Displaying items by tag: recruiting

Cresset, a $60 billion RIA, has secured a $150 million minority investment from Constellation Wealth Capital, an alternative asset manager specializing in long-term investments in wealth management firms and multi-family offices. Constellation now holds less than a 10% equity stake, with employees and clients retaining majority ownership, ensuring the firm's alignment with client priorities. 

The funds will support Cresset’s efforts to enhance its platform, technology, and talent recruitment initiatives. Karl Heckenberg, president of Constellation, praised Cresset’s commitment to client success and shared their "100-year vision" for sustained growth and innovation.

 Cresset’s co-founder, Avy Stein, described the investment as a strong endorsement of the firm’s business model and growth strategy. He also welcomed the Constellation partnership as a way to further transform how clients experience wealth management.

Finsum: This investment into technology is a reflection of the growing importance of innovation in advisors decision making processes. 

As competition intensifies in wealth management, independent firms are leveraging bold strategies like generous payouts, cutting-edge tools, and strategic guidance to attract top advisors. For advisors considering a change, it’s vital to look beyond incentives and seek a firm that prioritizes trust, accountability, and open communication. 

A commitment to radical transparency—a philosophy emphasizing full disclosure and honest dialogue—can set a firm apart in a crowded market. This approach fosters deeper trust by encouraging clear communication, owning missteps, and making decision-making processes visible to all stakeholders. 

Advisors who embrace transparency in their client relationships can build stronger partnerships, ensuring alignment of goals and expectations. Firms that champion these values by prioritizing advisor feedback and meaningful investments in their growth will cultivate long-term success for both their teams and their clients.

Finsum: There seems to be a clear leveling up in terms of what firms are offering clients, but don’t sell short the benefits of technology and efficiency when serving advisors. 

A recent survey reveals that 83% of advisors who switched firms in the past three years are satisfied with their decision, with many wishing they had made the move sooner. The primary motivations for these changes are improved technology and better compensation, as highlighted by 80% of respondents citing tech as a factor in their decision. 

Satisfaction is closely tied to the quality of the tech stack, with advisors emphasizing tools that enhance efficiency, attract clients, and improve work-life balance. Beyond tech and pay, advisors often cite inadequate support and administrative inefficiencies, such as delays in marketing approvals, as key pain points driving their transitions. 

Mergers and acquisitions also prompt advisors to reassess firm culture and alignment with their goals, particularly amid ongoing industry consolidation. 

Finsum: Firms looking to retain talent might focus on addressing tech frustrations, including better integration, improved client-facing tools, and AI-powered automation to boost advisor productivity.

Recruiting in wealth management has evolved significantly, with major shifts in deal structures and compensation trends. The size of recruiting deals has increased dramatically over time, especially among wirehouses and independent broker-dealers, but these deals are often accompanied by strict performance goals and lengthy lock-up periods. 

Clawback provisions and production guarantees are increasingly common, requiring advisors to meet specific asset transfer thresholds. 

While the large headline numbers may seem appealing, advisors need to carefully evaluate the conditions tied to the offers. Understanding the fine print is essential for making informed transition decisions.

Finsum: The numerical details of these provisions are key to switching and certainly should play a pivotal role in your cost benefit analysis

In 2023, registered investment advisors (RIAs) experienced a notable rebound, with assets under management rising nearly 18% to a median of $542 million, according to Schwab’s RIA Benchmarking Study. 

The median organic growth rate hit 5%, excluding market performance. RIA revenue increased by 6.3%, and the number of clients grew by 4.3%. Top-performing firms saw even higher growth rates of 12%. 

Key strategies for success included having a documented client persona, a solid value proposition, and a structured marketing plan. Client retention has remained steady at 97% over the past decade. Additionally, growing firms are focusing on talent acquisition and developing staff skills to drive future growth.

Finsum: Firms will simultaneously be doubling down efforts on retention and recruiting in 2024.