9 Motivations Which Can Turn Passive Advisors Into Active Recruits
9 Motivations Which Can Turn Passive Advisors Into Active Recruits
Advisor complacency is one of the primary challenges in recruiting advisors. Many advisors are satisfied with their current situation. With recent record-high revenue and asset growth due to strong market performance, there's little incentive for them to make a change. The mindset of "if it’s not broken, don't fix it" is prevalent. This means you need to strategize for a passive advisor market.
Understanding the Motivations of Passive Advisors: To effectively recruit passive candidates, it is helpful to grasp the factors that motivate them to consider new opportunities. This article explores nine key motivation categories which compel advisors to seek a change in their professional situation.
1 Culture
Culture can often times be easier experienced than explained and not all advisors will view their firm’s culture in the same way. Nevertheless, advisors not feeling they match the culture of their firm anymore is a powerful cause for exploring other options.
Lack of Support: Advisors seeking an environment that offers guidance and assistance find this crucial.
Underappreciation: Feeling undervalued can drive advisors to seek a firm that acknowledges their contributions.
Inaccessible Leadership: A firm that provides open channels to management is appealing.
Brand Concerns: Association with a negatively perceived brand pushes advisors away.
Lack of Advocacy: Wanting an employer that supports them in conflicts is important.
Strategic Misalignment: Disagreeing with the company's direction can prompt a switch.
Philosophical Differences: Variances in service or investment philosophies can make advisors consider their fit.
2 Control
Independence is all about control. The fundamental attraction of direct affiliation with an independent broker dealer/custodian or tucking into an existing indie firm is being in control of what an advisor wants to control.
Work-Life Balance: Advisors prize the ability to manage their personal and professional lives seamlessly.
Client Relations: Choosing whom they work with is a significant factor.
Brand Independence: The freedom to build and maintain their brand is enticing.
Legacy Concerns: Control over their professional legacy often guides their choices.
Platform and Product Options: Access to a variety of tools and offerings is a key consideration.
Decision-Making Power: Having a say in executive decisions can be a deciding factor.
Strategic Direction Input: The ability to contribute to the long-term vision is valued.
Equity Offers: Control over equity and firm ownership can be a strong motivation.
3 Compensation
It is no surprise that upfront cash, compensation, equity, and other financial considerations can be important to a Financial Advisor. Most advisors we help transition do not just move for just the check. A Financial Advisor can’t be blamed for financially advising themselves as a part of their evaluation process. Compensation causes can include:
Higher Payouts: Advisors naturally lean towards opportunities for increased earnings.
Avoiding Penalties: The desire to sidestep income-reducing policies is significant.
Less Overhead Cuts: Objecting to unnecessary fees leads advisors to search for better options.
Attractive Transition Packages: Superior initial support packages are highly sought after.
Equity Monetization: Opportunities to financially benefit from equity in their practice through deals.
Value for Services: Seeking more support for the revenue they generate.
Ownership Opportunities: The prospect of owning a practice or holding firm equity can be irresistible.
4 Client Commitment
Good advisors will not move firms if the move would be detrimental to their clients. There are a myriad of reasons an advisor’s commitment to their client base will cause them to move:
Subpar Client Experience: A commitment to enhancing client experiences drives advisors to move.
Desire for Personalized Services: Offering tailored services is a motivation for changing firms.
Unwanted Product Pressures: Resistance to pushing unwanted firm products.
Mismatched Client Focus: A firm’s focus incompatible with an advisor's client base.
Fee Model Preference: Wishes to modify client fee structures can precede a move.
Technological Improvement: The need for modern and high-end client interaction tools.
Lack of Social Media Engagement: Inadequate social media communication options.
Business Development Needs: The requirement for better structures to attract new clients.
5 Changes
There are many changes that can happen in an advisor’s life, office, or current firm, which can cause an advisor to start looking. Changes are often the impetuous cause turning a passive advisor into a potential active recruit. Common changes:
Personal Changes: Personal circumstances such as age or health is a substantial factor.
Company Acquisitions: Shifts due to broker-dealer ownership changes prompt reevaluation.
Leadership and Management Shifts: Alterations in leadership can unsettle advisors.
Cultural Shifts: A change in company culture may push advisors towards a new environment.
Business Evolution: Changing business needs and models can instigate movement.
Firm Reputation Changes: A shifting reputation might urge advisors to seek stability elsewhere.
Compensation Adjustments: Alterations in remuneration can lead to significant career moves.
6 Conflicts
Perhaps nothing can effect an advisor’s happiness at a firm faster than conflicts. Conflicts can range and can slowly erode advisor goodwill or wash it away like a tidal wave. Some of the more common conflict causes:
Regulatory Responses: Firm's handling of new regulations like the DOL can cause discord.
Personality Clashes: Interpersonal issues may drive advisors to seek a better work environment.
Internal Politics: Navigating political conflicts is often a source of frustration.
Fiduciary Differences: Disagreeing with firm's fiduciary approach can direct advisors out.
Proprietary Product Pushback: Resistance to the mandated selling of proprietary products.
Client Complaint Handling: The firm's response to client complaints is critically assessed.
Operational Mistakes: Experiencing operational and trading errors influences decisions.
Support Quality: Issues with received support's competency and professionalism.
7 Compatibility
Advisors can grow incompatible with their current firms for a host of reasons. Sometimes an advisor no longer feels compatible with their firm.
Value Proposition Shifts: A misalignment with the firm’s value proposition propels advisors to act.
Technology Gaps: Outdated or inadequate technology can prompt a move.
Service Gaps: Growing beyond what current firm support offers.
Client Fiduciary Concerns: Seeking alignment with client fiduciary responsibilities.
Growth Strategy Differences: A disconnect between personal growth strategies and firm support.
Management and Leadership Style: Disparities in this area can be critical.
Business Model or Direction Shifts: A transition away from compatible business models.
8 Curiosity
Who doesn’t want to know if the grass is truly greener on the other side right? For passive advisors who are merely curious of options, structures, transition packages, etc. still gives you a recruiting opportunity. An advisor may be content with his or her black and white TV until they see what a color TV in high definition looks like. We don’t know what we don’t know. Plenty of advisors who move each year started out as just a little curious before they got serious. Causes for curiosity include:
Knowledge Seekers: Simply exploring what other firms offer can show advisors a "greener" side.
Recruiting Communications: Receiving calls and introductions arouse interest.
Media Stories: Occurrences of advisors switching firms incite curiosity.
Colleague Movements: Seeing peers move and succeed triggers a review of options.
New Joiners: Seeing new advisors receive attractive transition deals.
Exit Planning: Long-term planning fosters curiosity about better options.
Independence Examination: Assessing the appeal of the independence channel.
Competitive Analysis: Comparing current situations to emerging competitor offers.
Referrals: Positive experiences relayed by friends in the industry.
9 Channel
Many advisors have already decided that they want to change direction in the channel their in. Advisors often share for example they are not looking at their options right now but if they did anything in the future they are going to start or join and RIA. Others decide on a different channel after they have completed more due diligence. If an advisor is seeking a new channel consider helping educate the advisor about the nuances and the differences the advisor may not realize from their current channel. Key channel centric causes:
Wirehouse Discontent: Advisors are no longer willing to stay at a wirehouse.
Fiduciary Standards: Increased awareness of fiduciary standards drives change.
Prospecting Environment: A change in desired prospecting environment, such as warm leads.
Business Model Shift: A shift in business model or direction prompts reevaluation.
Channel Frustration: Frustration with or feeling outgrown by the current channel.
Cultural Synergy: Being pushed away or pulled toward a more synergistic culture.
Industry Growth Positioning: Desire to be aligned with sectors where the industry is growing.
Work-Life Balance: Seeking improvements in work-life balance.
Equity Desire: A strong desire for equity in their professional journey.
Consider inquiring about the reasons prompting the advisor to engage with you, as they often expect such questions. Ask what changes they would like to see in the new firm they join compared to their current one. Are they simply curious about available options, conducting due diligence for a potential move in the near future, or actively searching for a new opportunity? Understanding their level of interest can significantly benefit a recruiting firm that has a long-term strategy focused on building and nurturing relationships.
Each of these motivations presents an opportunity to connect with the advisor. By acknowledging the reasons behind their outreach, you can enhance your chances of successfully hiring them in the short term and tailor your recruiting communications more effectively with a more passive advisor in the long term.
This article is authored by Darin Manis, founder of AdvisorBox, LoanBox, & AdvisorLoans.