Team Breakups Surge Among Financial Advisors Despite Firm Incentives
From the desk of Jim Eccleston at Eccleston Law
In recent months, several high-profile departures have highlighted a growing trend: financial advisors are splitting from longtime teams and even family members to pursue opportunities with other firms. AdvisorHub reports that this movement underscores the limitations of economic incentives designed by wirehouses to encourage teaming.
For example, an 11-year Merrill Lynch advisor in New Jersey left his team, which included his father and brother, to establish his own advisory firm. Similarly, a Merrill advisor in Connecticut separated from his brother to join UBS, and a duo from UBS in Austin, Texas left a third senior advisor to move to Morgan Stanley.
According to AdvisorHub, those instances are part of a broader pattern where nearly 20 teams have split this year, driven by lucrative recruiting offers, personality conflicts, and the search for better prospects.
Nevertheless, many advisors still work in teams. According to Asher Cheses of Cerulli Associates, 46 percent of advisors are part of a team, rising to over 94 percent among those managing at least $500 million. AdvisorHub reports that firms like Merrill, Morgan Stanley, and UBS have higher rates, with Merrill aiming for all its 11,000 advisors to be on teams by 2030.
But the temptation is real. Recruiting bonuses have skyrocketed, reaching over 400 percent of trailing-12 production for top producers. The average age of advisors also impacts decisions, with senior advisors more inclined to stay for retirement deals while junior partners look to move.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory and disciplinary matters.
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