COVER STORY
“ What ’ s changed is what advisors are willing to outsource . Before , advisors were ... very focused on doing it all themselves . Now it ’ s like , ‘ We ’ ve got Commonwealth as our partner . Let ’ s leverage you .’”
— BECCA HAJJAR , MANAGING PRINCIPAL , COMMONWEALTH FINANCIAL NETWORK
cybersecurity and compliance . “ As we ’ re evolving and the industry is evolving , we think there ’ s going to be a shift towards more support as opposed to pure independence , especially for Gen 2 ,” he says .
The next generation , he says , will operate their businesses very differently from the way the current generation of founders have . “ They ’ re not necessarily going to want to be in the real estate business or technology curation ,” he says . “ They might not even want to be in the marketing or lead generation side of things . They don ' t want to be bound by office space and geography , so they want to use technology more .
In some cases , the firm has handled leasing for advisors , hired staff , and managed payroll and accounting , he says . And for some recruits who have been identified but can ’ t take the time to iron out all the details of setting up a new office , Smith says the firm has shouldered virtually all of the effort .
“ We ’ ve been testing in a couple of recruiting instances where we set up an office ahead of time for the advisor ,” he says . “ We ’ re doing the shadow leases and some of those things , all confidential . And they can come in , turn on the brand , turn on the lights in their office and make that transition .”
At Commonwealth , Hajjar also says picking up outsourcing has been a strong recruitment tool .
“ We ’ ve always said that we ’ re time merchants , so our piece hasn ’ t changed ,” she says . “ What ’ s changed is what advisors are willing to outsource . Before , ad-
visors were always very focused on doing it all themselves . Now it ’ s like , ‘ We ’ ve got Commonwealth as our partner . Let ’ s leverage you .’”
Based on advisor demand , Hajjar says Commonwealth has added a virtual admin program , virtual para-planning and virtual transition support . And most recently the firm has added special support for ultra-high-net-worth clients .
“ Prospective advisors are saying , ‘ Hey , I have some very large clients . What type of support do you provide ?’” she says . “ Well , the needs of a $ 20 million or $ 50 million client are very different from the needs of a $ 500,000 client . So we ’ re making sure that we have the products and services available that that highnet-worth client wants . Not every $ 500,000 household client should have an alternative investment , per se . So it ' s about knowing your client and doing what ' s best for them .”
RIAs ’ Advantage
Wirehouses have traditionally had multiple business lines and deeper pockets for recruiting , which have given them an advantage luring talent . To some degree independent broker-dealers have had those advantages as well , sourses say . But there remains one area where the fully independent RIA has the advantage .
If the recruitment prospect really wants the biggest possible upside at the end of their career , there ’ s nothing like being an equity owner in an RIA , says Cerulli ’ s Caruso . “ Advisors that we talked to truly like the idea of building financial value in an independent business ,” he says .
This is something that ' s portable , that has a true independent value and a value that they can see monetized by their peers on a regular basis . “ They can transact it . They can have a liquidity event . In some cases , we ' re seeing advisors create generational wealth by transacting their practices ,” he continues . “ In terms of advisor recruitment , there ' s a long-term opportunity there that ’ s hard to beat .”
42 | FINANCIAL ADVISOR MAGAZINE | OCTOBER 2024 WWW . FA-MAG . COM