Where Did the $500M+ Wealth Advisors Move & Why?

Introduction

Despite the market turbulence and inflation peaking to its highest level in decades, many advisors and teams decided to switch firms in 2022. We estimate that 1400 advisors switched firms in 2022, only around 70 of those were from teams of $500 million in assets and above. The report will focus on those 70 moves.

At Spartan Advisory Partners, we have been closely monitoring the industry's leading teams by AUM and their movements, providing coaching, consulting, and transition services to the most elite advisors listed on Barron's and Forbes. In this white paper, we delve into the data from Barron's list, discovery database, and AdvisorHub to understand the direction of top teams with $500 million or more in assets under management and where they transitioned in 2022.

As a consulting firm, we aim to educate and assist the top teams in the country with their options. Our approach is impartial and all-encompassing, offering a wide range of services, including education on exit strategies, succession planning, channel and firm selection, personal coaching, and staffing. Our process prioritizes the advisor's understanding of channel selection and firm culture, enabling them to make the best decision for their clients.

We offer a range of solutions, from helping you sell or merge your RIA, starting or joining an RIA, going independent, or transitioning to a wire-to-wire model. Our focus always remains on the critical questions that impact your clients - will a move improve their experience, is the technology and platform better, can you transition them smoothly, do the resources available better serve their needs, and where can you expand your client base.

Year in Review

Markets crashed in 2022 with the S&P 500 being down more than 18% for the year, and one would expect a correlation in the number of advisors and advisors team making moves to decline as well. However, the transition multiples did not slow down as expected. In fact, several firms stepped outside the norm to drive deals higher to once unimaginable levels. 2022 was a robust sellers’ market for those who were open and confident to move. Interestingly enough, when we analyzed the data from last year, there was a trend of wire(w-2)-to-wire(w-2) transfers in the $500m+ space with around 83% of the advisors going from wire-to-wire, and around 17% going independent or RIA. 

*Many firms don’t report advisors joining or leaving. 

Why did 83% of teams with over $500 million in assets that made a transition in 2022 choose the wire (w-2) to wire (w-2) model?

Many teams running ultra-high net worth businesses require best in class capabilities and resources to effectively manage their client’s needs and only a few firms can deliver on everything. 

Access to cutting-edge technology, strong cybersecurity measures, in-depth research, and convenient client accessibility are among the important features to consider.

Banking and Lending, many of the teams $500M+ need specialized banking and lending services for their high-net-worth client’s unique financial needs. These services may include:

Personalized private banking, Asset-based lending (using valuable assets like real estate or art as collateral), Yacht and aircraft financing: These loans are specifically designed to finance the purchase of luxury yachts and private aircraft. Art lending: This specialized lending product provides loans secured by works of art. Hedge fund financing: This lending solution provides hedge funds with the necessary capital to make investments and manage their portfolios.

Due diligence and access to the world’s best professional money managers, hedge funds, private equity, venture capital funds, real estate investments, art and collectibles, and other alternative investments is another major reason why many of the 500m+ go wire(w-2) to wire(w-2).

Access to advanced technology and sophisticated products, along with thorough due diligence on alternative investments and money managers, plays a crucial role in why many of the 500m+ teams go wire to wire.

Morgan Stanley, First Republic, Rockefeller, and RBC lead the pack and landed the industry’s most desirable teams.

Well… if 83% of elite advisors went wire(w-2)-to-wire(w-2), how does that breakdown? Where did the wire-to-wire elite go? Which firms were the big winners?

Channel selection is not as much about how many assets a team has under management but all about the size and complexity of clients that practice works with. Many of the teams we consult with focus on ultra-high-net-worth families with a net worth of $10+ million or more. Those families have different platform needs usually involving some complex products and extraordinary capabilities. There are only a few firms in the world that can provide solutions for those specific needs and many of those are categorized as wire(w-2 fullservice) firms. This is why, in the $500+ asset space, 83% of those advisors go wire-to-wire.

Who saw the most outflow within the $500m+ space?

Merrill Lynch/Bank of America lead the way with making up almost 50% of the outward mega moves in 2022. It was a little better than what was reported in 2021, where they represented 62% of the $500+ moves. Keep in mind the reported recruited assets do not fully represent what was actually moved.

17% of the 500M+ went Independent, where did they go?

In contrast to wire-to-wire trends - In 2022, Full Service RIA platforms saw strong growth among advisors with $500 million or more in assets under management. Firms such as Sanctuary Wealth, NewEdge Advisors, LPL Strategic Wealth Services, Fidelity, Kestra, Wells Fargo- Finet, Tru independence, and Dynasty Financial Partners emerged as popular options for advisors seeking to establish their own independent businesses without the burden of building from the ground up. Furthermore, many of these platform firms began offering upfront capital or minority investments to mitigate the risks of transition and compensate for lost deferred compensation, which was a successful strategy for both the firm and the advisors.

A relatively new player in the race for the ultra-high-net-worth advisors who find themselves to be more entrepreneurial is Goldman Sachs’ RIA platform. Access to institutional-grade products and services with an industry-leading brand name allows you to not only service UHNW clients very well with the complex product necessary, but build trust and ethos with your book being powered by Goldman Sachs. What makes this different? Let it be known this is the advisor's brand and business but backed by Goldman. Goldman Sachs will be co-branded on the statement to let your clients know that this is your business but powered by a world-class brand. Goldman charges one single fee which includes all costs for trading custody, technology, and access. For a $500m+ team, it can be hard to transition straight into RIA, but with Goldman Sachs’ new platform - think complex products, innovative resources, and brand with all the support to make your transition less stressful.

Why are so many 20+ year lifers exploring options?

Many of Barron's and Forbes’ moves consisted of advisors who were considered Lifers at the firm they moved from but explored their options in the marketplace. Many of these advisors have built extraordinary businesses in advising business owners on pre-liquidity events and exit planning only to never have done the same for themselves. These advisors have worked hard their entire careers getting their clients to understand the need to explore options, have a plan B, and understand exit strategies. Many of these advisors are now starting to explore their own-liquidity event and exit strategy. We help them understand all their options.

In the face of a challenging market environment and significant market volatility, it is essential for advisors to carefully consider their reasons for making a move and to have confidence in their ability to successfully transition their clients to a new platform. At Spartan, we believe that the decision to move should be based on the best interests of the clients and that the new firm should offer a clear upgrade in terms of brand, platform, technology, investment platform quality, alternatives, lending, banking, and planning resources. While it may be difficult to find the perfect firm, it is important to ensure that the benefits outweigh any potential drawbacks for the clients.

Making a transition to a new firm is a significant decision that should not be taken lightly. Advisors should have a clear understanding of their own abilities and be confident that they can successfully move the majority of their clients to the new platform. While the timing may not be perfect, it should be as close to perfect as possible. It is important to weigh all the pros and cons, and to do a thorough due diligence before making a decision.

In conclusion, the trend of advisors and teams switching firms, particularly in the $500 million or more asset space, remained robust in 2022. The decision to move to another wire(w-2 model) was driven by the needs of their clients, as these advisors were focused on finding the best platform and resources to serve their clients' needs, including advanced technology, cyber security, research, lending, banking, and alternative investment options. The decision to move was ultimately about serving the best interests of their clients and providing them with the best possible service. The transition package comes after the advisor is comfortable with the firm and the platform for their clients.

To receive the list of all moves in 2022, please add your email here, and your report will be sent to you.

Disclaimer

It is important to note that this analysis is based on publicly available data and may not include every move that has taken place. Additionally, it only includes movements of w-2 wire house advisors. The information provided is an estimate and has been compiled using AdvisorHub, Barron's, Investor news, and Discovery database.