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Should I Stay or Should I Go?

When a firm is acquired, advisors are left wondering what’s next for themselves and for their clients.

I’m betting that the chorus of “Should I Stay or Should I Go,” the 1982 song by The Clash, has come to mind for every Barclays-affiliated advisor over the past several months. When Stifel Financial announced its intent to acquire Barclays’ 180+ advisor wealth management unit, the news sent shockwaves throughout the advisor world. 

But it’s just the latest shift in an ever-changing financial services landscape, which has been busy with dealmaking in recent years. Whether with Stifel’s purchase of Sterne Agee earlier this year, Raymond James’ acquisition of Morgan Keegan in 2012 or Bank of America’s takeover of Merrill Lynch in 2008, financial advisors working for the target firms are typically faced with a great deal of uncertainty. 

With third-party recruiters and managers from other firms competing fiercely for highly productive advisors with uber-aggressive transition packages, recently acquired FAs tend to have a lot of choices to weigh. How do these deals compare to what their new parent companies will give them? For example, Stifel’s offer to Barclays advisors is approximately 100 percent of trailing 12-month production, but recruiting firms typically offer much larger transaction bonuses (upwards of 350 percent of TTM production).

Is it Only Economics?

How does an advisor decide between accepting a retention package from his own firm or a transition package from a competitor? 

The calculus is actually not dissimilar to the exercise every advisor should go through periodically—assessing the current state of professional affairs: Is my firm giving me everything I need in order to achieve my goals? Where do I see myself over the next 5-10 years? What do I want to be when I grow up? 

The only difference for an advisor who's working for a firm that's being acquired—with a retention package awaiting him if he pledges loyalty—is that 100 percent of TTM is a LOT of money to be paid for essentially staying the course.

 Accepting the retention package poses much less risk than changing firms because you save yourself the trouble of having to re-solicit your clients, and it is a lot easier than disrupting your life—and your clients’—for a few months as you settle into a whole new world. 

This Indecision Is Bugging Me

Although these are questions all advisors should be asking themselves, an advisor whose firm is being acquired has the perfect excuse to go through this exercise in self-reflection. Looking at the “bigger picture” and obtaining the answers to key questions will eliminate the uncertainty about the future. Consider the following:

  • Will things stay the same? Will the acquiring firm make changes that will force me to work differently than I am used to or want to?
  • Will local and regional management stay the same? Who will I be reporting to?
  • Will my compensation change?
  • For how long am I tying myself up? If I accept a retention package, what will be expected of me?
  • Have I evaluated other options? Do I know what I'm worth elsewhere? Is there an option that might allow me to serve clients and grow my business in a better and more efficient way?
  • Culturally, will becoming part of a larger organization change things? How will that feel?
  • Will my old firm’s name be retained permanently? If not, will the new name resonate with my clients and prospects?

The Deciding Factors

If you were happy enough at your firm before the acquisition was announced and your intent was to stay put, then that 100 percent windfall is, essentially, found money. However, if there were frustrations that you were dealing with—and they were impacting your ability to serve your clients, grow your business, and/or your professional quality of life—then even a 500 percent retention package won’t necessarily make your life any better.

So, while the process may seem daunting, you can only answer the “stay or go” question once you’ve addressed the “bigger picture” questions. And, while the assumption is that there is no perfect solution, you will be on much firmer footing and will have eliminated a good deal of the uncertainty that comes with new leadership.

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