The Best Reason to Change Firms

Some financial advisors chose to change firms frequently. Many people assume they do it just for the money — and a lot of money can be involved.

In my experience working with advisors, though, money is rarely the prime motivator. Usually, the advisors have a business problem to solve that can’t be addressed at their current firms.

It’s worth noting that the “highest bidder” is not always the winner when it comes to capturing advisors. In many cases, the advisor selects the firm that offers a new business model or better support.

The advisor’s goal is to build a practice with superior growth prospects. Upfront packages can influence the decision when an advisor is reviewing competitive offers. But the long-term outlook is even more influential.

More Pros Than Cons?

Prudent advisors understand that moves demand lengthy preparation efforts and can be stressful. Though these shifts can help them grow, moves aren’t risk-free. There are often surprises, and sometimes advisors can lose clients in the process.

Support is a big attraction. Both young up-and-comers and established pros managing vast pools of assets are attracted to firms that will front the cost of junior brokers or other team members.

These key hires can often be the catalyst for a boost in an advisor’s business. I worked recently with an advisor team that opted to join a major firm that rejected a bigger payday in favor of a deal that promised to hire and fund two junior brokers, for instance.

Advisors often expand their business by selecting firms with deeper, richer product offerings. In recent years, many advisors have done more business with existing clients by gravitating toward firms with services such as lending and alternative investment options.