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4 Signs the Wirehouse Team Ain’t Movin’

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It can be hard to assess just how serious a wirehouse advisor or team is about going independent. Just because advisors seem excited about the prospect of starting their own firm doesn’t mean they’ll actually pull the trigger.

So how can recruiters and hiring authorities at independent firms know if they’re spending their time and focus on the right candidates?

Here’s a guide to four key questions to ask. The answers, of course, will be clear indicators of the advisors’ true intentions.

1. Are they looking at just independent firms, or are they also interviewing with rival wirehouses?

In my experience, most advisors who go independent focus solely on prospective choices in the independent space right from the very beginning. They’re not out there kicking the tires at local wirehouses.

That’s because they have the entrepreneurial DNA and are internally driven to become business owners. These advisors know exactly where they want to go. Plus, they are happy to explain why they no longer need a wirehouse platform to expand their respective businesses.

In contrast, the lion’s share of advisors exploring both independence and more traditional options typically choose to remain within the wirehouse/regional firm fold. They’re checking out both options, because they don’t know what they really want and are using the interview process to help them figure it out.

For many reps and teams, these steps are simply part of a due diligence process that lets them satisfy their curiosity and explore the less-familiar independent world. 

Some years ago, an advisor sent me a funny cartoon from the New Yorker magazine. It shows a knight in shining armor calling out to a damsel in distress looking down at him from a window in a tall tower. There’s a neighboring castle identical to the one in which she’s currently imprisoned.

The caption reads: “Let me take you away from all this and bring you over to all that.”

I framed the cartoon and have it hanging in my office as a reminder that most people move to firms that are similar to the ones they are leaving. It’s the exceptional person that ventures into radically different terrain.

2. Do the advisors have an excessive focus on the transition deal?

This is a battle that recruiters and hiring authorities with independent firms just can’t win. Once an advisor seems overly concerned about the details of the transition package, you can be sure that he or she will be joining another wirehouse or regional firm.

Major independent firms pay top producers 40% to 60% of trailing-12-month fees and commissions upfront. Smaller independents pay 10% to 15% up front, and RIA custodians may offer only modest start-up allowances. 

But wirehouses and regionals pay up to 150% upfront!

Advisors who are serious candidates for independence have already decided that they’re willing to take less of a deal or no deal at all if that’s what it takes to start their own firm.

3. Can the advisors give the specific reasons they want to go independent?

Advisors who feel it’s important to have maximum control over their business are good candidates for independence.

You can probe their level of entrepreneurship by asking: Is there a marketing program involving broadcast or social media they can’t execute at their current wirehouse? Are they seeking to sock away bigger pension contributions as a business owner? Do they want more flexibility in crafting the ultimate sale price of their practice or firm?

4. Are they truly ready to be business owners?

In other words, do they seem prepared and committed to the extra work that is required of those starting a business? Hint: If you see beads of sweat forming when you discuss finding and renting office space, this advisor may not be coming over to independence!

Also, if hiring an assistant and paying for their benefits feel like insurmountable obstacles to the advisor, beware. Similarly, advisors who don’t want to make time to understand the merits of different ownership structures (LLC, S-Corp and C-Corp) are not good prospects.

Going independent is no easy move. But there are easy ways to see if the advisors being recruited have what it takes to become successful indie reps. 


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