Tag Archive for: Recruiting

Keep An Eye On The Uptick In Morgan Stanley Recruiting; Dallas Merrill Team Another ‘Competitive’ Win

Morgan Stanley isn’t grabbing all of the recruiting headlines in wealth management these days, but their trajectory is worth noting. Their latest win in Dallas is notable given the competitive nature of the bidding versus rivals old and new.

The terms of the deal haven’t been disclosed but landing a Merrill team doing $5.5M in annual production these days is no small feat. Merrill may be the most heavily recruited ‘away’ firm on the street right now, so every ML situation is competitive.

The group that migrated to Morgan Stanley in Dallas is captained by 39-year vet John Calandro along with his brother and son, Kevin Calandro, and Rob Calandro. They manage more than $720 million in client assets and brought with them admin staff Shea Self and Jonathan Hicks as well as Redding May.

Now here is the competitive bidding part of it – this was a three-horse race. UBS and Rockefeller were both heavy contenders for this team’s services and pushed their deals higher.

A source close to the negotiations had this to say, “each firm had pushed their deals and deal structures to the limit and well past 300%, ML teams are commanding premiums right now.”

And there is the money line: Merrill teams are commanding premiums right now. Including deferred comp balances, the Morgan Stanley deal breached the 350% number. Cha-Ching!!

Morgan Stanley will continue to be aggressive and maybe the ‘belle of the ball’ for the second half of 2021. Get your popcorn ready.

Wells Fargo Rebirth? Even Offering The Largest Recruiting Deal On The Street Isn’t Working

Its well understood that wealth management recruiting is white-hot. White. Hot. It’s a seller’s market as even middling advisors and teams are in a position of strength, commanding premiums on stated deals in the wirehouse space.

So what to make of Wells Fargo’s position? It’s simple really, no matter what they’ve tried (apologies, congressional appearances, new CEO, and executive leadership) the narrative is largely negative. Advisors have nearly zero interest in Wells Fargo as a destination. That’s not an exaggeration, it’s an ‘on the ground’ fact.

Advisors’ current view of the firm is a fallback at best, and a ‘no chance I’d consider them’ at worst.

A year ago it looked like Wells Fargo may have been turning the corner, and then… the newly minted CEO made a boneheaded comment about diversity on a conference call. In today’s corporate environment, that was an epic mistake. Any momentum that may have been building died right there.

Wells has been attempting to employ the ‘money talks and bullshit walks’ approach to recruiting, effectively offering the largest deal on the street. It hasn’t mattered.

Will Wells Fargo eventually make it back to being a meaningful player in the wealth management recruiting landscape? Maybe, but it’s far from certain.

Morgan Stanley Is Missing The Private Banking Opportunity; Head of Recruiting Ben Firestein Says “Not Interested”

Several firms have decided to absolutely feast on private banking recruiting so far this year. The ranks of J.P. Morgan, Goldman Sachs, Bernstein, and Citi have been migrating to rivals UBS with a smattering finding their way to Merrill and a few others.

In fact, over the past 120 days. UBS alone has announced nearly $10B in private banking assets from J.P.Morgan and Wells have migrated to the firm. Another $5B, in that same period, has moved to First Republic and Merrill.

So where is Morgan Stanley?

In a conversation passed to us from a recruiter who asked to remain anonymous, Morgan Stanley has eschewed private banking recruitment unless the bankers have an interest in taking a greatly reduced ‘W-2 based’ deal structure. The quote we were passed from Ben Firestein, National Director of Recruiting for Morgan Stanley:

“We’re not interested in competing for private bankers at those valuations. We can’t get anywhere near those numbers.”

That begs the question, what are ‘those numbers’ that Mr. Firestein is staying away from? UBS specifically is doing deals that focus on private bankers score cards rather than their W-2 numbers. That makes the deals remarkably more lucrative than anything it’s competitors are offering. When we say more lucrative we mean 4-6 times more lucrative. A 20 year vet from a private bank would be offered a $2.5M deal from Morgan Stanley, whereas UBS is offering a $10M deal.

That’s not in the same universe, and it gives context to the language used by Mr. Firestein when he said “…not interested in competing”.

It’s an interesting calculation made by Morgan Stanley versus its rivals. Some might say that in the wealth management space Morgan Stanley may not see a meaningful rival at the moment. Wells Fargo is limping along, Merrill/BofA is a shell of its former self, and UBS is a boutique compared to the scale of MS.

Still, recruiting moves in cycles, and the numbers being put on the board at UBS won’t go unnoticed. If we had to place a bet, at some point Morgan Stanley and Mr. Firestein will change his mind.

If/when that happens, expect private banker recruiting to absolutely explode.

Lies, Damn Lies, And Statistics – Merrill Claims They’ve Been Recruiting All Along, Also Claim Headcount Only Down 3%

In what looks to be a weak and feeble attempt to cover up the industry’s worst recruiting and retention record over the past few years, an unidentified Merrill exec claimed that the firm is jumping back into recruiting. That claim was then quickly followed by a statement that they never stopped recruiting – and then everyone laughed.

The quote that made the rounds in the media late last week intimated that Merrill would be making a ‘few hires’ this quarter and the next. The source attempted to make the giant leap that a ‘few hires’ in the next two quarters would signal that Merrill was the clear choice for advisors who serve HNW and UHNW clients.

Why did this source feel compelled to make such asinine claims? Merrill has been getting their teeth kicked in on the recruiting trail for the last five years. We did a little research, and check this out, 7 out of every 10 teams that have moved in the past 5 years that claim annual revenue better than $3M have left BofA/Merrill and went to a new firm.

Nobody believes that Merrill is about to score a bunch of noteworthy teams from rivals UBS, Morgan Stanley, or Wells Fargo (okay maybe Wells but that’s an article for another day). Any large team associated with a move and Merrill Lynch has been an exit, plain and simple. In 2018-2019, Stifel absolutely feasted on Merrill teams. Now, Rockefeller is doing the same, along with First Republic and indie firms.

All this amounts to is a misdirection play to take the industry’s eyes off the fact that Merrill’s real attrition rate with legacy advisors (not new bank hires and Merrill Edge) is closer to 10% rather than 3%. Give me a break. The smoke and mirrors are lame and nobody believes this ‘anonymous’ executive.

Our best guess is this – Merrill will probably announce a big private bank hire or two in the next couple of months. J.P. Morgan?? Maybe. Or possibly Goldman Sachs. That will serve as cover for this leak claiming that they are back in the recruiting game. **In fact that’s the only ‘team’ hire Merrill has made this year that we can find; a JPM PB hire in Texas.

Any team worth a damn in the industry wouldn’t dare go to BofA/Merrill. Why sign on to a small division of a bank that sees you as nothing more than a distribution center for loans and trust products?

Merrill would’ve done well to simply keeps its mouth shut. Now, we will be watching for their recruiting to come roaring back **rolls eyes**.

Cracking The Code – UBS Disproves Long Held Adage That ‘Money Talks And Bullsh** Walks’

For as long as advisor recruiting has existed (lets call it 40 years) the annual winners of the arms race have carried one specific thing into battle – the biggest bazooka. Yes, the firm or firms that offer the biggest deals generally win recruiting wars and larger team face-offs. It has been this way for literal decades.

In the past six months one firm seems to have cracked the code. UBS has taken decades of ‘highest bidder’ conventional thinking and turned it inside out and upside down. Instead of offering a best-on-the-street deal that surpasses its rivals, UBS has decided that the architecture of a competitive deal is really what matters.

Guess what, they’re right.

Over the past six months UBS as outpaced its recruiting rivals in raw AUM transfer numbers by a larger margin – and we have it on good authority that the firm is set to make several announcements that will further distance itself from the pack. Over the course of the next 6-9 months UBS will announce massive team recruiting wins that will make industry eyes bulge and leave their rivals scrambling.

But why? What is the secret sauce here?

After a two year hiatus from the recruiting scene UBS made a strategic shift in how it goes after teams at Merrill, Morgan Stanley, Wells Fargo, First Republic and others. Sure, they still offer a 300% deal, but that pales in comparison to Morgan Stanley at 325%, Ameriprise at 340%, Wells Fargo at 340%, and First Republic that climbs beyond 400%. Huge ’starting’ numbers from the aforementioned firms can balloon from there dwarfing what UBS has equipped their field management with during their current run.

And when we say ‘balloon’ we generally are talking about upfront payments. Morgan Stanley, Wells Fargo and even First Republic are very comfortable taking upfront checks right up against the 200% threshold. We haven’t seen anything near that from UBS.

So again we ask, what is UBS doing to outfox its recruiting rivals. To state it simply they turned over the apple cart of decades of conventional wisdom with respect to recruiting and stripped out the ‘guts’ of their recruiting deal.

For traditional HNW and UHNW coming from rivals, UBS has removed all hurdles. No asset transfer hurdle, no revenue hurdles. Zero. Nada. Zip. The UBS recruiting deal, should a Merrill PBIG team hit the proverbial bid is fully guaranteed. Yes, guaranteed. No claw backs, no games, no lofty ‘150% of AUM and Revenue in Year 5’ nonsense. They’ve stripped all of it out.

What they’ve created is the recruiting equivalent of the beauty and elegance of the ‘little black dress’. No frills, no drama, no running around with your hair on fire in your transition. Just come to UBS and do the business you’ve always done.

And here is the ultimate catch – it works. Teams are transferring and moving most if not all of their assets in 90-120 days. Done and done. The firms is satisfied, clients are satisfied (no under the surface vibe of ‘we have to start generating revenue right away or we will miss our first hurdle’) and the advisor/team is comfortable and happy with the process.

**And a note – UBS also offers the largest retirement package in the industry at 260% of revenue. So teams in their 50’s are looking at a fully guaranteed deal of 300% with a fully guaranteed retirement deal of 260%. A little back of the napkin math and they are staring at 560% with no revenue or asset hurdles of any kind.

So their is your answer to the question poses above. UBS is winning the recruiting wars by playing a different game altogether. The data and leadership at UBS decided in concert that HNW and UHNW teams from the likes of Merrill and Morgan Stanley bring nearly all of their assets. Time and time again, their assets transfer. So why add drama with hurdles and deal negotiation that can go on forever??

UBS is winning based on the simplification of the process and respecting teams for who they are and have been for decades. The numbers prove that UBS has cracked the code.

Recruiting Shift: UBS And Rockefeller Significantly Outpace Rivals Using Different Narratives

It is an understatement to say that the Covid-19 pandemic ‘changed’ wealth management habits for both firms and clients. Simply claiming changes doesn’t do it justice. Some serious shifts took place and the initial results as it relates to recruiting are beginning to become very clear.

A reduction in costs and overhead associated with hard asset real estate seems to have been shifted to recruiting budgets and high-quality, tenured advisors and teams are benefitting in ways the industry has never seen before.

Specifically, elite (those listed on Forbes and Barron’s lists) teams are defaulting to what is familiar, if not a smidge smaller in scale. As of this writing, two firms have taken a significant lead in the recruiting economy: UBS and Rockefeller.

The case for UBS looks like this – the global leader in wealth management, resources that rival anyone in the industry AND they’ve decided to remove any and all hurdles from their deal when recruiting from traditional rivals (MS, WF, ML). That narrative has never been heard or seen before and it is having a massive impact. **read that again, no hurdles in their deal.

Rockefeller, on the other hand, has become the ‘Goldilocks’ of the wealth management world. Not an independent or hybrid, killer tech platform, a legacy brand name that seriously resonates with HNW and UHNW clients, and a commitment to bring on big teams that are uniquely respected amongst their peers.

What we’ve seen has become a pattern in 2021. The commitment by UBS to go with a no hurdle deal has been a brilliant decision by their leadership, and the Rockefeller name and culture continue to be an easy ‘yes’ when advisors of distinction are approached.

Ultimately, the numbers tell the story: UBS and Rockefeller are leading the recruiting pack by double their closest competitors. Both firms claim asset transfer numbers in Q1 of better than $8B. First Republic and Morgan Stanley are hovering around $3B. A massive gap.

Given that wealth management recruiting is the ultimate ‘capitalism economy’ and assets and revenue flow to the best and brightest – digging deeper with both firms should be on any curious advisors list.

Broke: Merrill Lynch Recruiting Is A Zombie Cartoon

Merrill Lynch, the firm that used to set the entire narrative for the wealth management industry, isn’t even a skeleton of its former self. It has become a zombie. The walking dead. An easy-to-kill, slow-footed organization that doesn’t have a meaningful reason to continue to exist. Zombie.
Overly harsh one might ask?? No, it isn’t. In fact, Merrill Lynch isn’t even called Merrill Lynch anymore. Bank of America thought it was a great idea to rebrand as just ‘Merrill’ – you know, the name of Mel Gibson’s brother in the movie Signs. Yep, that guy can now accurately be equated with the Merrill brand. Washed up.
In just the 8 weeks since the turn of the calendar, the continued acceleration of Merrill teams has migrated to Morgan Stanley, UBS, and Rockefeller. Does anyone want to guess how many recruits Merrill (a division of Bank of America) has signed up in that time? How many have been announced? Nada. Zilch. Zero. 
Merrill Lynch teams are increasingly easy to poach as the pervading attitude is “there really is no reason for me to stick around anymore.” Management turnover, culture destruction, colleagues have bounced – if you are a big team or advisor still at the firm you either hate change as much as I hate asparagus, or you simply aren’t marketable. It’s one or the other.
In a scene from The Walking Dead, rival firms have a massive cache of weapons, and Merrill advisors keep slowly walking in the same direction. Easy targets. “Swing away Merrill, swing away…”

Regional Firms Continue Recruiting Hot Streaks: 5 Reasons Why The Trend Will Continue

Regional firms have been absolutely crushing it over the past 24 months.

Most prognosticators thought that the fiduciary rule and protocol exit disruptions would disproportionately positively affect independents and RIA aggregators. While those businesses have benefited, the boom has taken place in the halls of Stifel, Raymond James, RBC, Janney, and others.

To drill down a bit, three players have gathered assets like they’ve never done before: RBC, Stifel, and Raymond James.

Here are five reasons why it’s happening.

  1. Culture, culture, culture. Merrill Lynch was an advisor’s dream twenty years ago. Brand cache, a belief in the advisor as to the firm’s revenue center, stock stability and golden handcuffs, the ‘Thundering Herd’, and smart national marketing campaigns. Now, it’s an afterthought at Bank of America. Regional names now ‘feel’ like Merrill felt in the 90’s – entrepreneurial and collegial. Their opinions and client-focused businesses matter again. Culture.
  2. Recruiting deals at regionals are either equal to or larger than wirehouse deals. Just five years ago that simply wasn’t the case. Management at places like RBC saw an opening when UBS and Morgan Stanley decided to de-emphasize recruiting two years ago and reduce their recruiting deal numbers and stepped into the gap.
  3. Executive leadership. As wirehouses have seen significant churn amongst their leadership ranks, regionals have been ‘steady as she goes’. Furthermore, regional leadership has made smart moves and kept their powder dry with respect to the DOL fiduciary rules. They waited, wirehouses panicked.
  4. Demographics. As large scale, legacy teams are at the height of their earning power (and in the midst of a historic bull market), they are looking for a soft landing that won’t nip at their heels with new quotas connected to households, loans and checking accounts. Quotas that if not met take a chunk out of their grid payouts.
  5. Financial crisis residue remains. Wells Fargo is still fighting the stigma of a scandal that is two years old. Merrill is no longer Merrill. Nearly everyone took a big bailout. But regionals don’t even have a whiff of what remains of that stink. No bailouts, no ‘too big to fail’ documentary cameos. It is an easy sell to clients who previously may have questioned a move to a regional name. That question is gone, replaced by ‘could it happen again’ to legacy wirehouse firms.

Add it all up and you have legions of million-dollar producers taking VIP trips to RBC, Stifel, and Raymond James on the regular. And the pace doesn’t look like it’s about to slow. Every single quarter wirehouse headcount dwindles. No new narrative or bloated recruiting deal can compete with the reality of the above.

Regionals will continue to win.

During COVID-19 Chaos Big Teams Accelerate Moves To New Firms; Want To Know Why?

If it seems like larger and more frequent recruiting headlines to keep hitting the tape, you are viewing the wealth management landscape correctly. Each and every week hundreds of millions, if not billions, in client assets are filling out asset transfer paperwork on Saturday and Sunday across the country. And there is no slow down in sight.

The wirehouses continue to be hit hardest as advisors are either opting for perceived greener pastures at a rival firm or setting up their own shop as masters of their inside an RIA aggregator of note. The mass exodus remains real and ongoinG, no matter what firm brass at places like UBS and BofA/Merrill Lynch would have you believe.

But we are more interested in why these moves are occurring now…and accelerating in the midst of COVID-19 and historic market volatility. We think the following four dynamics are fueling the recruiting market and have tipped the scales in the question.

  1. Practice valuations and client balances (AUM) are at historic highs.The thought process here is that with client balances at or near all-time highs, annual production levels are bloated in ways the industry has never seen before. T12 numbers and their multipliers are extremely ripe and perfectly situated to capitalize on the next dynamic in this list. Advisors would be well advised to take advantage of the gift that the markets have given them.
  2. Recruiting deals are at all-time highs and almost artificially outsized for big teams.The competition for teams of scale is as fierce as it has ever been, and deals reflect that competition. At both Wells Fargo and First Republic, when including deferred compensation balances and choosing to retire at those firms, the numbers can surpass 500%. Yes, you read that right. Deals are more apt to retreat from these levels than to press much higher – another reason why big teams are hitting the bid.
  3. Expired Deals.Every advisor and team that mattered during the financial crisis has had the deals they signed back in 2010 (either to stay at their firm or in a move to a new firm) expire. Everyone is a free agent and evaluating the best way to play out the rest of their career – both philosophically and by way of monetizing their book. Besides the two firms that exited protocol in UBS and Morgan Stanley, most advisors are completely legally detached from their current firm.
  4. The COVID-19 effect is real and a significant advantage for transitioning to a new firm.At the outset of the pandemic most thought that the chaos and market turbulence would stifle recruiting movement. Just the opposite has been true. Clients that have stayed home from work are more available to discuss moves and sign transition paperwork virtually; while advisors deal with fewer colleagues attempting to keep their clients at the firm they are leaving. In terms of the drama of the first weeks of a transition, COVID-19 has become an easy off-ramp for exiting advisors.

Doing a serious evaluation of the tent that you find yourself under as an advisor is an absolute must right now. With so many deals stretching beyond 300% and production and asset levels at historic highs, big teams will continue to leave. Considering the factors above and the cover for a transition, you should be doing your own evaluation right now.


Stifel Recruiting Rebounds

After the departure of their national recruiting head, John Pierce, Stifel recruiting took a bit of a pause. As they circled the wagons they remained engaged with advisors that had been in the pipeline before Mr. Pierce’s departure and the fruits of those efforts have finally found their way to the firm. Via On Wall Street

“The largest of Stifel’s latest recruits is an ex-Merrill Lynch team that managed $935 million. It is composed of advisors Blase Sparma, Stephen Long Jr., Brad Ripplemeyer, and Hampton Ballard. They made the move last week and will staff a new Stifel office in Venice, Florida.”

“Sparma and Long had been at Merrill Lynch since starting their careers in 2000 and 2004, respectively, according to FINRA BrokerCheck records. Ripplemeyer began his advisory career at Smith Barney in 2000, moving to Merrill in 2012. Ballard has spent the entirety of his four-year career at Merrill.”

All in all, Stifel brought in $1.5B in client assets via their recruiting haul, adding several other advisors and teams to go along with the flagship group from Merrill Lynch.

Over the past four years, Stifel has feasted on Merrill Lynch’s legacy teams and advisors. This group adds to that batch of former Merrill Lynch faculty that now call Stifel home.

Beyond Merrill Lynch, Stifel also landed a sizable grouping of Wells Fargo talent across the country. Interestingly enough Wells Fargo has a sizable presence in St. Louis alongside Stifel – so a bit of hand to hand combat on the recruiting front.

Whether or not Stifel can keep up the pace that is set in 2018 and 2019 is yet to be seen, but $1.5B in recruited assets is a great start.