Wealth Management Advisors Transitioning to the RIA Space Demand Bank-like Benefits
As experienced wealth management advisors continue to make (or think about) the leap to independence as entrepreneurial Registered Investment Advisors-and as more RIAs seek to bolster their ranks following the 2009 market meltdown-some of the most sought after candidates have begun demanding pay schemes similar to those of the very banks they're exiting.
So says Dave Moran, a partner with Experienced Advisors Recruiting, LLC in Fort Lauderdale, Fla. "In my world, demand for top-talent revenue generators is higher than for technical, behind-the-scenes people," Moran tells eFinancialCareers.
The producers in question include experienced individuals with titles like Business Development Specialist, Senior Advisor, or Vice President. As part of their compensation package, "what they're asking for more and more is equity," says Moran .
This is precisely how Merrill Lynch did so well building its ranks into something people associated with independent advice 10 to 15 years ago, says Moran-by offering stock as well as cash bonuses.
A shift is underway
But the advice space is shifting. Often, Cerfified Financial Planners (CFPs) decide they'd like to get into the RIA space because larger firms "are taking on the banking model" and are demanding that a certain percentage of advisor revenues are derived from this or that bucket of assets. "It might be variable annuities or long term care (LTC) insurance-something outside of [the advisor's] sweet spot," adds Moran.
The time could be right to transition: Moran's partner Caleb Brown, who's also a partner at New Planner Recruiting in Tallahassee, Fla., was quoted in this month's edition of Financial Planning Magazine explaining that "Over the last couple of years nobody was hiring," but that now advice-giving firms are doing so "like crazy," especially in the Northeast, where there are multiple offers for top talent."
Moran agrees, and points to rampant hiring in cities like Philadelphia, Washington, DC, Boston, New York City and parts of New Jersey, as well as on the West Coast in places like Los Angeles, San Francisco, and San Diego and (just recently) Dallas, Texas to boot.
Particularly now, when "things aren't going so well at the Merrills of the world, advisors coming into midsized and larger RIAs are increasingly asking 'what's the equity and succession plan,'" Moran observes.
For those with the right credentials, Moran is placing advisors whose "all-in" compensation including base salary, incentive pay and profit sharing alternatives comes to $150,000 to $250,000 or more per year. These advice givers want to know how owners plan to transition to the next generation, as they're interested in becoming owners themselves some five to seven years down the line.
Moran's company is in its first year and represents a partnership including Moran, a veteran advice giver himself, and advisors Michael E. Kitces and Caleb Brown. The firm focuses entirely on advisors with a minimum of five years of experience and educational credentials such as the CFP designation.