October 2, 2023
Jason Diamond Quoted
By Karen Demasters
Anyone looking for evidence of America’s growing shortage of financial advisors might point out the growing competition to recruit advisors among independent broker-dealers.
There is no shortage of B-Ds that would enthusiastically court quality firms in today’s market, according to Jason Diamond, vice president of Diamond Consultants, a financial consulting firm based in Morristown, N.J.
Moreover, the number of advisors who wish to retain their brokerage business isn’t growing like it once did, and Covid accelerated the retirement of older brokers who were getting ready to leave the business anyway.
These forces have tilted the supply and demand equation in favor of reps, intensifying the recruiting competition. “All broker-dealers want advisory firms for their assets. Broker-dealers want to grow their assets and they want to increase their share of fee-based firms,” Diamond says. “If someone has a quality advisory firm, there will be a home for it. Broker-dealers want to recruit, but there are not enough quality firms out there, so it is an advisor’s market.”
Broker-dealers aren’t just competing for reps but for assets, something that prompts them to offer bigger payouts and more transition dollars for advisors bringing those assets over. Deals are trending higher. It’s not unusual now to see five-year forgivable loans for advisors reaching up to 40% of their trailing-12-months revenues; 30% used to be the average.
“In some selective cases, the loans can even be north of 100% of the trailing-12-months revenue,” Diamond adds. But it could be that even ridiculously high financial incentives aren’t enough. “What advisory firms are really looking for is better access to financial solutions for their clients, for lending and banking products, and technology support,” Diamond says.
