March 1, 2012
By Mindy Diamond

Here’s a snapshot of a move that for many reasons is particularly instructive.

James and Nancy, a wirehouse team in a southeastern city, began looking around for new digs in 2008 but it took them a few years to make the leap. James and Nancy had been at a regional firm that was ultimately acquired by their wirehouse in the early part of the decade. Together, James and Nancy generate around $1 million in annual production. While they never would have chosen to move to a wirehouse on their own, given their aversion to additional layers of management and red tape, they tried to make it work at first.

But by 2009, the landscape was changing and James and Nancy wanted to ensure they were in the best place for their clients and the growth of their business. They began to explore regional firms and different models of independence. In 2010, a new executive took the helm of the wirehouse. While James felt somewhat encouraged by the executive’s strong reputation as a firm builder, he soon became frustrated as negative press about the firm was getting louder, and there were cuts in support and recruiting. All of this made the team uneasy about the firm’s financial stability. Communicating with the back office was also becoming more cumbersome, causing a problem for their clients. Moreover, the firm was dedicating marketing and other resources to larger advisors and teams. As a last straw of sorts, a key referral source set the team up with a $4 million prospect who liked the team, but ultimately determined they would not do business with the wirehouse due to the firm’s negative press and uncertain future. James and Nancy decided it was time to think more aggressively about moving.

The Plan

Because of limited local alternatives, they considered other wirehouses, different forms of independence, and national independent broker/dealers. While wirehouses offered the largest transition deals for a team of their stature, the deal size was not driving the move, and they decided to leave the wirehouse world.

The Meetings

James and Nancy met with a local regional manager multiple times, and went on a home office visit. Once there, the team felt a sense of belonging. According to James, “There was a sense of professional camaraderie and optimism. Everyone seemed happy; we felt much the same way we did at our prior firm. It was that familiar culture that we had hoped to find again.” They were pleased that it owned a small bank in case they needed any lending capabilities for their clients.

They were also happy that the primary focus of the firm is investing and financial advisory — that they would not have to compete for management attention with the investment banking side of the house. They also liked that most of the firm’s top executives had been advisors at some point and seemed dedicated to their growth.

The key differentiators for James and Nancy:

•  Strong culture and reputation for being stable, and client- and advisor-centric. They knew that their client assets would be safe, and that the firm name would help prospecting efforts so they could recapture the growth trajectory that they once had.
• Not bank-owned so they wouldn’t feel any pressure to push particular products or services. The brokerage business was the primary contributor to the firm’s bottom line.
• Access to cutting-edge technology that could be tailored to their business.

The Wrap-Up

In January 2011, James and Nancy left the wirehouse to join the private client group at the regional firm. Since the team had operated in their city for 20 years and were well established in the community, the firm agreed to open an office for them there. While the deal they received was less than what the bigger firms offered, James and Nancy felt the many upsides far outweighed that particular downside. James and Nancy followed the broker protocol and quickly brought about 90 percent of their assets to the new firm. According to James, it was easy to talk to his clients about their decision to move. While it was somewhat challenging to convert certain proprietary products from the wirehouse to the regional, the firm’s dedicated transition team helped them get it done.

“We just celebrated our one year anniversary here and we have two more advisors in this office,” James said.