Despite the unpredictable market conditions of 2022, at least 9,000 advisors have changed firms. According to a Diamond Consultants Advisor Transition Report, that number includes advisors with three or more years of experience.
A significant factor driving advisor transitions has been recruitment deals. Firms are increasingly becoming more competitive with how they structure deals to attract more advisors, according to WealthManagment.com. Deals are a critical factor in an advisor's decisions to transition, which explains the recruiting success many firms are experiencing.
For example, UBS offered short-term transition deals to encourage advisors to leave their current companies. UBS's short-term offers resulted in a 76 percent increase in advisor hiring, according to the report from Diamond Consultants.
The competitive nature surrounding transition deals has also reached independent firms. Traditionally, independent firms offered 25 percent to 50 percent of an advisor's gross dealer concessions (GDC). Independent firms currently offer between 35 to 100 percent of advisor GDC. The dramatic increase represents how firms are compelled to incentivize their offers to compete.
Firms are even moving away from the traditional route of back-end deals and instead offering guaranteed amounts or salaries. Other firms are providing advisors with provisions for repayment of outstanding notes and sunset deal balances as part of their deals.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
