Of Myths and Moving 2023

Setting the record straight on the most common misconceptions that can block financial advisors from achieving their best business lives.

Most people believe that knowledge is power—and the more you know, the more informed of a decision you can make.

Yet it’s particularly true when the stakes are extremely high, as they are in advisor transitions: There’s too much to lose by getting it wrong.

So, logically, one might assume that the more information an advisor has, the better. But there are two flaws in that thinking: 1.) Sometimes information overload leads to “paralysis by analysis” whereby the sheer magnitude of input is too overwhelming, resulting in the choice to do nothing by default; and 2.) Much of the information advisors believe when it comes to a transition is outdated, out-of-context, misguided, or just plain wrong.

This is Diamond Consultants’ annual endeavor to set the record straight: What are the most common “myths” that can stall an advisor’s plans to realize their full potential? Let’s dive in:

1. “The wirehouse world is truly open architecture.”

A modern wirehouse advisor has more options than ever: The biggest firms in the industry offer a comprehensive menu of investments, technology, planning solutions, banking and lending, etc. But that’s a far cry from the genuine, shop-the-Street style open architecture that the independent space provides. In fact, many advisors (like our podcast guest and former UBS advisor Ghislain Gouraige of NewEdge ) who moved from a captive model to an independent model shared this as their biggest surprise: They thought they could do it all at their previous firm. But once these advisors saw what was possible outside their previous firms’ four walls, they realized just how limited they really were.

2. “A move from wirehouse to wirehouse won’t move the needle.”

It’s common in the industry to group the four wirehouses together, but it’s also a bit unfair. There are important differences between Morgan Stanley, Merrill, UBS, and Wells when it comes to their cultures, economics, platforms, emphasis on wealth management, etc. Remember that not everyone needs a wholesale change to another model to better their business life. For example, you may dislike 10% of what you derive from your firm. Another wirehouse can offer the ability to replicate the other 90% you like while simultaneously solving for that 10% gap.

3. “The regional firms are not sophisticated enough to support my HNW/UHNW business.”

10 years ago, this thinking would have been accurate. But today, firms like RBC, Stifel, and Raymond James are very legitimate options for top wirehouse teams. The proof is in the proverbial pudding: Virtually every week, we read about a $5mm+ revenue team making the leap from a wirehouse to a regional firm, and generally, they do so (at least in part) because these firms offer equally sophisticated platforms but with a more boutique culture and flatter organizational structure.

4. “I’m not going to move anytime soon, so there is no point learning about the industry landscape.”

We believe verily that everyone should have a Plan B, whether they have any thoughts of moving or not—especially in a world where heightened compliance scrutiny and zero-tolerance risk cultures abound. But more than that, there is power in conducting due diligence. If you feel well-served at your current firm, you still have an obligation to your clients and your team to periodically ensure that there isn’t something better. And if you look around and determine that you really are in the very best possible place, you can re-commit to your current firm with a renewed sense of purpose and dedication. Plus, one additional side benefit: exploring other options is a great way to get a sense of what your business might be worth.

5. “Making a non-Protocol move is a non-starter.”

The reality is that most large moves in 2023 were non-Protocol. Since Morgan Stanley and UBS pulled out of the agreement, and because a Protocol move dictates that both the “leaving” and “joining” firms need to be in Protocol, many big teams no longer have the luxury of the agreement’s protection. But it should be thought of as just that: a luxury. While a Protocol move is undoubtedly easier if you follow the advice of competent and experienced counsel, a non-Protocol move should not be so daunting.

6. “Recruiters have been saying for years that deals are at an all-time high, so I’ll never miss the boat.”

You may very well be right: The recruiting market shows no real signs of slowing down. But things change very quickly, and no one has a crystal ball. What’s more, while deals may not have gone down, they also did not increase dramatically in 2023. Yes, firms are still willing to pay top dollar for the industry's biggest and most significant teams. But as capital costs rise and firms continue to recognize lower profit margins from advisor recruiting, it does beg the question of how long the dance will go on.

7. “There is nothing new and exciting out there.”

Perhaps the most common feedback we hear from advisors who admit to being less than thrilled with their current firm but still reticent to make a move, is some version of “the grass isn’t greener” or “I’ve looked around and nothing excites me.” And that’s a perfectly valid point of view, but needs to be revisited often, because the landscape evolves so rapidly. An advisor who knew the landscape intimately in 2015 would be lost today. From direct private equity investments to supported independence options to new RIA custodial offerings, there are a lot of exciting developments in the wealth management landscape. ?

8. “Everything about a move is a drag.”

We never sugarcoat it: A transition is a hassle. Plenty of elements of the process are simply not fun but necessary evils—like client account re-papering, learning new systems and technology, and HR onboarding. But there are some potentially significant positives as well: The ability to “shrink to grow,” the energizing and re-invigorating impact of change, and a powerful story to share with clients, chief among them.

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Because the landscape continues to evolve rapidly and dramatically, there is a great onus on advisors to stay educated and informed about the latest and greatest. It’s essential to base any decision on whether to stay or go on up-to-date facts and not outdated information, rumors, or misperceptions—as the latter are often the only things standing between you and your best business life.

As seen on WealthManagement.com...

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