For more than a decade, executives at custodians and broker-dealers have privately voiced one of their biggest concerns—that they’ll lose business when their affiliated advisors retire or sell their firms.

Most have established or partnered with lenders so they can help their network advisors finance internal sales of their practices. The companies have often hired internal and external transition consultants to help facilitate succession plans for their reps.

They rarely say it, but paramount among their goals is to keep the assets in-house one way or another. Retention rates are just as important for brokerages and custodians as they are for advisors.

As senior editor Eric Rasmussen reports in this year’s annual broker-dealer survey on page 32, the issue is coming to a head now. The pandemic prompted many advisors to actually retire, not just think about it. And broker-dealers know they have a lot to lose.

Many are raising their game when it comes to succession and directly investing in their reps’ firms. For reps who left a captive wirehouse or insurance company decades ago, the world has come full circle.

But private equity’s entrance into this arena has changed the game. The reality is that an advisor in Dallas who may have had a buy-sell agreement with a colleague in an adjacent market, say Fort Worth, probably can’t pay anywhere near the price a private equity firm can. A broker-dealer, on the other hand, can. And as Rasmussen reports, they are starting to do exactly that.

How this all plays out is anyone’s guess. Charles Schwab has repeatedly said it doesn’t want to start buying individual RIAs the way private equity-backed aggregators do. However, it is recruiting advisors to become employees in its branch offices, and many have thrived.

Big B-Ds, such as LPL Financial and Raymond James, already have separate divisions for advisors who are company employees. So far they have managed to keep things copacetic without tensions within their workforces. The fact is, some advisors want to own their businesses and others want to retain the benefits of being an employee. Keeping those lines of distinction clear may become even more important in the coming years.

Email me at [email protected] with your opinion.