Excerpted from “The Market For Advisor Transitions Is ON FIRE – Understand The Reasons Why”, by Frank LaRosa
On the surface, it seemingly defied logic given 2020 was a year defined and transformed by COVID-19. Yet, as December drew to a close and the numbers came in, 2020 proved to be one of the hottest advisor transition and recruiting markets ever experienced in the financial services industry. A quick analysis of the numbers tells the tale. According to AdvisorHub’s Recruiting Wire Scoreboard, the top three leaders in 2020 NET recruiting acquisitions; which included LPL Financial, Rockefeller Capital, Management, and First Republic, tallied a total of $64,760 MLN AUM as a result of their recruiting efforts. Looking back at 2019, the data recorded shows the top three totaled $62,821 MLN AUM. And, two years ago in 2018, the top three netted $35,749 MLN AUM as a result of recruiting. These numbers convey a decided message that we are in the midst of an upward trend in advisor recruiting and transitions. Which leaves us with the question, why?
First and foremost, the primary factor impacting the increase in advisor transitions is the advisors themselves and their mindset. The COVID-19 crisis of 2020 proved to be a great illuminator, not a detractor, of the pluses and minuses of each advisor’s practice. Work from home measures made every advisor a de facto independent advisor and brought to light whether an advisor had the skill sets independence required, among them the discipline and organizational wherewithal to run your practice as an entrepreneur. As more and more advisors realized they did have what it takes to go independent, they also realized they were leaving money on the table by staying in a W-2 model. Advisors had already experienced what independence was like, making the leap of a transition less of an unknown and instead a clear path to autonomy and greater financial reward.
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