Displaying items by tag: recruiting

At the DeVoe and Company annual M&A+ Succession Summit, LPL Financial announced an expansion of its liquidity and succession offerings for unaffiliated advisors. The program was initially started last year for LPL advisors who are eyeing retirement but still a decade away from actual retirement.

In essence, the program is designed to allow advisors to receive market value for their firm immediately, but they are required to commit for a period of time to support the next generation of advisors who would be groomed to take over the business. As an intermediary, LPL would buy 100% of the practice while the chosen successors would run the firm while participating in a 10-year ‘successor advisor’ program before fully taking over. 

This strikes a balance as it gives the current generation liquidity and full value for their business, while also setting up the next generation of advisors who may not necessarily have the capital to acquire a practice. According to LPL Executive VP of Strategic Business Development Jeremy Holly, “They’re not having to come out of pocket or take down a bunch of debt to take over. And the principal seller doesn’t have to take a steep discount to sell their practice to that next generation.”

Finsum: LPL Financial introduced a new program for succession planning. Current advisors would be able to sell to LPL but remain with the firm while the next generation is trained to takeover. 

New financial advisors face some daunting challenges such as learning the industry, getting their licenses, and building a book of business. Last year, headcount in the industry only grew by 2,579 advisors with a failure rate of more than 72% for rookie advisors. 

This highlights the succession crisis that is facing the industry. Over the next decade, it’s estimated that 37% of all advisors, representing 39% of total assets, will be retiring. And among this group, 26% have no succession plan in place. While this is a major challenge for the industry, it’s an opportunity for savvy advisors.

For firms, some strategies to improve rookie advisor retention is through a structured training program. Firms will have to invest in developing and retaining their own in-house talent rather than the previous growth model of recruiting advisors from competitors. 

Another constraint for firms looking to boost their recruitment efforts is that currently most new advisor recruiting is through word-of-mouth referrals. However, these types of informal methods will certainly overlook many qualified candidates outside of these networks. Therefore, firms must be more proactive in educating young people about this potential career path. 

Finsum: The financial advisor industry is facing a challenge as many senior advisors are nearing retirement, while recruitment of new advisors has been lacking.

LPL Financial topped analysts’ estimates for Q3 earnings despite a slight 3% decline in earnings. It also reported a strong quarter in terms of recruiting and asset growth. It also laid out its growth plan for the future which involves expanding its capacity to serve all types of advisors. 

LPL added 462 advisors on a quarterly basis and 1,360 on an annual basis. It attributed this growth in part to its new affiliation models and to boosting its offerings to serve a wider variety of advisors. CEO Dan Arnold remarked that LPL’s goal is to eventually be able to compete for all 300,000 advisors on the marketplace.

Q3 was LPL’s best quarter for asset growth since Q2 of last year when it added $43.5 billion. In Q3, the firm added $31.2 billion in assets with $12 billion from Bank of the West and Commerce. However, the company believes that its current growth is higher quality and more durable.

Richard Steinmeier, managing director of business development, said “We are strengthening in the way that individual advisors and groups of advisors are choosing to come to [LPL] in a much more material way even than Q2 2022.” 

Finsum: LPL Financial reported strong Q3 results in terms of recruiting and asset growth. The firm has ambitious growth plans for the future. 

Raymond James CEO Paul Reilly was optimistic about efforts to close broker recruitment deals before year-end on its recent earnings call. In total, Raymond James only added 31 brokers in its Private Client Group, while it lost 24 brokers in its independent channel. 

The firm saw a 15% increase in assets to $1.3 trillion, although net new assets declined to $14.2 billion from $20.2 billion. Its Private Client Group segment saw a 29% increase in profit and a 13% jump in revenue. 

Earlier this month, Raymond James completed a deal for a group of 27 advisors managing $3 billion in assets away from Cetera Investment Services. The company also set aside $55 million for an SEC probe into off-channel communications. Similarly, rival firms like Stifel and Ameriprise also revealed similar amounts it was setting aside. 

Ameriprise also shared Raymond James’ optimistic assessment of recruiting despite a seasonal slowdown on its earnings call. It added 64 brokers but saw total headcount decline by 2%. But the company believes trends are positive and that there should be more additions into year-end. 

Ameriprise saw a 13% increase in revenue and a 23% increase in pretax profits. Assets increased by 15% to $816 billion while net new additions dropped 20% to $8.9 billion from $11.2 billion. 

Finsum: Raymond James and Ameriprise both noted a seasonal slowdown in recruitment but believe that activity should pick up into year-end. 

In a recent J.D. Power study on financial advisor satisfaction, findings reveal advisors are facing challenges in effectively managing their practice tasks. The study highlights that "nearly one-third (28%) of financial advisors say they do not have enough time to spend with clients."

Further, the report states that "Advisors falling into this category spend an average of 41% more time each month than their peers on non-value-added tasks, such as compliance and administrative duties."

Broker-dealers and custodians are constantly exploring ways to reduce these administrative burdens in hopes of retaining existing advisors and recruiting new ones. However, the study underscores another essential factor driving advisor satisfaction: culture.

One significant takeaway from the report is the motivation behind advisors' loyalty to their firms. Among employee advisors, the predominant reasons they gave for their long-term commitment are "a strong culture and company leadership."

Culture can mean different things to different people, but most agree it's about purpose, values, how we communicate, and our work environment. Given how these factors play a significant role in our daily happiness, it's no wonder why advisors regarded culture so highly in the report.

Finsum: A study from J.D. Power highlights challenges faced by financial advisors, emphasizing the importance of culture in advisor retention and satisfaction.