April 3, 2023
Louis Diamond Quoted
by Alex Ortolani
“The legal contracts are the strongest and most compelling way that firms keep advisers and consultants in play,” says Louis Diamond, president of financial adviser recruiting firm Diamond Consultants. “But to me, that is almost a negative way of approaching it—I don’t want to keep people just because their contract says they need to stay, but because they want to stay.”
Diamond says a key selling point is showing top advisers a path to growth with the new firm—and how they can benefit from that growth. This can be done through post-acquisition equity in the firm, which usually has a vesting scheduled tied to how long an adviser stays. Perhaps more important, he notes, is that it “gives people a sense of belonging and sense that they are part owner of the firm.”
Private equity firms, which have been key players in the adviser acquisition space, often use shared equity packages, Diamond notes.
Another, related strategy is to show advisers how joining the new firm will aid in growing their business and client list, whether through lead generation mechanisms, retirement plan participant access or custodial services.
“Pretty much every adviser wants to grow, so if a firm can help them grow their business, they are more likely to stay,” he says.
Still, Diamond says, non-solicitation contracts will continue to be key as a way of retaining advisers.
“What any of these firms is buying are the people,” he says. “The people in the firm and their underlying relationships is the key element. … It makes them less marketable to other firms and protects them a little bit from leaving.”
