Last week’s news of Morgan Stanley exiting the Broker Protocol, most likely encouraging other major wirehouses to follow suit, elicited a knee-jerk reaction. Advisors and industry professionals alike speculated that the party is over; this will put an end to the wave of advisors breaking away from the employee model of the banks and brokerage firms for the RIA space and greater independence. That feeling of dread was quickly overtaken by optimism and strength as individuals and firms dedicated to the client-centric RIA industry realized this is just another example of the overbearing “big brother” culture within the wirehouse world. While it is no doubt more difficult to transition from a non-protocol firm than from a protocol firm, it is far from impossible. This news is not going to encourage advisors to be more confident in their employers; it is going to drive them even faster into the welcoming arms of the RIA community (see: The Push vs. Pull for Breakaway Advisors)!

PFI Advisors feels very strongly that well-established, M&A-savvy RIAs with reputable brands should jump on this opportunity to recruit heavily from the wirehouse community. If you are one of these RIAs, reach out to wirehouse advisors and ask them how they are feeling – if they feel their employer has their (and their clients’) best interest at heart; if they feel the platform provided to them is offering the best products and services in the industry; if they feel the technology tools available to them are allowing them to scale their processes and provide high-touch service to more clients each year. When they admit they are feeling a bit uneasy, explain to them that as an RIA, you have access to more products and services, with lower internal costs, and better technology at your fingertips. Point to recent research by Aite Group and Cerulli Associates detailing the continued sophistication of the RIA space, and the ever-increasing asset flows from the wirehouses to the RIA channel (see: Recent Financial Advisor IQ Article).

Many of these wirehouse advisors, even in the year 2017, are completely brainwashed by their branch managers into believing the RIA community is still only for the simple mom and pop shops that “couldn’t make it in the big leagues.” They are told that their access to resources will be limited and thus their clients will feel limited if they were to leave the wirehouse world. Use our recent white papers to open their eyes to the fact that when they escape from the compliance shackles of the wirehouse confines for the RIA channel, they will have access to more sophisticated lending products (see: PFI Advisors White Paper: Innovative Lending Solutions in the RIA Space for Breakaway Advisors) and more alternative investments opportunities (see: PFI Advisors White Paper: The Rise of Alternative Investments in the RIA Industry).

Before you make these calls, however, make sure you have your “advisor pitch” ready, as opposed to your “client pitch” (see: Jumping Into the M&A Game). When selling your firm to an advisor, as opposed to a client, you want to highlight the back-office infrastructure you have in place. Convince these advisors that if they join your RIA, you will handle operations, compliance, HR/payroll, marketing, onboarding, technology…all the major aspects of running a business that have been taken care of for them by their current employer. As we pointed out in Top 3 Questions Every Breakaway Advisor Asks, the majority of these wirehouse advisors are not entrepreneurs and are not interested in running a business. What they need from you is an assurance that by joining your RIA, you can provide them with a “client first” culture, with access to the right products and services, and robust technology in place to scale the business in a profitable manner. Use our M&A white paper to better form your acquisition strategy (see: PFI Advisors Industry White Paper: Becoming a Professional Buyer). We’ve even written specifically about Onboarding a Wirehouse Advisor into Your RIA.

We provide this information in hopes of promoting education throughout the RIA industry as we remain dedicated to our mission:

To further evolve the RIA industry from a collection of “practices” to “businesses,” and to be a continued voice in validating the industry as a legitimate landing spot for billion-dollar teams and their clients.

This is an amazing opportunity for RIAs and the independent industry as a whole. By acquiring wirehouse advisors, not only are you gaining additional AUM to further scale your firm, but you can add some amazing business development talent to your organization that will spur your organic growth for years to come (see: Tough Sales Love for RIAs). Upgrade your firm and your acquisition strategy to unlock a true win-win situation: you can liberate the wirehouse advisor from a failing business model, while adding both inorganic and organic scale to your RIA today.


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