Displaying items by tag: wealth management

Following the collapse of First Republic, many believed that there would be a negative impact on financial advisor recruiting. However, this concern was unfounded as more than 9,600 experienced advisors switched firms last year, which was a 7.5% increase from 2022 according to a report from Diamond Consultants. 

Jason Diamond, executive VP of Diamond Consultants, authored the report. He considers an experienced advisor to be one with a minimum of 3 years of experience. He believes that the healthy recruiting figures reflect that advisors are ‘taking a long-term view of the business in terms of what move will best position them for the next five years, not just today.” 

The two biggest moves were a team from UBS, managing $5.5 billion in assets, moving to RBC, and a private banking group at Bank of America, advising on $4.5 billion in client assets, joining Fidelis Capital, an independent wealth management practice. 

Most moves were within the same channel, such as wirehouse to wirehouse, even though many headlines focus on large teams going independent. For 2024, expectations are for another strong year of recruiting, although weakness in financial markets could lead to less activity. Many wealth management firms now offer multiple affiliation channels for incoming advisors. Additionally, private equity has also been getting more involved which has also pushed valuations higher. 

Finsum: Many thought that financial advisor recruiting would drop off in 2023 following the collapse of First Republic. However, this was incorrect as recruiting was up 7.5% compared to 2022. Expectations are that recruiting in 2024 should be strong as well.  

Bank of America CEO Brian Moynihan is looking to increase the profitability of the bank’s wealth management unit. He wants to achieve this by increasing scale, hiring more advisors, promoting more cross-selling of products, and investing in technology. 

In Q4, Bank of America had a net gain of 175 brokers with most of the growth coming from graduates of its training program. It ended the year with 18,916 advisors across all units which was a 2% decline from the end of 2023. The bank has also sought to stem the tide of defections over the past few years by upping compensation to match its competitors.

Moynihan wants to expand headcount and increase the bank’s presence in underserved markets. A key aspect of this is its revamped broker training which was integrated with Merril in 2021 and has increased retention rates of new advisors. 

Another element of the growth plan is to increase use of Bank of America financial products across its ecosystem. This means getting wealth management clients to use Bank of America financial products such as home loans or bank accounts, or private banking customers should be using Merrill for wealth management rather than an outside firm. He sees this as an opportunity to increase sales with minimal expense compared to other channels. 

Finsum: Bank of America CEO Brian Moynihan was positive on the wealth management unit’s performance. He sees future growth coming from adding advisors, investing in technology, and increasing cross-selling of products. 

Marketing is a non-negotiable for any practice that is serious about sustaining consistent growth. While there are many aspects to consider, an overriding factor is determining the right budget. Some of the variables that will impact this decision are the size of the firm, the marketing strategy, and the channels that will be targeted. 

It can be helpful to study the marketing strategies and budgets of other advisors. According to a study conducted by Broadridge, the average advisor spent $17,400 on marketing in 2022. The average spend for an RIA was $27,800 vs $9,700 for independent broker-dealers. In terms of impact, the study found that firms were onboarding an average of 23 clients per year with the cost of acquisition at $743 per client. However, there was significant variance as some reported spending under $250 per client, while others reported figures above $2,000 per client. The survey also showed that 30% of advisors plan to increase their marketing budget, while only 2% of advisors plan to reduce spending. 

The general rule, for more established advisors, is that the marketing budget should be between 1% and 10% of annual revenue. Marketing is also an iterative process, so it’s important to evaluate the effectiveness of spending and various tactics in terms of desired metrics such as generating leads, finding prospects, or brand building. 

Finsum: Marketing is key to sustainable growth for advisors. Determining a marketing budget is the first step. Here are the most important factors to consider, and how other advisors are approaching the matter.

First Trust is launching a new managed floor product called the First Trust Vest U.S. Equity Moderate Buffer UCITS ETF. The ETF will strive to capitalize on the gains in the S&P 500 but will cap the returns at 13.86% annually. However, this comes with the benefit of a 15% downside protection.

The Fund will have an outcome period of a year and will set to end in February 2025, when this time expires the cap and buffer conditions will be reset to match the current market conditions adapting to the new financial climate. 

Managed by First Trust Advisors L.P. and sub-advised by Vest Financial LLC, GFEB invests primarily in Flexible Exchange Options (FLEX Options) on the S&P 500, providing a customizable approach to outcome-based investing and mitigating bank credit risk. Derek Fulton, CEO of First Trust Global Portfolios, highlights the fund's role in addressing investor concerns about downside risk and underscores the increasing popularity of buffered ETFs as a solution in today's market landscape.

Finsum: Buffer ETFs like these give investors an alternative route to navigate the tricky 2024 markets while maintaining exposure to the upside equities offer. 

Any advisor who is serious about acquiring high net-worth clients’ needs a solid marketing strategy. This is because there is intense competition to land these clients, and it’s necessary to differentiate your services in the marketplace.

The first step is to clarify what exactly you are trying to accomplish with your marketing plan. This can include increasing awareness of your practice, building trust with prospects, branding, creating credibility, and highlighting your expertise and knowledge. 

Next, it’s essential to understand the needs, goals, and challenges of your target audience. Some themes that are likely to resonate with wealthy clients are areas like legacy planning, minimizing tax liabilities, or superior levels of service. 

Building authority and credibility is an important prerequisite when it comes to landing wealthy clients. Some ways to do this are through interviews with journalists, being a guest on a podcast or program, collaborating with other professionals, and building a following on social media by regularly sharing valuable information. 

During the process of converting a prospect into a client, advisors should ensure that all interactions with prospects and full of value with the intention to create trust. This starts from the first interaction with a client and should always remain a primary ingredient in every point of engagement.

Finsum: It’s quite competitive and difficult for advisors to land wealthy clients. Here are some tips on how to be successful.