Page 32 - Investment Advisor June 2021

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t’s not easy to keep up with the rapidly changing panorama of financial services firms. As larger entities
gobble up smaller ones, which are grappling with numerous challenges, the total number of broker-dealers
Iregistered with the Financial Industry Regulatory Authority continues to drop. It now stands at about 3,500
and is declining by about 100 per year.
The total number of registered representatives stands at about 624,500. About half of these professionals
are registered with broker-dealers only, while others are dually registered (as registered reps and investment
advisor representatives).
Many advisors are choosing to work under the umbrella of a registered investment advisor, and the number
of RIAs is on the rise. It’s now at 13,500 and has been growing by about 400–500 firms a year, according to the
Investment Adviser Association and National Regulatory Services.
To make sense of these significant industry trends and what they mean for financial advisors, we spoke with
Louis and Mindy Diamond of Diamond Consultants. Mindy founded the recruiting firm Diamond Consultants in
1998 and serves as its CEO. Louis, her son, was tapped as its president earlier this year and has been with the firm
since 2016, after working in financial services for seven years. (One of their colleagues is Chief Operating Officer
and General Counsel Howard Diamond, Mindy’s husband and Louis’ father.)

ThinkAdvisor: What are the biggest trends affecting What other thoughts do you have about the new models?
broker-dealers today? LOUIS We look at our data and find that when wirehouse
LOUIS DIAMOND One trend we’ve seen is that firms with advisors move these days, many are moving to alternative
multiple affiliation models have become incredibly appealing models rather than to another wirehouse. We’re still seeing
to advisors. a decent amount of movement from wirehouse to wire-
This is because as advisors’ practices evolve in size and house, and it’s picking back up from a low point of a couple
complexity, either as generations retire out or someone of years ago.
wants more control and freedom, they have the ability to But increasingly advisors are finding success and that they
go independent or change the amount of support they’re really resonate at boutique firms like Rockefeller Capital
getting without having to transition away from their Management, First Republic Bank and even JPMorgan. Some
organization. of the “super-regionals,” like Raymond James or RBC, those
types of firms seem to be resonating, too — ones that are
MINDY DIAMOND Also what’s really changed in the smaller and more advisor friendly. They have cultures that
industry is that the advisor mindset has shifted, mean- advisors really like, and that gives advisors a sense of freedom
ing what advisors value today is very different than what and control that maybe they didn’t have at their old firm.
it once was. When I started the business almost 25 years
ago, the top questions on most advisors’ minds at a broker- MINDY We’re talking about the models that advisors view
dealer were: What are the deals? What kind of deal is being as the best of both worlds. On the one hand, they can go inde-
offered by another firm or another model to advisors who pendent and build their own firm with maximum freedom and
join them? control there. But they also have to go through the headache
Everyone wants to understand the economics, since the of building a firm.
economics of a transition need to make sense. But the most While plenty of advisors are entrepreneurial and want to
important driving factor in advisor movement today is advi- do just that, there’s a large swath of the advisor population
sors wanting freedom, flexibility and control. Also, this is that wants more independence, more control and more free-
driving the way the industry has evolved — and newer models dom than they have at Merrill Lynch, Morgan Stanley or UBS,
are being born. but going independent is a bridge too far. The models of the
The big firms are losing a lot of advisors, who can’t firms that Louis just mentioned — the Rockefellers, the First
get what they want where they are. People are moving to Republics, the super-regional firms, boutique firms, etc. —
the right side of the industry continuum, where newer provide them with the best of both worlds, a turnkey firm all
models have been born to solve for exactly what advisors under one roof with fully built infrastructure along with the
want: Models that give advisors more freedom, flexibility additional freedom and control they could get if they were
and control. completely independent.

30 INVESTMENT ADVISOR JUNE 2021 | ThinkAdvisor.com