Recruiting Roundtable: 2023 Growth Drivers For Firms And FAs

Recruiting And Acquisition Trends Are Showing Resilience Despite Market And Economic Uncertainty

With unprecedented inflation and a hawkish Fed bent on raising interest rates to defeat this trend, the age-old tradition of looking forward to next year in the fourth quarter may seem out of place as we approach 2023.

But is there justification for a dour perspective about what the near-term future looks like in the wealth management space specifically?

Well, let’s take a closer look at the prevailing trends in financial advisor recruitment. Market and economic uncertainties notwithstanding, there is actually hope for continued growth opportunity across recruiting and M&A for financial advisors next year.

A barometer for 2023

Consolidators are becoming more creative in how they are bringing new advisors aboard and identifying and structuring new deals. 

Indeed, throughout 2022, several players in this space tacked into the wind and shifted their approach – And what they have done in the year could collectively serve as a barometer for what to expect in 2023.

Several stand-out examples in particular come to mind:

Lou Camacho, COO (Stratos Wealth Holdings) & President (Stratos Wealth Enterprises)
  • Aquiline-backed SageView Advisory Group is another RIA that has taken an aggressive expansion stance, acquiring wealth management and retirement plan advisory firms across the country.
  • The rapidly expanding Las Vegas-based Hybrid RIA AmeriFlex Group launched an interesting recruitment tool focused on bringing in advisors within five years of retirement, which still represents one of the largest populations of advisors. 

I contacted these institutions to see what new creative approaches we may see in 2023 and if their leadership believes recruitment, M&A or a combination of both will sustain the consolidation trends in the new year. 

Stratos Wealth Holdings and Stratos Wealth Enterprises: Lou Camacho, Chief Operating Officer (Stratos Wealth Holdings) & President (Stratos Wealth Enterprises)

The wealth management landscape has changed significantly over the past several years, and I’m incredibly confident that the consolidation trends will continue – even in the face of the most complicated market conditions in a generation. In some ways, this trend self-perpetuates as smaller firms need immediate scale to compete against larger firms in these challenging economic and financial conditions. 

With that said, the old tricks of pure recruitment and M&A may ​no longer suffice as the industry trends mature. And with so many capital partners interested in activating funds to support these transitions and deals, all players are taking a step back to ensure that their partnerships and engagements serve their long-term strategic needs. 

The right path forward

Finding new ways to invest in our leading affiliated advisors, facilitating on-platform M&A to simplify due diligence and transitional pain and identifying new markets has enabled our firm to achieve significant success over the past year. 

By expanding our vision of how to grow, we have leveraged several successful strategies that touch on recruitment and M&A, and we believe this is the right path forward. A broader lens will be critical in the increasingly competitive and complex wealth management space. 

Arthur Ambarik, CEO, Perigon Wealth Management

Perigon Wealth Management: Arthur Ambarik, CEO and Financial Advisor

Looking at today’s market and what I expect it to look like in the next 12 months, I would lean toward the combination of M&A and recruitment to continue driving growth across the wealth management landscape. Advisors need more choices when deciding on succession plans, growth strategies and partnerships with firms. Robust technology stacks and back-office support have become table stakes for the industry, so firms must differentiate in other ways.

The days of only two choices are over

The days of independent financial advisors seeking growth only having two choices – becoming part of an aggregator model or being recruited – are long over. At Perigon, we see the future of the RIA space as one that offers flexible affiliation models – sell-and-stay, complete merger, minority stake sale, independent affiliation (or “tuck-in”) or joining the firm as a W-2 employee advisor – and multiple custodial relationships. 

This flexibility allows more advisors to consider joining our firm. This approach allowed us to bring in strong new members of our firm’s leadership and maintain sustainable long-term growth.

As we consider a more competitive landscape and complicated macroeconomic situation in the coming years, firms must bring together multiple strategies to deliver on their growth ambitions and continue building infrastructure to support their advisors. 

Jeremy Holly, Chief Development and Integration Officer, SageView Advisory Group

SageView Advisory Group: Jeremy Holly, Chief Development and Integration Officer

There is a compelling case that firms must take a balanced approach to recruitment and M&A activity to achieve meaningful growth in the coming year. And this approach should be tied closely to a strategic vision for the firm’s future. 

The influx of capital into this industry has pushed consolidators to go after scale for the sake of scale. And this has furthered the need for smaller players to look for larger partners to support future success. However, in a more turbulent market environment, advisors must be able to explain how making a change now will benefit their clients. Identifying a good reason to join another firm or merge with a larger player must make sense for the advisor, the firm and their clients. 

As SageView looks forward to 2023, we see a significant opportunity for strategic M&A activity that allows the firm to expand its business at the intersection of wealth management and retirement, an increasingly important market segment. With an aging advisor population, a tremendous demand remains to monetize practices even as valuations may slip below all-time highs. 

A harbinger of opportunity?

Simultaneously, the bear market presents opportunities for well-capitalized firms to help advisors replace revenue through recruitment bonuses and a compelling story to tell clients about their flight to quality.

While growth potential remains high, we believe we are entering a period that will be defined by firms with a clear strategic mission. Firms with clarity of mission will come out on top as the market recovers, rates stabilize and the economy returns to a sense of balance. 

Thomas Goodson, President & CEO, The AmeriFlex Group

The AmeriFlex Group: Thomas Goodson, President and CEO

We need to change our view of recruitment. The facts are clear: More advisors are over the age of 70 than those under the age 35 – and those older advisors need different things. They need a way to capitalize their business without giving up control while continuing to work and identifying a clear path to the next phase of their lives. 

Cracked the code

At AmeriFlex, we believe we cracked this code with our SuccessionFlex program. It gives advisors a way to take some capital out of their business without giving up equity, a clear path to succession and a way to keep working for up to ten more years. This kind of program is extremely attractive to one of the largest populations of advisors in the market. 

Wealth management firms need to provide more than just money to attract the best older advisors and, importantly, gain access to their books of business once they do choose to retire. Firms must provide the tools to transition an advisor’s business and keep their clients well-served after retirement. 

Over the next few years, this kind of thinking will become mission-critical for our industry, and we already see a meaningful return in our business thanks to this program. 

Jeff Nash, CEO, Bridgemark Strategies


Jeff Nash, CEO of Bridgemark Strategies, is Chair of WSR’s Recruiting Roundtable.
Bridgemark Strategies is a nationally recognized advisor recruiting, consulting and M&A firm. He can be reached via 
info@wealthsolutionsreport.com

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