Wirehouses have been beaten up lately mostly because of all the bad press and the destruction of their brand names. Financial advisors are looking to breakaway to other channels. Every channel has seen double-digit growth within the past year except the wirehouse channel. Granted, they still have the majority market share.

With this troubled economy we see a significant amount of advisors looking to breakaway primarily due to lack of cash flow. Advisors are getting paid up front for moving to another firm and that helps those who are struggling. It does surprise me that financial advisors are willing to leave a quality firm or wirehouse just for the money. It is unfortunate to see because is this really helping their clients or are they just being self-serving?

According to a survey conducted by the Aite Group, “A desire for a higher payout (came in) third place among rationales for leaving…”

Wirehouses are aggressively trying to retain advisors while recruiting advisors from other channels or younger advisors. It is a tough uphill battle for wirehouses, but the deals they are offering advisors to move may be too good to pass up as well.

Most will agree that the financial services industry is a male-dominated world. So it is no surprise that women are less than happy with their current advisors.

When a husband and wife walk into the office to meet with their financial advisor, it used to be a general assumption that the final say on all finances was the husband’s. Now, the times are changing and many women are actually the breadwinners in the household. Yet women are still treated as the lesser equal.

Peter Damisch, coauthor of a Boston Consulting Group study, states, “We heard this sense of subordination time and again in our interviews. The problems that cause women to feel like second-class clients are deep-seated. They stem from experiences in the advisory process as well as the communication style of private banks and relationship managers.”

The percentage of women who control the wealth will continue to increase over the years. If financial advisors are willing to adapt to these changing times, there is no shortage of women looking for an advisor. Women aren’t looking for just female advisors either. Most women are indifferent to gender.

Women are looking for a qualified financial advisor who can provide them with solid investment planning advice. Because women also tend to live longer, they are going need help investing for their future if they survive their spouse.

Where does that leave the next generation and beyond? Veteran advisors are having difficulty finding new talent to help takeover their book of business once they retire.

Many firms like Morgan Stanley Smith Barney are adding plans to help experienced financial advisors with their succession planning. According to Talent Shortage Grips Firms As Financial Advisors Age, the company reported, “(it) created a retiring advisor program that assists those producers who are planning for and changing their businesses over a suitable length of time before their expected retirement.”

But what about acquiring new talent? What plan do firms have in place to find this new talent for these veteran advisors? Apparently, some firms are looking for younger financial advisors to come in and learn the experienced advisors’ business and eventually take over their book of business.

I still believe most financial job recruiters are going to go out and find experienced advisors with a large book of business rather than spend their time hiring young advisors who have no book of business. Many FAs don’t get paid if the book of business isn’t reaching the firm’s minimum requirement. Where is the incentive for financial recruiters?

Mindy Diamond, a financial industry recruiter, states,

“Recruiting advisors without real life experience can pose a serious problem for the firm. The lack of life experience and lack of a rolodex of connections sets these young kids up for failure.”

While this may be true, why can’t firms set up a program to help younger advisors? After all, they are the future.

Baird is self-clearing and has a team of seasoned employees to help with every different aspect necessary for a financial advisor to run a successful business. This includes helping advisors with comprehensive wealth management plans, a tax team, technology services and back office operations. This firm is so successful, it has no need to go public.

Baird continues to open offices in every region they don’t already have exposure, including Winston-Salem, Denver, Sacramento and Baltimore. It also has plans to open many more offices in areas such as Charlotte, Portland, Or., and St Paul, Minn.

And why shouldn’t they? Baird has managed to sign on veteran advisors such as Charles Knowlton of Smith Barney. According to Aarti Maharaj, Hiring Continues at Baird, “Knowlton spent eight years at Smith Barney and is now senior vice president, branch manager and financial advisor at the firm’s new Charleston office.”

Advisors looking to expand their business need to consider a few things first. They must have a solid plan on how they intend to grow their business. Also, they need to consider what type of advisor they want or need to join their firm. For example, is your company in need of an advisor who has a particular specialty that your firm currently lacks such as tax, retirement, or even divorce planning?

Another important factor to ask is will you be retiring within a few years and in need of succession planning? If this answer is yes, it may behoove you to look for a junior or younger financial advisor who can learn from your practices and ultimately take over your book of business. If you are not planning on retiring any time soon, then you should be looking for a seasoned advisor who already has a well-established book of business.

There are a multitude of questions advisors must ask themselves before they decide to grow their business to make sure they find the right fit. If you have a solid plan and have thought about what your business needs to thrive, you are one step ahead of the rest.

According to a new report from Cerulli Associates, Inc,

“…the average age of an advisor is 49, although it may be even older since the firm analyzed predominantly fee-based advisors – a group that tends to be younger.”

Many big firms are trying to set up more training programs to entice younger finance professionals to join the business. This will help keep accounts from leaving the firm when older advisors decide to retire. According to the Cerulli report, “a number of financial firms have launched training programs, but the report showed that a larger broker-dealer needs to add 2,000 to 3,000 financial advisors ‘just to keep pace’.”

Financial firms have a lot of work to do and quickly to even attempt to replace its older advisors. There is plenty of room for younger advisors to acquire a baby boomer’s book of business.

Barbara Herman, senior consultant for Diamond Consultants, states,

“Now more than ever, retention depends on providing real value to the advisor at every production level and at any tenure in the industry.”

How do you add value to the advisor? Rich Franchella, Sr., manager for RBC Wealth Management, has had success retaining the financial advisors in his territory. He has a few options. A primary concern for advisors is their BOM is not available when they need them. Make sure to provide financial advisors with a way to reach you whether you are in the office or not. Also, make sure to value your to advisors by helping invest in them and help them plan for their own financial future.

These ideas are effective to make advisors feel they are appreciated which makes them feel valued. This may be just the way to retain the advisors you already have.

According to Wells Fargo,

“…the number of advisors involved in the firm’s independent arm has increased by 24% over the past 18 months due to clients’ growing interest in dealing with this type of advisor.”

Wells Fargo changed the structure of their organization to better support the advisors for its independent channel. There are now team leads instead of just branch managers to help assist the advisors.

RBC Wealth Management added a quasi-independent channel to recognize the needs of financial advisors who want to move to an independent space. They are using this as a retention tool for its advisors who want to breakaway.

Hopefully, this will help big firms retain not only its advisors who want to breakaway, but also the clients who want more of an independent firm.

According to a report from the Aite Group,

Wirehouse brokers tend to breakaway because the brand name of the wirehouse has been tarnished. After the financial meltdown, wirehouses still managed to make a fortune leaving a bad taste for advisors and clients alike. In fact, some clients initiate the process of leaving wirehouses for RIA firms on their own.

Since wirehouse brokers already have clients who will follow, the transition from wirehouse to independent is much smoother. Advisors don’t have to build a book from scratch and have a solid foundation. According to the Aite survey,

“Sixty-eight percent of independents who originated from wirehouses have chosen fee-only or dually registered RIAs.”

It may seem that many advisors are jumping ship from the wirehouses and heading toward independent firms. However, wirehouses are still enticing financial advisors with their technology and vast array of investment options. After listing the pros and cons of breaking away to the independent channel, wirehouses seem to have more pros than the freedom independent channels bring.

According to a UBS spokesman,

“UBS, by far the smallest of the four wirehouses, has recruited 75 advisors from the other three firms so far this year.”

Wirehouses offer more benefits to advisors that independent firms cannot afford. Also, it is a hassle to be your own boss in an independent channel because you have to deal with administrative tasks, human resources, and compliance.

Wirehouses have come up with creative strategies to retain the brokers they currently have as well. These strategies include offering mortgages and 5-6 year loans. The biggest deals advisors will still receive are through recruitment packages. Wirehouses are aggressively recruiting with generous deals that include up to 330% of an advisor’s trailing-12 production.

What are these wirehouse recruiters looking for? It could be youth. According to Larry Petrone, director of research at Boston-based Financial Research Corp, states,

“Hiring younger and newer advisors will allow the company to shape and mold them to fit their culture. There is certainly a massive number of advisors retiring in 10 to 15 years, and the wirehouses moving to hire younger advisors may be an effort to attract them to a team.”

However, veteran financial advisors are still wanted and needed. Many wirehouses want someone who is experienced and has formed a bond with their clients. If you are looking for a brand name, technology and all the advisory tools needed to run a successful business, wirehouses are for you.