February 27, 2024
Jason Diamond Quoted
By Andrew Welsch
Advisor recruiting moves increased at a healthy clip last year despite a regional bank crisis that took down First Republic Bank, one of the industry’s leading recruiters, according to a new report by Diamond Consultants.
More than 9,600 experienced advisors switched firms in 2023, a 7.5% increase from 2022, according to the Morristown, N.J.-based recruiting and consulting firm. Diamond Consultants defines experienced advisors as industry professionals with three or more years of experience.
The recruiting volume “speaks to advisors taking a long-term view of the business in terms of what move will best position them for the next five years, not just today,” says Jason Diamond, executive vice president and the report’s author.
Although wirehouse breakaways garner headlines, most recruiting moves occur within the same channel, meaning most wirehouse advisors go to other wirehouses, not to a regional brokerage firm or an RIA, according to the report.
“Certainly, we see big teams moving toward independence,” Diamond says. “But we also saw teams take the traditional path, that is wirehouse to wirehouse.”
A market correction this year could crimp recruiting across the industry. But barring that, Diamond expects a steady stream of advisors will switch firms this year. They certainly have plenty of options as to where to go as more wealth management companies have diversified their platforms to attract a wider range of talent. LPL Financial, for example, in recent years has launched a unit for employee advisors and one that assists wirehouse
breakaways in setting up independent practices. Those offerings are in addition to longstanding independent broker-dealer model. Other companies—such as Raymond James Financial, Ameriprise Financial, and Wells Fargo —offer multiple affiliation options for advisors.
There has also been an influx of private equity money into the wealth management sector, which has pushed up RIA valuations. The Diamond Consultants report suggests that PEmoney will find its way to more directly assist wirehouse teams in both setting up their own RIAs and immediately monetizing all or part of their book of business. “Someone will crack this code and do it in a meaningful way,” Diamond says.
The largest recruiting move by assets last year was a former UBS team that oversaw $5.5billion in client assets and jumped to RBC. Coming in at No. 2 was a former private banking team that advised on $4.5 billion in client assets at Bank of America and left to join FidelisCapital, an independent wealth management firm founded by former private bankers.
Morgan Stanley was the wirehouse with the largest net gain in recruited advisors, according to the report, which relies on a combination of private and public data sources. Raymond James was No. 1 in the regional firm channel and LPL Financial led in the independent broker-dealer channel.
