LPL OSJ Aims to Lure Wirehouse Breakaways by Covering Moving Costs
November 16, 2020
By Mrinalini Krishna, Financial Advisor IQ
Independent Advisor Alliance is offering to pay breakaway advisors’ relocation costs to try to entice them away from wirehouses, says Michael Gordon, chief business development officer for IAA.
The firm, which is an office of supervisory jurisdiction on LPL Financial’s hybrid RIA platform, is offering to cover the expenses and coordinate with moving companies as a way of differentiating itself in a very competitive market for wirehouse breakaways, says Gordon. While the amount of additional money offered to recruits as part of the package isn’t necessarily enormous, the arrangement is meant to demonstrate a spirit of partnership, he says.
IAA’s strategy is premised on the notion that advisors are at present especially keen to leave big cities for the suburbs in response to the pandemic, and so might find the firm’s offer attractive, Gordon explains. The COVID-19-driven remote work environment was the “last straw that broke the camel’s back,” after other factors like high costs of living and escalated tax rates had already begin driving advisors out of city centers, he says.
A study by Realtor.com released in September identified a “deurbanization trend” emerging during the pandemic, with prices for suburban homes rising faster than prices for those in urban areas since the first week of March 2020.
So far Gordon said he has been in talks with several dozen advisors about relocating to suburbs to establish offices on the outskirts of large cities, as well as conversations with roughly half-a-dozen advisors about making longer moves of 100 miles or more to join IAA. He declined to say how many advisors had taken the firm up on its offer to date.
IAA had approximately $12 billion in assets under supervision as of the first week of November, according to Gordon.
Jodie Papike, president of the recruitment firm Cross-Search, says the offer may have some appeal for wirehouse advisors, who have less location flexibility in their current jobs than their independent counterparts. But the deal is unlikely to appeal to independent broker-dealers or RIAs, she says, since they can set up their office anywhere, and relocation costs are consequently not an especially large consideration.
While offers such as IAA’s and the recent shift toward remote work could make going independent more feasible for wirehouse advisors, they also have constraints that make it difficult for them to move, she adds. “It’s very uncommon for someone to completely leave a territory, especially if they’re [working] out of a wirehouse.”
Jon Henschen, founder of St. Croix, Minn.-based recruitment firm Henschen & Associates, says firms’ and advisors’ increasing comfort with remote work is making it easier for them to relocate. Clients are also starting to get more used to virtual meetings, says Henschen, who works with independent B-Ds.
Still, while advisors do generally seem to be gravitating towards suburbs and away from cities, and remote work is becoming more viable, advisors contemplating a move need to think carefully, Henschen adds. It all boils down to “How well can you service your clients if you’re away from them?”
