Page 13 - Investment Advisor - Jan/Feb 2021

TRACKING TRENDS

By Mark Elzweig

7 Predictions for Advisors and Firms in 2021

From changes in recruiting deals to more M&A, here’s what lies ahead for the year.

he COVID-19 pandemic made
for a tumultuous 2020. From
T Wall Street to Main Street, bro-
ker-dealers, RIAs and financial advisors
deserve a lot of credit for responding so
nimbly to the crisis.
Advisors and their firms showed they’re
able to both service clients and grow their
businesses during this challenging time.
As we turn the page on 2020 and ished the informality and increased fam- 6. The RIA model will continue to
begin to focus on 2021, here are some ily time that comes with working from gain traction.
predictions on what the industry is like- home. With no work commute, there can Both wirehouse and independent
ly to see next year. be more time in the day (or at least greater broker-dealer advisors will continue to
flexibility) for non-work activities as well. gravitate to the registered investment
1. Recruiting deals will stay strong. While some advisors did miss daily advisor space. It’s fiduciary model
Firms are going into next year with aggres- interaction with team members and col- and investment freedom are attractive
sive hiring goals and souped-up recruit- leagues, many will insist on working to many.
ing packages. This is the case across all part time at home going forward. Despite the incremental growth of
channels — the wirehouses, high end bou- flat and hourly fees, the “good ole”
tiques and independent firms. 4. Virtual home office visits are fees tied to assets under management
Morgan Stanley and Wells Fargo boost- here to stay. will remain the primary way that RIAs
ed their deals this year, and indepen- Advisors learned that they could get a charge. It’s a set-it-and-forget-it pricing
dent broker-dealer/RIA Commonwealth tremendous amount of useful informa- model that obviates the need for yearly
Financial is set to introduce an enhanced tion from product specialists and senior arm wrestling with clients.
package to attract wirehouse advisors in management at prospective firms via While there’ll be lots of scaling up via
2021. Firms of different stripes and sizes Zoom calls. Plus, hiring firms found that RIA mergers, predictions that a handful
are emerging from the pandemic, and they could run many more potential advi- of mega-firms will dominate the busi-
they are determined to grow. sors through their recruiting process. ness will come to naught.
This proved to be an efficient use of Yes, these giants will have the budget
2. The movement to independence time for advisors and firms alike. In the for a lot of cool technology and market-
just got more legs. future, getting on a plane and flying out ing programs, but there always will be
For many advisors, the pandemic was to visit a prospective firm’s corporate room for smaller players who can forge
a dress rehearsal for independence, as headquarters will become just another relationships and provide value to inves-
advisors found themselves working option for advisor due diligence. tors — and to advisors who join them.
from home.
This prompted many of them to ask 5. Advisor dealmaking will remain 7. Diversity and inclusion matter.
themselves if they really needed a fancy red hot. Firms will continue to scour the mar-
branch office — and all the rules and Many aging advisors will put their prac- ketplace for diverse advisor candi-
policies of their current firm. For many, tices out to bid. With markets hitting dates. They will accelerate their
independence suddenly didn’t seem like new highs, valuations are strong — so it’s efforts to encourage members of
Elnur/Shutterstock 3. Advisors will continue to work exit the business before renewed mar- training programs.
minority communities to join advisor
a good time to sell.
such a stretch after all.
Also, many older advisors want to
This will involve recruiting at his-
(at least) part time from home.
ket volatility hammers the value of their
torically minority colleges and diverse
student organizations at other schools.
practices or stresses them out.
Many advisors discovered that they rel-
JANUARY/FEBRUARY 2021 INVESTMENT ADVISOR 11