Industry Trends Point to Larger Retail Firm Concerns About Advisors Going Independent
Moorestown, NJ – It is not uncommon to hear, on a daily basis, the news of significant multimillion-dollar advisor teams leaving one of the large retail houses to embrace the benefits of going independent. The perks of working as an independent with the right industry partner are certainly attractive when you consider the autonomy, increased income potential, compliance benefits, open architecture, and flexibility in perspective related to managerial support or lack thereof.
It’s no wonder then, with so many advisors looking at transition options, that we are witnessing a shift in thinking on the part of the large retail houses as they scramble to find a way to preserve their firms in an integral way by keeping their employees happy and committed to a future with the company.
A recent example of this trend is occurring at Wells Fargo, where existing company policy has undergone a radical shift and new procedures have been put in place to create an attractive model for advisors to move internally from the retail-side to the independent-side of the enterprise. To put this policy into practice in a way that is attractive to the advisors themselves, Wells Fargo has chosen to waive fees for a two-year term that an advisor making the transition would normally pay, ensuring the immediate financial benefit of the move is an attractive one.
Ultimately, although forgoing the residual income generated from fees, Wells Fargo puts themselves in a better financial situation overall with this new strategy as the loss of fee income is not as great to their bottom line as losing the advisors themselves or incurring the cost to recruit new advisors into the firm.
Perhaps, Wells Fargo’s creative policy maneuvering to preserve their advisor head count shows that they recognize their advisor’s discontent and are actively pursuing ways to modify their internal process to reduce their advisor attrition while still addressing their own needs for self-preservation.
In the end, though, while commendable these policies still do not solve core issues prompting advisor moves – most important among them the requirement of a three-year commitment to the firm, the lack of intellectual freedom to service clients, inferior technological resources, and an inflexible and unsupportive management and compliance structure.
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