Boutique RIAs Seek Advisors They Can Shape

The advisors are looking for a salary with perhaps a bit of equity, Staton says.

"More than likely they're not getting paid enough," she offers.

A faster growth path is a big reason to opt for a boutique over a larger RIA, she adds.

In the interview, Staton, who launched FPR three years ago after recruiting for two small RIAs, delves into why advisors are switching firms, the gain in family offices, the increased emphasis on tax planning among firms and the popularity of boutiques with female advisors.

Here are excerpts from our interview:

THINKADVISOR: Who has the upper hand in recruiting now — advisors or firms?

ALI STATON: When the market is down, the firms because they wouldn't be looking to hire. But when the market is trending [up], it's the advisors.

[Right now] candidates definitely have more of their pick of where they want to go.

THINKADVISOR: You specialize in placing advisors in boutique firms. How do you define boutique?

STATON: To me, a boutique firm has less than about 40 people. Some on the large side have 30 to 40 advisors; for the smaller shops it's probably five or six.

THINKADVISOR: Do firms need to specialize in a niche to be a boutique?

STATON: No. It goes by size. But sometimes they'll call themselves boutique to give [the impression] that they provide white-glove service.

THINKADVISOR: What types of advisors do you help?

STATON: I work with solo fee-only shops and hybrid RIAs. Typically the advisors have from five to 15 years' experience.

They probably have their CFP designation; mainly, they're looking for a salaried role, plus, maybe, a revenue-share incentive.

THINKADVISOR: Do you help them move from one type of firm to another?

STATON: Yes. Sometimes they're looking to go directly to the same type they're with; others will be looking for a complete switch.

THINKADVISOR: Why do they want to switch firms?

STATON: Probably the biggest reason is lack of a growth path. Maybe they're trying to manage more households or have more client relationships. And they're just not getting that where they are.

Reason No. 2 is compensation. That's a biggie. More than likely they're not getting paid enough. Or maybe they want some equity and aren't being offered any, such as a partnership or stock.

The third reason is culture fit: "I'm just burnt out. I work like a dog." Or maybe the opposite is true: They're bored and aren't fitting in where they are.

Or: It could be that they want a complete career change. Maybe they're just tired of the industry.

THINKADVISOR: Which channels do you see with the most advisor exits and which with the biggest gains this year?

STATON: A lot of people in wirehouses are moving toward RIAs. That's definitely a trending space.

THINKADVISOR: Are most of those RIAs boutique firms?

STATON: I would say so. There are larger RIAs too that are extremely successful. But a lot of candidates I place are looking to go somewhere smaller, where there's a quicker growth path, a more tight-knit culture and where they can be more hands-on with clients.

THINKADVISOR: What trends in compensation are you seeing?

STATON: For the advisors I place, most of the roles are salaried plus bonus. Usually if somebody is servicing existing clients and also doing some business development, they may get a pretty strong base salary, to have stability, and then some sort of revenue share.

That could be a percentage of the revenue they're bringing in. Somewhere between 20% and 30% is typical.

I also see situations where they're not getting as heavy a base salary but a heavier revenue share or a percentage of assets under management.

THINKADVISOR: Where do firms stand with signing bonuses?

STATON: A lot of times I see them as: "We want to get you over here and start quickly, so let's implement a signing bonus." But I don't see them super frequently.

Mainly they're meant as an enticement: "We really want you. Let's do this signing bonus to get the deal done."

THINKADVISOR: Are you observing a reflection of the pursuit of high-net-worth clients trend?

STATON: Absolutely. I'm seeing an increased trend toward more family office-type firms, where $10 million relationships get that true one-stop-shop white-glove service.

THINKADVISOR: But why would a family office who wants white-glove service hire a small firm or someone who hasn't been an advisor very long?

STATON: For some firms, that's a definite positive. A lot of companies I work with want to avoid the 15- to 20-year-plus advisor who's set in their ways.

There's something to be said about bringing in someone with only 10 years' experience so they can mold them a little. They can build them up, teach them the tools of the trade and how they do things at their firm.

THINKADVISOR: Are more women advisors coming to you?

STATON: Yes. And I love when they do. There's a trend to more and more women becoming advisors, which is awesome. Colleges are doing more financial planning programs, whereas you didn't see that as often about 10 years ago.

So there's more and more financial planning prep coursework for students, versus just going through a finance program.

A financial planning program will prepare you a little bit better [to work in] the industry, especially for firms that are doing true comprehensive planning with a planning-first main focus.

THINKADVISOR: Do many women prefer to work at boutique advisories?

STATON: That's probably a large part of [female advisors' switching]. A lot of what I hear is, "I'm looking to move out of this large company and go somewhere where I can thrive and have a better culture, be more hands-on and really help clients."

THINKADVISOR: Your thoughts about advisors going deeply into retirement planning and helping clients more with tax planning?

STATON: I work with a lot of firms that specialize in pre-retirees or retirees. A good financial planner is looking at the whole picture: estate planning, retirement planning, tax planning, tax projections.

Being prepared on the tax planning front is so important. I'm even seeing a lot of firms who do so much tax planning that they not only want CFPs but also CPAs and people who are enrolled agents.

THINKADVISOR: Why did you decide to specialize in recruiting for boutique firms?

STATON: I fell in love with financial planning and working with firms in the boutique space that are growing versus firms that are massive.