I’m betting that “Should I Stay or Should I Go,” the 1982 song by The Clash, has come to mind for every Barclays advisor in the past several months. Their roller coaster ride of not knowing what firm they would be working for ended earlier in June when Stifel Nicolaus announced their intent to acquire Barclays’ 180+ advisor wealth management unit. This acquisition is just the latest in the ever-changing landscape of the financial services industry. Whether it’s Stifel’s purchase of Sterne Agee earlier this year, the acquisition of Morgan Keegan by Raymond James in 2012, or Bank of America‘s acquisition of Merrill Lynch in 2008, financial advisors working for the newly acquired firms are typically faced with uncertainty after the initial relief wears off. With third-party recruiters and managers from competing firms circling highly productive advisors like vultures, dangling uber-aggressive transition packages, the FAs that hadn’t jumped ship earlier are often left to weigh the retention package offered by the acquiring firm (e.g., Stifel’s offer is approx. 150% of trailing 12 month’s production) against typically much larger bonuses if they move to another firm.
Is it only about the economics?
How does an advisor decide between accepting a retention package from his own firm or a transition package from a competitor? The calculus is actually not dissimilar to the exercise every advisor should go through periodically—assessing the current state of affairs: “Is my firm giving me everything I need in order to achieve my goals? Where do I see myself over the next 5-10 years? What do I want to be when I grow up?” The only difference for an advisor working for a firm that is being acquired with a retention package awaiting him if he pledges loyalty is that 150% of trailing 12 is a lot of money to be paid for essentially staying the course. Accepting the retention package poses much less risk than changing firms because you save yourself the trouble of having to re-solicit your clients, and it is a heckuva lot easier than disrupting your life for a few months as you settle into a whole new world. Bottom line: If you were happy enough at your firm before the acquisition was announced and your intent was to stay put, then that 150% windfall is essentially found money. But, if there were frustrations you were dealing with that were impacting your ability to service clients, grow your business, and/or your professional quality of life, then even a 500% retention package won’t necessarily make your life any better.
Some additional questions advisors working for firms that experience a change in ownership need to ask themselves:
- Will things stay the same? Will the acquiring firm make changes that will force me to work differently than I am used to or want to?
- Will local and regional management stay the same? Who will I be reporting to?
- Will advisor compensation change?
- For how long am I tying myself up? By accepting a retention package, what is expected of me?
- Have I evaluated other options? Do I know what I am worth elsewhere? Is there an option that might allow me to service clients and grow my business in a better and more efficient way?
- Culturally, will becoming part of a larger organization change things? How will that feel?
- Will my old firm’s name be retained permanently? If not, will the new name resonate with my clients and prospects?
Although these are questions all advisors should be asking themselves, an advisor whose firm is being acquired has the perfect excuse to go through this self-reflection exercise. While the process may seem daunting, and the assumption is that there is no perfect solution, still being armed with the answers to questions, an advisor will be on his way to answering the question dogging him: “Should I stay or should I go?”