Recruitment momentum in the registered investment advisor (RIA) and regional space should jump higher in 2013 after a slow 2012, as advisors in search of independence are now sufficiently prepared to make a move, recruiter Diamond Consultants reported Wednesday.
Diamond predicts this year is likely to be a more robust recruiting year than last based on inbound calls and conversations with advisors, as well as deals closed in January and those now in progress.
While Diamond’s 2013 forecast is strong, 2012 was an average to down year for advisor transitions as fewer (but larger) advisors moved. The average trailing 12-months of deals executed by top recruiters was in the $2 million to $3 million range, up substantially from 2011, the Chester, N.J.-based recruiting firm reported.
“We observed that larger advisors—those with higher annual production and total assets under management—were exploring options and on the move to take advantage of the record-high transition packages being offered by wirehouses and because frustration levels amongst the longest tenured advisors at these firms have increased substantially,” said Mindy Diamond (left), president and CEO, in a statement.
Diamond Consultants has reviewed financial advisors on the move based on its proprietary annual data aggregation every year since the firm’s founding in 1998.
Last year, the firm found that movement to the bank channel remained “significantly” down. Overall, Diamond’s data confirmed that 2012 was lackluster for advisor recruitment due to:
- Still “unforgiven” wirehouse retention packages for quality advisors
- A perceived “sameness” among the wirehouse firms
- Significantly stronger interest in independence, which requires a longer due diligence process, fueled by top advisors looking for greater control and freedom
- Regulatory uncertainty
“We placed nearly the same number of advisors with wirehouses as we did with independent broker-dealers in 2012, accounting for the majority of our deals,” Mindy Diamond said. “The most interesting data point for us, however, was that larger advisors and teams turned to us for counsel than the year before.”