Why the DOL’s Draconian and premature interpretation of its new rule is the ‘end of the world as we know it’ for wirehouse recruiting but a bonanza for the RIA business
This past week has been one of the most hectic we have experienced in the recruiting world in some time.
The precipitous release of guidance related to the Department of Labor’s new rules relating to an advisor’s fiduciary duty to a client when recommending retirement products prompted a tidal wave of emails, calls and texts with advisors asking, essentially, “What’s going on with my deal?”
Their anxiety was well-founded. Consider “Patrick,” a wirehouse advisor I had been working with. His world literally changed in an instant. With $350 million in AUM generating about $3.2 million in annual revenue, he had been offered the kind of deal that keeps so many wirehouse advisors only dreaming about the independent space rather than making the move to it. He was offered what was once considered a standard wirehouse deal for quality advisors like him, that is, 330% of production once upfront signing bonus and back-end earn out provisions were figured in.
With a deal like that, why wouldn’t he stay in the wirehouse world?
I was the one to confirm the bad news: His 330% wirehouse deal turned into 140% upfront and no back-end bonus.