Advisor Demand Is Hot as Talent Supply Runs Low

Terrana, formerly a broker and co-owner of a broker-dealer before he launched his firm 33 years ago, is both a recruiter and a business development consultant who advises, for example, on succession planning, mergers and acquisitions.

In the interview, he discusses 2025 recruiting trends, such as “sell and stay,” wherein advisors sell part or all of their firm but continue to work with their clients.

Here are highlights of our conversation:

THINKADVISOR: Is financial advisor recruiting hot right now?

MICHAEL TERRANA: It’s super hot. It’s definitely heated up in a big, big way.

Because we have a limited number of advisors that are good producers. We have an aging population of advisors and not as many newer folks getting into the business as in the 1980s and 1990s.

Therefore, demand is high, and supply isn’t as high ... So you can imagine that trying to find producers from competitors is in favor.

Are the recruiting deals bigger?

As big as they’ve ever been. The bigger deals are from the wire [houses], and then it goes down [in dollar amount]: regionals, banks, independent brokers. The RIAs have practically zero [deals].

About how many clients do you have?

We have over 300 contracts on the books, but what makes them clients is if they treat us like a partner, not a vendor. So we pick and choose out of those 300.

If I’m going to help you grow your firm as an extension of your business development team and partner with you to help grow your practice or firm, I’m a partner, not a vendor.

If they treat me like a vendor, I’ll fire them.

Do you work with the wirehouses?

We choose not to because that isn’t where the puck is going. A lot of aging advisors are looking to monetize their business, to truly own it and not be managed to the lowest common denominator, which the wires do.

So I see wire producers moving to the independent space or the RIA space. That’s where the puck is going.

We do work with super-regional firms that are very much like the wires, but the culture is much more broker-centric; and in some cases, the broker owns the practice.

How does President Donald Trump’s intention to abolish DEI programs affect advisor recruiting? For years, the industry has been trying to recruit more women advisors and Black advisors. Will Trump’s goal stymie firms’ effort? 

The wealth management business is going [toward] meritocracy. We’re getting back to what I would call normal: Those who do well are rewarded. To get paid [just] to show up, that was temporary in our business.

We put up with it around the COVID years and a little bit after.

Getting back to what I call common sense — meritocracy reward — is part of the business: You perform, you win.

But some women and African Americans have been hired as advisors primarily because of diversity programs. Your thoughts?

Yes, and the big firms are still going to go on [doing that]. In many cases, they should. Certain folks should have a chance to get started and have an opportunity to do well and be rewarded.

But if they’re not meant to be there, they should get out quickly. The ones that do well, should have their opportunities, but the ones that have no business being in our business, should fail fast.

Why have so many advisors gone the RIA route?

Because RIAs are running their own P&L. They start out at 100%, and then, based on how they control their expenses, they can make as much as they want.

You don’t have that option if you work at a wire.

And being regulated under the SEC [as RIAs are, as opposed to FINRA] is the most cost effective.

Is the era of breakaway brokers over?

Breakaways are definitely going to continue. Advisors who want to be in a position to monetize want to work their books the way they want to.

If they want to pass their business on to the next generation, they won’t truly own the business because the wire or bank decides where the business goes.

There are certain words that clients and financial advisors should refrain from using in emails because they generate a red flag to the advisors' firms that could turn into a compliance issue. What do you make of that?

It’s not regulation; it’s policy at the big firms.

It’s an example of being managed to the lowest common denominator: You’re an advisor that’s been in the business for 30 years, but you’re being regulated the same as a trainee.

It’s worse at the wires and insurance companies; it gets better at the regionals. The RIAs are the loosest in terms of flexibility in compliance.

What trends do you see in 2025 that you haven’t mentioned?

I definitely see that advisors are looking to partner up with other advisors — in some cases, younger advisors that might take over some or all of the business.

This would put [the founder] in the position of having more time to work with clients or spend with their families.

Or maybe they’ll sell part or all of their [firm] and continue to work the business: “sell and stay.” They work with their clients, but they’ve sold the business to an independent broker-dealer, RIA or private equity firm. We’re seeing more and more of that.

Also there will be more rollups where advisors sell to a bigger organization, whether an IBD, RIA or private equity firm.

What qualities do you look for in an advisor?

First and foremost, their compliance history, making sure they’re relatively clean or at least explainable in terms of their Form U4 and Form U5.

Secondly, we look at whether they’re retail producers, meaning that they’re working with clients.

And we look at assets under management. That’s very important. Typically, the sweet spot is about $50 million; for independent broker-dealers or RIAs, it's over $100 million.

And then, of course the revenues should align with their AUM. We typically use the 1% rule: If you manage $50 million in assets, you should do about $500,000 in revenue or maybe a little less.

What you don’t want is someone that manages $50 million that’s doing $1 million in revenue. That [indicates] a churning situation.

What should advisors be thinking about now concerning where they work?

Everything I’ve just said: finding the right home or just continuing to do business the way they want without being managed to the lowest common denominator.

But there are still going to be outliers who don’t care about any of that as long as they can take the biggest check up front to move from one wirehouse to another.