Wealth advisors and the wirehouse blues

Wirehouses usually tear their hair out when a wealth advisor with affluent clients bolts for a competitor. The jail break, as it’s known, usually involves a jump to a registered investment advisory firm that operates as a fiduciary, or as a hybrid fiduciary cum broker.?

A cottage industry of recruiters and consultants is focused on advisors making that leap. Advisors who swap team jerseys are lured by everything from a conflict-free business environment, in which they’re not pressured to sell house products, to the lack of bureaucracy of playing in a leaner sandbox, one that’s also the fastest-growing niche of the wealth management industry , according to McKinsey.

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“Advisors are changing firms and models with near record frequency,” industry recruiter Diamond Consultants wrote last year in a first-of-its-kind study . Over the first six months of 2022, 4,249 advisors who had been in the industry for at least 3 years changed firms. Most came from legacy wirehouse institutions like Bank of America’s Merrill Lynch and Wells Fargo (with Morgan Stanley a lone, high-profile exception).

The moves have prompted large broker-dealers that compete with wirehouses, including LPL, Stifel Nicolaus and Raymond James to create new ways for advisors to feel like they’re at an independent firm. Meanwhile, the story of how and why a big team from Merrill Lynch Wealth Management jumped ship to Sanctuary Wealth, a hybrid RIA that’s only been around for 5 years, is a must-read:

Read more: How Merrill lost a $1.5B advisor team to Sanctuary

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