I write a lot about changes in the industry landscape—whether it’s a new business model, relevant trends that we’re seeing, or the headline-gripping announcements from firms. What strikes me about the past 12 months is the frequency and speed of transformation that we’re seeing. Even more striking are the courage and determination of advisors to find the best firm or model to suit their business needs, regardless of the obstacles they may encounter.
For example, over the past two decades, it was rare for advisors to leave Goldman Sachs Private Wealth Management. Of course, the cache of the name alone and a belief that there was no better option kept many of the industry’s finest in their seats. Yet for many others, concern over garden leave policies, as well as the potential legal battle that might ensue, served as extremely powerful deterrents.
The fact remains that it was always considered a rare exception when a Goldman advisor changed jerseys. Yet, in the last 12 months or so, five high-quality, mega teams have jumped ship.
The development begs the following questions:
What’s going on in the industry that’s serving to push the finest advisors with the most restrictive post-employment mandates out of their firms?
Answer: There are likely different drivers for everyone, but generally speaking, it’s about a growing sense on the part of the advisors that they don’t have control over how they’re compensated and how best to serve clients.
Where are these brave folks going? Is there any commonality in their choices?
Answer: Not really. One team went to Morgan Stanley Private Wealth Management, one to First Republic Wealth Management, and three to different versions of independence. Having facilitated two of the biggest moves in the past year, I can tell you that once the advisors made the decision to leave, it became very clear where they wanted to go.
And, most importantly: What can advisors who are worried about a non-protocol world learn from these Goldman moves?
Answer: The fact remains that there is more to a non-protocol move in terms of planning, process, time and risk. And for Goldman advisors, these considerations are multiplied. So what is it that other advisors can take away from those who’ve gone before them? What realities should they be aware of before they even think of making a move? Consider these six characteristics:
- Unyielding desire. You believe verily that there’s a better place to run your business. Said another way, there are significant enough frustrations pushing you out the door, as well as an obvious and tangible opportunity elsewhere that is more than marginally better than what you have now.
- Strong faith in clients’ loyalty. You will be putting your relationship with them to the ultimate test—because if they’ve been unhappy with you, this is an opportunity for them to vote with their feet. Honestly assess the depth of your relationships and then trust in them.
- Tremendous self-confidence. Any move requires a good amount of aplomb, for sure. You’re betting on yourself and your team, that you’ve got the goods to make this work.
- Boundless patience. Proper planning makes porting over clients far less of an arduous task than it was years ago and, especially for those managing a small number of relationships, it usually happens pretty quickly. In the case of Goldman advisors and those moving from private banks where portability always takes longer, taking the long view is the only way to go.
- A long-enough runway. We move advisors of all ages and stages in their careers, and in each case considering the benefits versus the time they are looking to stay in the game is key.
- High-levels of risk tolerance. There is some risk associated with any move, and so for those who don’t believe they have the mettle to tolerate any bit of it, staying put may be the better option.
Acting as a true fiduciary for their clients, an advisor’s role is to ensure that decisions are made with the clients’ best interests in mind. Ultimately, where they work provides a foundation of how they serve their clients. So, if there are limitations to that foundation, then, despite the hassle factor or fear of reprise, the onus is on the advisor to find a new home.
That said, the big lesson learned from the recent trend of Goldman advisors on the move is that, if they have the chops to find a way to better serve their clients and their careers—despite the potential toll of garden leave—then it stands to reason that advisors with less restrictions can muster up the courage to do the same.
We’re now living in a world where advisors have more options than ever before. It’s not that the notion of risk or fear has disappeared, but the desire for something better has grown stronger. And with all of the options and opportunities available, that desire can be more easily translated into something attainable.