Working from home during the Covid crisis has awakened many brokers and financial advisors to new beginnings, setting off a wave of departures to independence, consultants say.

“Advisors are realizing that they are not getting as much value from their current firm, especially working from home,” said Louis Diamond, president of Diamond Consultants in Morristown, N.J. He also noted that some advisors are at odds with their firms’ policy on remote working, Covid testing and vaccine mandates.

Diamond said the pandemic has created a perfect storm where there are more options than before for advisors. “You have the pull factor of just better options and more models have popped up that’s meeting advisors where they are,” he said.

Diamond and other industry recruiters said it is a good time for an advisor to consider moving, and many across the industry have taken notice and are successfully branching out on their own. Advisor movement, they said, has reached record-breaking levels in the past two years, and they said the trend, which is happening equally among individuals and teams, will continue in 2022. The recruiters said more independent-supported models are helping to fuel the exodus.

“There are more and more models coming out to cater to wirehouse advisors who want more independence, more autonomy and more control, but [who] don’t want to take on more of the business side responsibilities,” said Jeff Feldman, founder of Financial Recruitment Partner in Chicago. He noted that some firms are rolling out models where breakaway teams can focus on their primary areas of interest and expertise such as client-relations and investment management.

Feldman added that “advisors are being extremely efficient and productive working from home and remotely and that has caused them to question giving up more than half of their revenue to their firm and looking at other channels where they can keep more of their income.” He noted that advisors give up 55 cents on every dollar that they earn for their firm.

Deal structures, too, are as compelling as they have been, Diamond said. “There are different options for what advisors want to accomplish,” he said. Also, he said they are seeing a strong comeback in the recruiting space from the wirehouses, except for Merrill Lynch.

Diamond said his firm moved more teams than ever last year. The movement, he said, included a mix of advisors staying in channel from wirehouse to wirehouse, advisors going to boutique or regional firms, and breakaways or wirehouse moving to independence. And in each of those categories, Diamond said there is no firm that stood out. “I can probably point to three or four firms that have done really well and will continue to do so,” he said.

Seeing these new leaders emerge in the recruiting space is interesting to watch, said Casey Knight, executive vice president and managing director at ESP Financial Search in Houston. He singled out LPL as a clear winner. “We are seeing LPL just catch absolute fire,” he said, noting that recruiters want to go where they expect to get deals. “And no one is capable of doing that more than LPL, not by a mile."

Knight also pointed out that the market is becoming more competitive, and the gap is widening between the firms that are behind from a resource and technology standpoint and those that are ahead of the curb. “A lot of firms that are not keeping up with the Joneses are going to get left behind, and we will start to see that especially with a lot of the small independents and soon everyone is going to capitalize in the RIA space,” Knight said.

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