A move for any team of advisors can be challenging, yet for whales those challenges multiply
The movement of billion dollar premier wirehouse teams has become part of the industry’s new normal. Consider Paul Feinstein’s move from UBS to First Republic, or Matthew Celenza’s move from Merrill Lynch to Dynasty. Headlines aside, what many don’t realize is how much goes into moving behemoth teams like these. Ultimately, what we find is that the bigger the team, the bigger the obstacles they are likely to encounter. Given that, advisors like Paul and Matthew who ultimately choose to move despite the challenges that they were up against, do so because in the end their goals – the commitment to better serve clients as true fiduciaries, and the desire to build independent enterprises – are strong enough to prevail.
So when corner office marquis teams consider making a change in firm or business model, what are the obstacles that they – and even smaller teams – have to consider and devise a plan to overcome?
The 5 Biggest Challenges Big Teams Need to Consider
- More is at stake – The level of success achieved by industry “whales” raises the bar for any solution they consider. While it’s important for every advisor in any move to stay where they are unless another opportunity is meaningfully better, an option considered by a large team must move the needle even more significantly. These teams are often well-oiled machines—effectively serving clients and successfully growing. Any disruption in a team’s momentum can be counterproductive. Big producers may assume that a move means taking yourself out of business for a period of time, and potentially even taking a step backwards. For large teams, the motivation to move may be less about solving for a particular frustration and more that, opportunistically, they want to build something greater that benefits both clients and partners.
- Partner alignment – Large teams are typically multi-generational in makeup. Each member of the group, and certainly each generation of advisor, may be at a different point in their careers and have a unique perspective with differing expectations about what they need and where they see themselves next. Others may be more risk averse and only entertain a lateral move to another large firm, IF they were to consider making any kind of change at all. Some may be more entrepreneurial than others and see business ownership as the goal. Partners who are closer to retirement may be more concerned with protecting the deferred compensation they have amassed at their current firm. If they have never monetized and want to enhance their nest egg, they may value a meaningful upfront check. Partners need first to identify all of the varying – and sometimes conflicting – points of view and figure out how they will reach a consensus.
- Business processes and relationships – Large practices tend to be complex businesses built by successfully navigating and taking advantage of all of a firm’s resources. These advisors have mastered how to get things done, often as a result of negotiating exception management. In order to contemplate a move, these advisors must come to terms with untangling numerous connections to their firms (such as through banking and trust services) and find replacements for long-standing relationships. Moving may feel like going from knowing everything and everybody, to starting over and having to rebuild critical contacts.
- Knowledge of the landscape – The landscape has changed dramatically just over this past year alone and certainly since partners may have last looked. Successful teams have a world of opportunity and likely will want to evaluate options beyond the firms locally. Most large teams will want, at a minimum, to get educated about what it means today to be independent. This requires getting exposed to what can be a dizzying set of alternatives and learning a new vocabulary. Considering independence raises a set of unique model-specific questions, such as:
How do you access capital?
Who has oversight responsibilities?
How do you replicate the resources and infrastructure that you currently rely upon?
- Inertia – Even the most successful of teams can experience inertia—that is, the natural resistance to change that we all struggle with from time to time. Now multiply that among multiple individuals on a team. If inertia seems to be at play, this is when it’s important to decide if you are settling because change is too difficult or do better solutions exist that are worthy of the disruption of a move?
There’s no doubt that any team – large or small – will encounter some level of disruption from each of these obstacles through the process of a move. The reality is that as a team grows, these challenges become amplified to a greater level. But the rewards of a move – to clients and advisors alike – can be amplified as well, that is, for the right opportunity and with the proper due diligence. Going into the exploration process with a full understanding of these potential complications and solving for them at the onset – rather than putting out fires later – will limit their impact and help you focus on building the next chapter.