Advisor Recruiting Trends in 2023

Advisor recruiting experienced a healthy uptick last year, defying the challenges posed by the regional bank crisis that impacted the industry. Despite the downfall of First Republic Bank, a prominent recruiter, over 9,600 seasoned advisors made the move to different firms in 2023. This marks a 7.5% increase from the previous year, as revealed by a recent report from Diamond Consultants, a trusted recruiting and consulting firm based in Morristown, N.J.

Strategic Moves for Long-Term Success

Channel Preferences and Trends

While the industry often sensationalizes wirehouse breakaways, data from the report shows that the majority of recruiting shifts actually occur within the same channel. This means that most advisors transitioning from wirehouses choose to remain within the wirehouse realm, rather than opting for a regional brokerage firm or an RIA.

Diverse Pathways to Success

While there is a noticeable trend towards independence among larger advisor teams, traditional pathways still hold sway in the industry. Teams are seen moving from one wirehouse to another, reflecting a mix of both conventional and innovative approaches to career progression. Diamond Consultants emphasize the importance of considering all options for a successful and fulfilling career in financial advising.

A market correction this year may impact recruiting efforts across the industry. Despite this, a continuous stream of advisors is expected to switch firms in the coming months. With an array of options available, wealth management companies are diversifying their platforms to attract a wider range of talent.

Diversification in Wealth Management Companies

For instance, LPL Financial has introduced a unit tailored for employee advisors and another aimed at aiding wirehouse breakaways in establishing independent practices. These offerings complement LPL's traditional independent broker-dealer model. Similarly, companies like Raymond James Financial, Ameriprise Financial, and Wells Fargo provide multiple affiliation options for advisors.

Influx of Private-Equity Money

The wealth management sector has witnessed an increase in private-equity investments, leading to higher RIA valuations. The Diamond Consultants report suggests that PE firms will play a more direct role in supporting wirehouse teams in launching their own RIAs and monetizing their business portfolios. The prospect of deciphering this strategy in a significant manner excites industry experts.

Notable Recruitment Moves

In the past year, the largest recruitment event by assets involved a former UBS team managing $5.5 billion in client assets, which transitioned to RBC. Following closely was a private banking team from Bank of America managing $4.5 billion in client assets, moving to Fidelis Capital - an independent wealth management firm established by former private bankers.

Financial Advisor Recruitment Update

In the latest report, Morgan Stanley stands out as the wirehouse with the largest net gain in recruited advisors. The data used in the report comes from a mix of private and public sources, showcasing the firm's success in attracting new talent.

Regional Firm and Independent Broker-Dealer Channels

Raymond James takes the lead in the regional firm channel, demonstrating strong growth and appeal within this sector. Meanwhile, LPL Financial emerges as the top performer in the independent broker-dealer channel, solidifying its position as a key player in the industry.

This ongoing trend reflects the dynamic landscape of financial advisor recruitment, with each channel seeing notable gains from different top firms.

For more insights and updates, stay tuned for further reports and analysis.

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