Advisors at the “Big 3” are feeling stuck between the corporate bottom line and a battle for control

During the past few months, wirehouse advisors may feel as though they’re caught between a rock and a hard place. That is, they are being forced to choose between maintaining their income level or best serving their clients’ interests.

Corporate profit seems to be driving the bus, and each day it is increasing the distance between the advisors and the firm that they call home.

Consider some of the recent moves by the firms:

• UBS unveiled a comp change in June of 2017 in which the firm cut back the number of bonuses their advisors could earn as a way of having them focus more on asset growth.
• Or the grid change announced in November by Merrill Lynch that added both penalties and rewards to spur asset growth.
• And Morgan Stanley’s message to advisors in December of last year that it will raise grid thresholds it uses to pay brokers by about 10% to incentivize them to produce more revenue.

Certainly, there are many advisors who benefit from these changes, especially the most productive folks who are asset-gathering machines.

Yet even the best and most compliant advisors complain that there is something incongruent about being told how to run their businesses and which clients to take on. As one team put it, “The notion that the new comp plan requires us to behave in a certain way if we want to continue to be paid at the same grid rate borders on offensive.”

Quantity vs Quality?

Advisors are living through a culture shift; one where firms are leading them down paths that may not be in the best interest of their clients or careers—and definitely in direct conflict with the fiduciary standard they promised to uphold. For example:

• A Merrill advisor who must make at least 2 client referrals to other parts of the bank to avoid a pay cut.
• A Morgan Stanley advisor who will see his pay reduced by 3 percentage points for business done with clients residing outside the United States.
• A UBS advisor who will lose a bonus this year because he brought in many new clients but their net worth was below the threshold.

So as firms battle to retain control in an attempt to maximize profit by valuing quantity over quality, advisors are voting with their feet in search of a place where freedom and flexibility are part of the culture and vision of the organization. Which is why regional firms like Raymond James, RBC and Stifel, boutiques like JP Morgan Securities, and the independent space in general, are killing it in the race for top advisor talent.

While it often feels like being caught between a rock and a hard place, the good news is that no advisor is truly stuck there. We’re lucky to be living during a time where vast changes have opened the doors to more and more opportunities that allow advisors to serve their clients and careers in a way that is more congruent with their own values. The key is to stay true to your goals and vision—and the money and happiness will follow.