D.O.L. Days - The Transition Confusion Blues

As a recruiter in the wealth management space my favorite times of the year are year-end and the New Year. Historically about 60 % of the moves we are involved in occur between December and January. As well things slow down, your hard work for the year starts paying off and you sit back and enjoy the fruits of your labor - nice rewarding quiet times.....It has been that way for me for the past 6 years, until this year.

As we reviewed our pipeline of candidates in late October it was looking to be one of the stronger year-ends we had seen in a while. The increase in movement was due to a number of factors: retention deals from '09 were expiring, more sophisticated concierge RIA & Independent platforms being available attracting more advisors to join independent platforms and advisors concerns that their existing firm would not be able to weather the DOL storm facilitated movement. All of these factors led to a busy year end of reviewing options for our clients.  The advisors are our clients and we focus on finding them the best fit not only for their future & their growth but also most certainly for their clients. We had wirehouse moves to other wirehouses, wirehouse to independent (ahh the Breakaways) and even a couple oddballs like independent back to wirehouse and RIA to boutique. 

 The firm an advisor chooses must have as a compelling value proposition for their clients as well as for themselves.  When advisors finally do make a decision to change it is often after months, and in some cases years, of due diligence, meetings with us, clandestine dinners, conference calls and home office visits. The most work for both myself and the advisor is typically around the breakaway space - meaning the move from a wirehouse to an independent (owning their own practice) or RIA. When an advisor or a team contemplates this move its time to break out the excel spreadsheets and start drilling down on everything from technology choices, office location, payouts and transition loans to the color of the carpet (FYI burgundy is "in" this year).

  Changing firms is without question one of the most difficult and yet rewarding decisions any advisor will have to make in his/her career. I love watching the due diligence process unfold and being a part of that informed decision. What's fascinating to me is that very rarely does an advisor go to the firm they first think about moving to. When a true search is done for the right fit that final choice often ends being a surprise - which is why it is very important to review all your options.  When buying your first house did you buy the first one you saw and did you only look at one? Of course not.

The decision to change firms should be considered the single most important decision ever - there are no "do overs" once you walk into that new office. The decision to move for an advisor comes down to a lifestyle choice (culture, ease of doing business & compensation) and one which will not only serve their clients but enable them to grow their business.  A majority of the  advisors want to make sure that  this next move will be "THE" move, the last one they'll do. Thats absolutely the case when its a breakaway advisor and can even be true with a traditional move.

After all those meetings and all that due diligence comes the moment everyone is moving towards -the Deal & the Start Date. That is the moment when an advisor finally makes the leap in his/her mind, when all my efforts and time are rewarded and when one firms manager is sad while another firms manager is happy. Setting that start date is about many factors, as a recruiter I always try to push for as early a start date as they can stomach. Why do I do this? It puts pressure on the firm to deliver what they have promised and it gets the advisor thinking about what needs to be done. I have found that start dates do have a tendency to become moving targets so why not start practicing early.

A move to another firm (and in some cases a move to an entirely new way of doing business) is often fraught with uncertainty and fear - but all of that is mostly just feelings and emotions. You know what they say F.E.A.R. stands for =  False Events Appearing Real.  

So back to my two favorite times of the year and how October looked. October looked stacked, the pipeline was full and it was looking like multiple moves would be occurring as we approached year end in December......and than the D.O.L. ruling hit and its impact on transition packages was immediate.

October 27th A Day Which Will Live In Infamy.....

I have never in my 25+ years of working on Wall Street seen such utter chaos and confusion at the most senior levels of wealth management. You know there is confusion when I have "Wirehouse A" calling me telling me what they heard about "Wirehouse B's" new transition deal would be and telling me they were unclear about what their new deal would be and 5 minutes later "Wirehouse B" calls me having almost the identical conversation with me about "Wirehouse A". 

The screeching halt of "deal status quo" after the DOL ruling and the subsequent morphing by the minute of  the new structures, the tinkered front-end VS. back-end percentages & ultimately the dollar amounts of the packages left the street, advisors and recruiters full of confusion. It was a good month to be a financial services attorney. When the DOL announcement  was made we were working on multiple deals for advisors and teams - some of which had gone to paper, some were being signed or were at some stage along the deal shaping process. From the start every firm seemed to be interpreting the ruling differently.  Some decided not to change their deals, some increased their front-end & decreased their back-end , while one wirehouse remarkably can not even offer a deal till January. Talk about an opportunity for their competition and an example of  lack of courage under fire.  So how did we handle this with our clients? We had some firms pull their deals that were on the table, we had others that drastically changed their deals, while some simply pushed them out to next year (i.e. Kick The Advisor Can Down The Road). What transition deals will ultimately look like has been a frustrating unanswered question not only for me but for all those advisors who were about to make one of the most important decisions of their career. This was not the typical year end which I was looking forward to. For advisors to have to go through this exercise of picking a firm only to be whipsawed by the very firms they were set to join was not only stressful but frankly ridiculous.

See brokers don't like change when it comes to their compensation or when it comes to impacting their clients negatively. They especially don't like change when it comes right before they make a move. I could spend a few thousand words on where things are today with deals, where they will be going and the impact on various platforms but most likely I'd have to edit the entire post tomorrow.

This is what I love about Wall Street , its always changing. So what happened to that pipeline in October and all those moves with a December start date? The majority of them have now moved to January (aka - the ever changing start date) , some have taken a step back and are going to wait, while others are still set for early December. At the end of the day everyone will get this figured out and the moves which still make sense will happen - but there is something just a little "off" with how this was all handled by the industry.  

I would have thought given that the street had been talking about the DOL potentially impacting deals for two years that they'd have those new deals figured out and ready on the shelf ready for October 27th .....

I am available always to speak with anyone about reviewing their options.

We are in an open architecture world where you as an advisor deserves to be happy and at a firm that not only supports you but helps you grow your business.

Greg Noble

Personal Cell Phone: (832) 623-9204

Personal Email:  noblegreg@gmail.com