Displaying items by tag: wirehouses

(New York)

LPL has debuted a new model for breakaway advisors. The firm has decided to act on something long known—the logistics for setting up a new independent business are a major hurdle for wirehouse advisors who are considering breaking away. Accordingly, they have set up Strategic Wealth Services, which will handle all office set-up logistics for LPL and make sure there are zero out-of-pocket costs.

FINSUM: Kestra has also launched a similar service. Honestly, sounds like a smart play to smooth the transition, but watch for the “catch”, which isn’t apparent yet in what we’ve seen on this.

(New York)

Morgan Stanley was due to make some big pay changes for advisors starting April 1st. The changes would mean a reduction in compensation for similar production levels. However, in light of the Coronavirus outbreak, the firm has said it is pushing the implementation date for the changes back to October 1st. Directly addressing the firms 15,000+ advisors, the head of field management said “We know that you are facing enormous challenges personally and professionally while at the same time taking great care of your clients in a very difficult environment”.

FINSUM: These changes are tough to begin with, and doing them right now would have been downright draconian (and might have caused some extra departures).

(New York)

Advisors who might be thinking of moving—now may be the time. Big crises are often a catalyst for advisors changing firms. The reasons why are numerous. Some advisors grow unhappy with the support their current firm gives them during a hard period like this one. Others see a big drop in revenue and need the bonus check of signing with a new firm in order to keep their team intact. Others try to sell soon after a crisis hits because their valuation (based on AUM/production) will likely not be higher for years.

FINSUM: Generally speaking, one would think that there would be a lot of moves in the next several months. However, one issue right now is that advisors cannot have face-to-face meetings with their clients to take their temperature on a move. All that said, if you are considering a move, many firms are ready to cut checks.

(New York)

One thing about the wealth management landscape that has never made much sense is how JP Morgan is not early as big a player as one might expect given the overall strength of its brand. Morgan Stanley and Merrill Lynch hog all the AUM and attention, with JP Morgan and Goldman Sachs mostly on the outside looking in. Well, that may be about to change, as JP Morgan is now planning some big changes to its wealth management business. According to the WSJ “The bank is creating a unit that will combine its U.S. wealth-management operations for affluent clients and the Chase branch network’s financial-advisory business”.

FINSUM: This sounds like a plan to go after mass market wealth management like Morgan Stanley or the Thundering Herd. Could be a big play.

(Atlanta)

Expectations of higher compensation and more “freedom” usually top the list of articles that discuss why advisors are breaking away from large brokers. However, there is more to it than that. An interesting piece in Financial Planning tells the story of a team breaking away from Merrill Lynch. In reality it is not just comp that is an issue, and it s rarely the sole reason for breaking away. Often times it has to do with institutional limitations, like corporate bureaucracy, a bad branch manager, or small clients getting funneled to call centers. Other times it is because advisors are offering tons of service, like tax planning, cash flow management, loan refinancing etc that they just don’t get paid for.

FINSUM: This is a good piece that goes deeper than usual in exploring the real reasons advisors leave and whether doing so is a good idea.