In America, we use the sports-derived phrase “on the ball” to describe someone who is active and attentive. Singapore slang, however, puts an ironic twist to the phrase as “on the wrong ball” describes someone who energetically attempts to do the wrong thing.
In times of market instability, it’s easy to get on the wrong ball – enthusiastically or sometimes frantically following flawed thinking to an end that at the very least wastes time and energy if not worse. Overconfidence in timing the market bottom, fearful swings in asset allocations and buying extreme out-of-the-money options “cheap” are but a few of the paths to folly.
Financial advisors, too, can focus on the downturn to such an extent that they lose their broader career vision and long-term focus. Specifically, financial advisors may choose not to make a needed transition or make one to the wrong broker-dealer or RIA that locks the short-term turbulence into their long-term career.
With 100 financial advisors and $5.2 billion in assets as of June 30 this year, Stifel continues to onboard new advisors through the downturn to its 60 nationwide locations, including 12 “flagship” offices, where it dedicates resources to a team of advisors for organic growth, recruiting and buying other advisors’ books.
We sat down with Boostrom to understand how advisors can make successful transition decisions during a downturn and the current environment for in-branch recruiting.
WSR: In your experience, what are the biggest concerns that financial advisors have about transitioning to a different IBD / corporate RIA during a market downturn? Is it just the repapering process and the client conversations about investment performance that the process triggers? If not, what are the other top concerns?
Boostrom: Elite advisors assume transitioning during a downturn would cause apprehension among clients, or that a client might think twice before moving with them. In my experience, however, downturns don’t govern the advisor-client relationship, especially among tenured advisors with decades of experience.
If you’ve been seeing your doctor for 20 years, and that doctor moves to a new hospital, would you give up seeing your physician because of an office move?
Downturns offer opportunities. A familiar advisor is a source of support in times of uncertainty, and high-net-worth clients will follow their advisors, wherever they may go, because of the stability the relationship provides them during periods of upheaval. Investment performance is not really a topic for clients when advisors make a move.
The real question revolves around the advisor. If the advisor is consumed by irrational or destructive fear, they will factor in things like downturns into their career decisions – holding them back from joining a firm that better aligns with their goals. But when an advisor chooses constructive fear – equal parts confidence and mature acceptance of risk – they make better choices.
WSR: It sounds like Stifel Independent Advisors has been especially successful with in-branch recruiting (i.e., recruiting independent financial advisors to existing teams or groups of financial advisors that are supported at the corporate level) – Is this correct, and if so, how does your emphasis on in-branch recruiting help allay the natural anxieties / concerns that independent FAs typically feel about moving firms during a major market meltdown?
Boostrom: As part of our value proposition, Stifel Independent Advisors is working to recruit elite multimillion-dollar independent advisors to existing teams supported at the corporate level, but we are still in the early innings. Our emphasis on in-branch recruiting has attracted interest in our flagship offices, particularly from advisors looking for a good, solid team.
Elite advisors who reach out to us understand there is true value to having the scale and structure of a large practice. At Stifel Independent Advisors, they have the option of joining a flagship office, or they could partner with us to find other advisors who are a good match for a more independent practice.
Joining an existing team at Stifel Independent Advisors is ideal for high-end, tenured advisors who have what it takes to open their own practice but may be more comfortable with the idea of plugging into a larger office – while keeping the benefits of independence.
Our emphasis on in-branch recruiting can put to rest concerns advisors may have about the business cycle, because a large practice gives them access to expert, personalized support, industry-leading institutional capabilities and resources few independent firms come close to matching.
More importantly, we introduce prospective advisors to existing visions – options that match their version of independence. Advisors succeed when they find a firm that gives them confidence – which comes from finding an option that makes them comfortable and fits with their personality. . When advisors build a practice on their own terms, they also build a better business. Stifel Independent Advisors’ approach helps elite advisors get there.
Julius Buchanan, Managing Editor at Wealth Solutions Report, can be reached at email@example.com