

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After an initial slowdown when the coronavirus outbreak began in the U.S., advisor recruiting has bounced back — and then some.

A combination of work-from-home policies and Zoom meetings has made it easier for advisors to take that introduction call and “kick the tires” of a prospective new firm from the comfort of their kitchen table, according to industry insiders.

“Advisors are at home and working in an independent environment. That can cause them to question what they are paying for at their firm. ‘Do I need the overhead and management of the wirehouse? Am I doing alright without it now?’” says Vince Fertitta, head of wealth management for Sanctuary Partners.

Fertitta says he’s had three times as many talks with prospective recruits than before the pandemic.

And those recruits are likely to take that call. According to a recent TD Ameritrade survey of 120 brokers, 40% said they were more likely to breakaway than they would have been six months ago before COVID-19 hit.

Those breakaways have become reality in recent months. An ex-UBS team that managed $1.6 billion in client assets moved to Wells Fargo FiNet. An all-women team that managed $500 million at Morgan Stanley left to join Sanctuary. And another ex-Morgan Stanley team signed on with independent broker-dealer Insigneo.

Efficiency is key

Even before the coronavirus, virtual tools had streamlined the recruiting process, eliminating two-hour steak dinners and reducing the need to travel for office visits.

Fertitta says that it’s easier for advisors to conduct the necessary process of due diligence online while at home, without worrying about a colleague looking over their shoulder or overhearing a conversation.

Furthermore, Zoom and other teleconferencing tools have made deep-dive meetings, technology demos and connecting with teams that have already made the move more efficient, says Fertitta.

“Recruiting is usually very social, but with virtual meetings, it’s all business. We can do several of these in a day, and it helps everyone stay focused,” he says.

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Less chop

Client transitions during the pandemic are also proving easier for clients, says Mark Elzweig, president of advisor recruiting firm Mark Elzweig Company. Clients are home and able to fill out the paperwork electronically, with advisors just a call away.

“We were worried the transition would be choppy for clients,” says Michael Durso, a founding partner of ShoreHaven Wealth Management in New Jersey. ShoreHaven recently left Morgan Stanley to join Dynasty Financial Partners.

Durso says he and his team have been pleasantly surprised by clients’ tech savviness. “It’s been very easy for them to print, sign, and take a photo of documents,” he says. “We’ve even had a client call to say that he’s out grocery shopping, but would sign when he gets home.”

Relationships to the fore

Elzweig notes that the pandemic has made it harder for advisors’ former firms to distribute their books to other staff.

“COVID has changed recruiting in a positive way. It shows that the thing that matters is the strength of the client-advisor relationship,” says Elzweig. It’s difficult for firms to prospect clients into staying because they are fighting an already established relationship, he says.

According to the TD Ameritrade report, 99% of the brokers surveyed said their clients trusted them personally, rather than the company’s brand.

Indeed, Durso credits his team’s generational advisor-client relationships as part of the success of their move. His father, Larry Durso, also an advisor at ShoreHaven, has 42 years of industry experience, according to FINRA BrokerCheck records.

“You have to really know your clients at this time,” Durso says. “Our clients are comfortable with my father, and that comfort level helped in the transition.”

But for all the advantages the pandemic may have provided for advisors considering a move, Elzweig and Fertitta both say that the transformed industry landscape should not be the sole motivator in making a change.

“A move makes sense or it doesn't,” advises Elzweig. “If a firm is meeting an advisor's needs and it's a good growing venue, then stay.”

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Coronavirus Recruiting Career moves Independent BDs Regional BDs Mark Elzweig Sanctuary Wealth Dynasty Financial Partners Going independent