Recruiters said they are expecting another busy year for advisors’ movement. Part of it, Feldman said, will be the push from wirehouses on making changes to their compensation plans. “A lot of these changes are primarily negative and not for everybody,” he said. “Any changes to a comp plan are basically in the interest of the firm and less toward the advisor,” he said.
Feldman cited the carrot-and-stick approach that Merrill Lynch rolled out in its 2018 comp plan that rewarded advisors for bringing in new clients and docking their base pay for failing to recruit a minimum number. “That really was a catalyst to a lot of long-tenured advisors to do some due diligence and look outside the firm,” Feldman said.
He also cited UBS’ latest comp plan, which calculates advisors’ length of service in real time as suspect. “Even though they try to spin it as a positive for the advisors, I know very few advisors find it as a positive for their net take-home pay, unless you have been at the firm for over 30 years,” he said.
The bottom line is that advisors’ mindset after working in a “captive-type situation” has changed, said Jodie Papike, president of Cross-Search Advisor Placement Services in Encinitas, Calif. “It has made them rethink their structure to say, ‘there are a lot of things about this new way that I like. I don’t want to commute anymore. I want to create my own infrastructure. I don’t need a big firm to do all this for me and take such a large override. I can do it myself because I have been doing it myself now for over a year and it’s working,’” she said.
Papike added that it takes a lot for an advisor to move. “There has to be some real pain there, but the service at a lot of firms is lacking to the point where a lot of people are moving,” she said.