What do advisors who manage $2 billion, $500 million and $100 million in client assets have in common? I’ve found that integrity, objectivity and a fiduciary mindset guide their service model, in addition to a strong focus on creating a sustainable, growth-oriented business.
That said, perhaps nothing can have a greater impact on an advisor’s business more than being in the right place to serve clients and grow the business with the greatest potential.
So how does an advisor go about the due diligence process of comparing and contrasting where they're at to what’s out there? Do they go it alone or use a recruiter?
From where I sit, a recruiter’s role is to act as guide and advocate in order to:
1. Educate by offering access to information and solutions not always readily available or obvious.
2. Distill an expanded and ever-changing industry landscape, curating and customizing an appropriate list of solutions and opportunities.
3. Streamline and systematize what can be a dizzying process.
4. Negotiate and ask for things in a deal that most advisors, and even managers, would never know to ask for.
5. Act as a neutral third party, stepping in on the advisor’s behalf and creating an “arm’s length relationship”—allowing someone else to be the “bad guy” in negotiations.
6. Share industry knowledge with competence and confidentiality, while acting as a sounding board and trusted partner.
Recruiters in this industry work on a contingency basis at no cost to the advisors they represent. So, if a good recruiter can do all of the above, why would someone opt not to avail themselves of the service?
Some people are just more comfortable doing it themselves. They like to book their own vacations without a travel agent, peruse a store without a salesperson to show them around and find the best restaurant and sights without the help of a hotel concierge. These folks likely take pleasure in doing their own research and having complete control over the outcome. And, when it comes to the decision to stay or go, they don’t trust anyone to represent their interests as well as they could themselves.
Other advisors feel that their time is best spent focusing on their core competencies—nurturing client relationships, prospecting for new business and investment management. They do not want to be distracted from any of these things in order to figure out what firms to talk to or who to meet at those firms, and they believe that it is best to let someone else help them through what can be a time-consuming and overwhelming process. They would choose turnkey over do-it-yourself any day of the week. And the potential value-add of working with a recruiter is far greater than the alternative. Aligning with a recruiter who has their best interest at heart allows them the ability to move forward in the most efficient and strategic way possible, limiting their time spent exploring and making decisions.
A DIY Story
Samantha and Jerry were a long-tenured, top wirehouse team in the Pacific Northwest. Convinced that they would retire from their firm, they eschewed any outreach from recruiters and other firms—until last year, when they were told that the firm made the decision to close their office and they would have to relocate to an office 10 miles away. That became the proverbial straw that broke the camel’s back. Samantha and Jerry most certainly felt the impact of greater bureaucracy and many of the other changes that came along with bank ownership, but they chose to ignore them because the pluses of staying put outweighed the hassle of making a move. But when they got the news, they became sure it was time to make a move.
Because the team was so well known in their market, they reached out directly to senior leadership at the other wirehouses and arranged meetings. Everyone they called was thrilled with the opportunity to recruit them. After two meetings with each firm, here’s what happened:
- They were overwhelmed with information from each firm and more confused than ever about how each compared to the other.
- They became worried that there were other options beyond the wirehouse space that they should be considering, yet had no idea where to even start looking.
- They began to feel like the exploration process was becoming a full-time job and were losing focus on their clients.
- And while they were being wooed by the top brass at each firm they engaged with, there was no one managing the thousands of small details that really mattered—the ones that can make or break a deal.
So, after three months of searching, they reached out to me to help them navigate the process.
There is no single right way to do due diligence. While many see themselves as part of the do-it-yourself crowd that can successfully navigate their way on their own, there are just as many others that prefer to be as hands-off as possible. The good news is that advisors are in the driver’s seat in this seller’s market. Whether you call the restaurant yourself or let the hotel concierge handle it, you’re still likely to have a good meal.
Mindy Diamond is president & CEO of Diamond Consultants in Morristown, N.J., a nationally recognized boutique search and consulting firm in the financial services industry.