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3 Ways to Be Proactive If Your Firm Is Signaling Its Future Intention


3 Ways to Be Proactive If Your Firm Is Signaling Its Future Intention

If your firm is signaling its future intentions, here are 3 ways to be proactive rather than reactive.

Almost every week seems to bring some stunning change in the financial services industry. Advisors are inundated with both newsworthy headlines as well as rumors from within their own firms: Possible comp changes (even whispers of going salary-bonus at UBS), recruiting retrenchment, and new models being born and poaching top talent from the competition. All this leaves many advisors feeling unsettled and unsure about their futures. While that’s an understandable reaction, more prescient advisors realize that they are actually getting a gift: The gift of time, a running head start, if you will.

Some of the recent changes have seemed sudden, like when Morgan Stanley pulled out of the Protocol for Broker Recruiting agreement with minimal advance notice to advisors. Others have been anticipated for months or even years, such as the consolidation in the independent broker dealer (IBD) space. But even for “sudden” moves – with hindsight – there are almost always warning signs, a virtual countdown to the event.

Of course, not all rumors come to be truth (as Barbara Herman discussed in Surviving the Rumor Mill in the Financial Advisory World). But the fact remains that if your firm is signaling its future intentions, as a fiduciary you must take note. Are you hearing the same rumor from multiple sources? Or is your firm making incremental changes that seem to be leading in a specific direction? Even if you’re not at one of the firms that have implemented recent newsworthy mandates, the industry itself is changing.

Like storm clouds signaling an approaching storm, most changes are heralded well in advance, whether the changes are recent:

  • Industry experts debated about the long-term viability of Broker Protocol for months before Morgan Stanley’s exit, and UBS’ departure on their heels was even more predictable.
  • Senior leadership at major firms complained about the cost of recruiting for years before slashing deals and used the Department of Labor rule as the excuse.
  • The increased cost of doing business in the IBD space was publicized well before LPL announced its acquisition of National Planning Corporation or Cetera started conferring with Goldman Sachs about finding a private equity investor.

Or “oldies but goodies”:

  • Creditors questioned the stability of Bear Stearns’ hedge funds well before the 2008 collapse of Lehman Brothers.
  • Merrill Lynch was saddled with massive debt, making it ripe for acquisition by Bank of America.

However shocking these events appeared at the time, the clues were there even if not everyone acknowledged them. Change rarely occurs in a vacuum, and advisors who keep their eyes – and ears – open for their firm’s clues are less likely to be surprised.

Related: How Building a Relationship Based on Trust Will Reward You with the Key to Success: Loyalty

So what’s an advisor to do?

If recent changes or rumors of change at your firm have caught your attention, use this time to your benefit. You have been given the opportunity to be proactive rather than reactive, and it is in your best interest – not to mention the best interests of your clients – to carefully consider both the changes we’ve already seen, as well as the potential changes coming down the pike. Here are 3 steps to make the most of this advantage:

  1. Take the emotion out of it
    Even in the event of a massive disruption, avoid the urge to panic. Take a deep breath and approach your exploration with a calm heart and clear head. Based upon what you have seen and heard, could the rumors you are hearing be true and if they are, could you be ok with any likely outcome?
  2. Honestly consider if your firm is the right place for you
    Have you had doubts in the past about your future with your firm? Are you happy with the technology, support and senior leadership? And if the worst were to happen – whatever your “worst” may look like (i.e., pulling out of Protocol, increased bureaucracy, comp changes, limitations that affect your ability to service your clients, etc.) – would you still be happy? This is the time to be brutally honest and self- aware.
  3. Get educated on your options
    The landscape of the financial services industry is ever-changing, with new models emerging on a seemingly daily basis. Be open-minded and challenge all your assumptions.

What’s next?

If after going through this exercise you decide your firm is still the right place for you and your business, then that’s great! This is likely the best-case scenario because it’s the path of least resistance. And since you did your due diligence you are actively choosing to stay from a position of greater strength and knowledge.

But if you aren’t 100% sure, then this is the time to continue looking at your options. Because of the waterfall of opportunities now available, there has never been a better time to explore or a greater chance of finding your personal vision of utopia. The firms – and the industry at large – are dynamic and broadcasting even more changes to come. Use the information you’re given to get a running start on choosing a path for your future.

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