Are you one of the many financial advisors thinking about going independent? If so, make sure you have a solid plan. The transition process can be extremely smooth for your clients who follow if you have developed a business plan. This transition process typically takes up to a quarter as well. Lack of preparation could halt your new business before it takes off.

Advisors need set goals for their new business and consult with financial professionals and legal experts for advice and to assure there are no restraints from leaving their current firms. Many times there are signing bonuses or outstanding loans that need to be resolved before advisors can venture out on their own.

Financial advisors also must know the policy their current firm has on taking their clients with them. The last thing you want is to get sued or have a temporary restraining order placed on you just when you are starting your new business. This is where legal advice is important. Attorneys can review your contract or the rules before you move to ensure there will be no issue.

The good news is, once you have a solid business plan and worked through all possible issues, the majority of your clients should follow if you go independent. Clients tend to follow their advisors going independent because they hire the advisor, not just the firm.

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Baird seems to be moving up more frequently than ever these days. It is targeting more and more markets and taking financial advisors from Merrill Lynch, Morgan Stanley and other firms it can find high producing advisors. Baird is more aggressive than ever. This privately held company is so alluring to so many advisors.

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.”

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There has been a substantial increase of breakaway brokers so far this year. According to TD Ameritrade Institutional, “…212 breakaway brokers have joined its network during the first three quarters of its fiscal year 2010. That’s a record amount for the first three-quarters of any fiscal year for the Jersey City, N.J.-based RIA custodian.”

Typically, years ago, brokers left the wirehouses because they wanted to go independent and run their own shop. Now, with the economy still trying to recover, these brokers are looking to join existing Registered Investment Advisory (RIA) firms. They don’t want all the risk that is involved with setting up their own firm. Tom Nally, the company’s managing director of sales, states,

“What we’ve seen after the financial crisis is that the visibility of the independent model has expanded and we’re seeing folks who are less inclined to be entrepreneurs who want to take advantage of the independent model by joining existing advisors.”

Even though there is an increase in breakaway brokers to RIA firms, there is also a considerable amount of wirehouse brokers breaking away to other wirehouses.

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There has been a significant decrease in assets under management in the global wealth management industry since 2008. High-net worth clients have lost confidence with their bank and fled to other firms.

The wealth management industry needs to start regaining the confidence of these clients because there is plenty of opportunity for growth out there. According to Scorpio Partnership’s 2010 Global Private Banking study, “there is $10 trillion in high-net worth bankable assets that haven’t been tapped.”

Unfortunately, clients are extremely reluctant to move their assets into this industry because of its tarnished reputation. According to Sebastian Dovey, managing partner for Scorpio, states, “Significantly, our global HNW (high net worth) data shows there are strong signs of wealth creation even in these complex markets and yet new clients are still holding back from opening accounts with the industry.”

It seems the only companies that are capturing this untapped business are the top 10 companies. They control the majority of this industry even when some of these companies have a tarnished reputation as well. These companies include Bank of America, UBS and Morgan Stanley Smith Barney.

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So it comes somewhat as a surprise that 66% of independent broker-dealer execs plan to cut CRM (Customer Relationship Management) and integration spending or put it on hold this year. (According to new research from Alte Group.)

Doesn’t make much sense to me since most advisors state that CRM software is either “very” or “most” important in determining the success of their advisory practice.

What they want is a single log-on, with a single data base where all programs “talk” to each other.

Technology is one of the most important factors in advisors’ decisions to choose which firm to join…as a financial recruiter, I hear this all the time and I’ve written about this before.

Someone is missing the boat here…if the independent broker-dealers want to see more financial advisors jumping ship from the wirehouses and going independent, then they better stay competitive and get back on the boat!!

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It was nearly impossible to place a financial advisor trainee over the past two years…so now, according to an article in the Financial Times, Bank of America/Merrill is going on a spending spree and adding 2,000 advisors, many of them young trainees instead of more experienced advisors recruited from other firms.

Hmmm. Could this actually happen?

According to the article, Bank of America was not available for comment. As industry recruiters, we see both Merrill Lynch and Morgan Stanley Smith Barney aggressively training new advisors, but we also see all four wirehouses very interested in recruiting.

Headcount is the name of the game in the big four; after all the investment banking side of the house is where the money is being made… and it wouldn’t be surprising to see that of the 2,000 new financial advisors targeted by BofA/Merrill, the greater percentage will be on the recruit side versus the trainee side.

Watching with interest…

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So…2009, I would hate to estimate how many articles and blog posts have been out there regarding the prognosis for “breakaway” brokers…ok, my blog posts too; I’ve had several.

So it was not surprising to me when I returned to my January 4, 2010, “financial recruiter office mode,” opened up the online Wall Street Journal and found one of the most extensive analyses of this current trend.

E.S. Browning’s in depth article, “More Brokers Flee Big Firms, Taking Investors With Them” is a good read and worth your time whether you are considering such a move or not…only time will tell.

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I didn’t think we’d see it for some time, but looks like the “big houses” are beginning to open up their doors again for Financial Advisor Trainees.

As recruiters, we placed some excellent candidates with our clients, but then saw the demand drop drastically in mid 2007 with the beginning of the recession. By last Fall, the doors were shut for anyone looking for an advisor training position.

Now, just in the past two weeks, we’ve had clients calling us telling us they “must” hire a certain number of trainees before year’s end.

The hunt for top candidates hoping to break into the wealth management industry has begun; but I warn you, the screening requirements will be more stringent than ever..

If you have that raw determination and drive for it, give us a call at Willis-Consulting, Inc. at 310-373-7400.

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Over the past two years, both of these wirehouses paid out massive claims of discrimination against female brokers. (There were other firms too, but it’s nice to see some positive moves being made now.)

The 2007 Morgan Stanley settlement required the firm to put in place training programs and account distributions to help female brokers, and Smith Barney’s former parent company Citigroup paid out $33 million to settle a case brought by 2,500 female brokers.

Now, the new MSSB venture is reaching out to women by launching a blog to help women interested in becoming financial advisors. Andy Saperstein, head of wealth management at MSSB said in a statement to OnWallStreet‘s Helen Kearney on July 7:

“We are committed to making Morgan Stanley Smith Barney the firm of choice for the world’s best financial advisors and this initiative is part of our efforts to cast a wide net for talent and support women in their careers and professional development.”

Check it out…and kudos to MSSB!!

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Looks like there is an increasing number of Financial Advisors who are seeing their salaries rebound this year.

So one may ask, “Why?” after looking at the horrendous beating the financial industry has experienced over the past year.

Well, according to the College for Financial Planning’s Annual Survey of Trends in Financial Planning, more Financial Advisors are switching from commission to fee based models, at least in part.

What I found interesting in the survey is the percentage of advisors (49%) who listed education as a key driver in success…this up from 38% in 2008. The report indicates this is partially due to the fact that clients are demanding more services and solutions to rebuilding and reassessing their portfolios versus simply increasing their stock holdings.

Seems to me these findings are only reinforcement for our belief at Willis Consulting that those Financial Advisors who embrace the changes within the industry are those who will reap the benefits; in other words, there are some “fringe benefits to failure!”

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