Talent Acquisition and the Current Advisor Recruiting and Breakaway Broker Trends
For the most successful advisor firms emphasizing organic growth, competing for top talent to strengthen their ranks and enhance client service capabilities has become essential. Expanding capacity and capability have become major trends in talent acquisition. More advisor firms are trending toward recruiting experienced advisors. Yet, recruiting these seasoned advisors remains a challenging endeavor.
The dynamics of advisor recruitment and the emergence of break-away brokers have become pivotal narratives shaping the industry's landscape. Amidst this backdrop of change, the Diamond Consultants Advisor Transition Report serves as a beacon – shedding light on the myriad trends and insights driving these phenomena.
The report identifies several causal factors that most heavily influence advisor movement, with firm culture, technology offerings, and compensation structures among the primary considerations. In a competitive environment where talent is highly sought, firms must distinguish themselves by offering compelling value propositions around these key drivers to attract and retain top-tier advisors.
Additionally, the report underscores the steady migration of advisors leaving established brokerage firms to launch independent practices or join smaller, more agile firms. While the reasons for breaking away are many and vary from broker to broker, the report identifies several key factors as principal drivers of independence:
- A desire for greater autonomy
- Increased control over client relationships
- The ability to align business practices with personal values
- Technological advancements and infrastructure support
- An ability to build greater business equity
According to a recent Tiburon report, nearly ¼ of all current advisor movements (~15,000/yr) are breakaway brokers who bring more than $1.3 trillion of client assets into play.1
As competition for advisor talent intensifies, the poaching of top performers may soon become the greatest existential threat to your firm’s continued success and sustainability. In response, you’ll need to strengthen your defenses and explore new and creative ways to retain the future leaders of your business.
Taking a closer look into the intricate tapestry of financial advisor recruitment and break-away broker trends, the Diamond Consultants report also highlights several other interesting findings, including:
- Shifting demographics within the advisor community. With a significant portion of advisors approaching retirement age, more and more firms are facing an imperative to attract and onboard the next generation of leadership talent. Millennial advisors, in particular, bring fresh perspectives and digital fluency, prompting firms to adapt their recruitment strategies to appeal to this burgeoning demographic.
- The growing importance of digital capabilities in advisor recruitment and retention. In an increasingly digital world, advisors expect robust technological platforms that facilitate client engagement, streamline operations, and provide actionable insights. Firms that invest in cutting-edge technology not only enhance advisor productivity but also position themselves as forward-thinking organizations capable of meeting the evolving needs of clients.
- An intensifying industry-wide emphasis on diversity and inclusion. Firms have finally begun to recognize the value of diverse perspectives in helping to drive innovation and better serve a client base that’s similarly becoming significantly more diverse. This has resulted in forward-thinking firms making a concerted effort to foster an inclusive environment that embraces individuals from diverse backgrounds. By prioritizing diversity in recruitment practices and cultivating an inclusive culture, firms can tap into a wider talent pool and foster a more vibrant and dynamic workforce.
- The vital role of incentives in advisor recruitment and retention. While competitive compensation packages remain a cornerstone of advisor attraction, firms increasingly explore innovative incentive structures tailored to individual advisor preferences and performance metrics. From revenue-sharing arrangements to equity ownership opportunities, firms are devising creative compensation models to align advisor interests with organizational goals.
The Diamond Consultants Advisor Transition Report offers invaluable insights into the evolving landscape of advisor recruitment and breakaway broker motivations. By understanding these preferences and drivers of movement, you can help better tailor your recruitment strategies to attract top talent and cultivate a thriving advisor community. As the industry continues to shift, firms that can remain agile and responsive to changing dynamics will undoubtedly be the beneficiaries who most thrive in this competitive marketplace.
1 Financial Advisor Recruiting & Break-Away Brokers, Tiburon Strategic Advisors, December 2023