Intro
Corey: hey everyone corey whalen managing director bridgemark strategies firm that’s helped over a thousand financial advisors objectively explore the broker-dealer and ria marketplace and help them find the firm with the right combination of feel fit and financials for them and their business one of the first questions advisors asked me in our initial consultation is corey what are some of the deals out there right now for a practice like mine what is a firm willing to pay for me to make a move to another firm and there’s really never been a better time to answer that question and there is
Reason 1 Rising Interest Rates
Corey: a couple different reasons for that the first one is rising interest rates broker dealers make a lot of money on clients cash sleep accounts and as interest rates continue to rise their spread continues to increase and they make tens of millions of incremental dollars that gives them the ability to offer a lot more money to financial advisors considering making a change
Reason 2 Private Equity Interest
Corey: the second reason is the interest that private equity has taken in the financial services industry a lot of broker dealers have decided to take on a private equity partner that frees up a lot of cash to the amount of hundreds of millions of dollars for them to invest back in their platform but also offer a lot more money up front to incentivize financial advisors like yourself to make a move to another firm
Reason 3 Competition
Corey: and the third one is just competition just like an arms race one broker dealer decides to increase their upfront economics and the other competitors decide to follow suit and it continues to go up and up and up to where it is right now which is record-breaking
Corey: offers to the right talent right now
Reason 4 Revenue
Corey: in the beginning of this video i mentioned people have asked me corey what are you seeing out there and i’m just going to put in a disclaimer it really depends it depends on the size of your practice it depends on your business mix most firms are much going to prefer fee based business over brokerage business and also the firm that you come from as well but for top talent in the industry we’re seeing independent broker-dealers and quite a few actually offering north of 70 of a financial advisor’s trailing 12 revenue to make a move so if you’re a million dollar producer and they’re offering you 70 of your trailing 12 production that’s 700 000 up front to make a move
Reason 5 Average
Corey: not all firms are offering that much i would say the average is somewhere around 40 to 45 of trailing 12 revenue or 400 000 to 450 000 up front to make a move based off that same million dollars of trailing 12 revenue example that i gave in the beginning
Reason 6 Average
Corey: on the employee side they’re offering much more for top quality talent again we’re seeing multiple firms offering north of 170 of the financial advisor’s trailing 12 revenue all the way up to 200
Conclusion
Corey: so a million dollar producer getting offered 1.7 million to potentially 2 million dollars up front to move with the average being around 140 to 150
Corey: i mentioned and another video that i created on my youtube channel called everything is negotiable we talk about some of the other things that could be negotiated besides upfront money i think a lot of financial advisors know there might be a little wiggle room in the up front but there’s also some things on the back end that you can negotiate as well that could greatly impact your ongoing economics that could really help make sure that you have the best start possible at your new broker dealer
Corey: if you have any questions would be glad to have a conversation and i really hope this helps thank you you
