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When You Wish You Hadn’t Signed on the Dotted Line …


Advisors who are feeling “stuck” at firms that may no longer serve them best find they have some really valid options

Traditional brokerage firms have a vast arsenal of retention tools they use to keep advisors – and their assets – captive. And in today’s increasingly competitive marketplace, firms have doubled-down in their efforts to retain talent, leaving many advisors feeling stuck.

These folks regularly face choices that solidify their obligations to the firms they work for. Accepting a retention package, buying a book of business from a retiring advisor, becoming a successor, or even receiving a bonus (which may also include the acceptance of a non-solicitation clause, as in the case of the pending UBS mandate) all sound good at first. Yet they come with strings attached and tie you monetarily to your firm by way of unvested deferred comp or unamortized loans. And while you may have willingly accepted those golden handcuffs, what happens if, over time, the firm you joined is no longer the best option for you and your clients?

“No longer happy or growing.”

Take the case of Rob, a young wirehouse advisor, and his senior partner, Stan. Three years ago, Stan entered the retiring advisor program, allowing him to phase out over time, monetize his life’s work, and ultimately hand the keys to the kingdom to Rob. At the time, Rob was thrilled with this decision—and eager to be the next gen leader of this successful team.

Fast forward to today, and Rob is living with regret over the choice he made. In the time since, his firm no longer resembles the one he promised his life’s work to. Comp changes and a culture of managing to the lowest common denominator have alienated top advisors like Rob. More importantly, the increased bureaucracy has made it difficult to service clients as he planned. The bottom line: He is no longer happy or growing the way he expected, and wonders if staying put another two years still makes sense.

“Where do I go from here?”

New leadership, changing comp plans, decreasing control and increasing bureaucracy have drastically transformed the culture at many large firms. And yet, for an advisor, the thought of leaving – especially if he owes his firm money ­– sounds impossibly complicated. But the good news is that there are options.

When considering whether or not a change is in order, advisors in this position must ask themselves some tough questions:

  • Is your growth being limited by your firm? And to what extent?
  • Is your ability to service your clients being adversely affected? And to what extent?
  • Is the pain temporary, or are the disruptions likely to be permanent?
  • Would staying put further bind you to your firm, making a future move even more difficult than leaving now?
  • How much would you owe back as a result of leaving early?
  • What are the economics of making a move and how does that compare to what you owe back?
  • How strong are the pulls toward another firm or model?

Related: The Choreography of a Move to Independence with Tim Oden

After gaining clarity through this exercise, you’ll be better prepared to assess your options. There are 3 choices available to advisors in this situation:

1. Stay with your current firm.

Even though you believe your firm is no longer the best place for you, you can choose to accept the limitations you’re facing and stop wondering “what if.” Make an active decision to fulfill the terms of your agreement and continue to service your clients to the best of your ability within the confines of the firm.

2. Move to another traditional firm.

Even though, in some cases, recruiting deals aren’t as high as they once were, there are still many firms offering significant transition money, including reimbursement for unvested deferred comp. You may find a firm that is closer to your version of perfection, gain leverage in the recruiting process, and solve for the monetary impact of leaving.

3. Move to independence.

While a move to independence may seem like the riskiest choice because it requires you to bank on your future success, it’s an increasingly legitimate option for advisors due to the long-term upside. If start-up capital is needed, there are many loan options available, plus willing investors with deep pockets who are anxious to get into the space.

As firms continue looking for ways to tie down their workforce, more and more advisors are reconsidering their commitment to them. While many will decide that staying with their firm is the best choice, others will choose to break the ties that bind and move on.

In a perfect world, we’d each have a crystal ball that would allow us to see into the future. Short of that, you owe it to yourself to thoroughly consider the potential impact your choice can have. So before you sign on the dotted line, ask yourself, “Could I live with whatever happens 5 years down the pike and still feel this was the best choice?”

Yet if you find that you’re living with a decision that no longer serves you or your clients, it’s important to remember that with creativity and an open-mind, you are never truly stuck—there are always options available.

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