There is a movement happening in our industry and it offers community banks and credit unions a significant opportunity. More than one in four financial advisors at traditional wirehouses are considering leaving their firm, according to a survey by Cogent Research. And with those advisors go billions of dollars in investable assets.

Factors influencing this growing interest in greener pastures may range from frustration with internal conflicts, to compensation goals tied closely to sales of in-house investment products, to an increase in competition for experienced talent as older advisors begin to retire.

Indeed, roughly 8,600 advisors will retire each year for the next 13 years, according to Cerulli Associates. Moreover, the industry is not producing new advisors at the same rate, Cerulli says.

It is therefore no surprise that financial advisors, recognizing the value they offer, are willing to take their skills — and very often, their clients — elsewhere.

On the other hand, consider community banks and credit unions with billions of dollars in deposits, established relationships with households in need of investment and retirement planning advice, and strong institutional reputations as trustworthy community leaders. These local financial institutions would seem to be an excellent business move for an experienced investment professional.

Historically, community and regional financial institutions encountered challenges in attracting seasoned, successful financial advisors. This has been due in part to a long-standing, self-fulfilling prophecy — the notion that a community institution simply cannot compete with high-profile money management firms, regional brokerages and national financial brands.

As a result, these local institutions have often been understaffed in the investment advice arena.

But financial institutions focused on building top-tier investment advisory capabilities should be aware of the distinct advantages they offer in the recruiting battle.

Below are seven strengths that community banks and credit unions should emphasize when recruiting top financial advisors.

1. Established infrastructure that values an advisor's contribution. Financial advisors coming from many of the top firms are accustomed to attractive offices and work spaces, state-of-art technology and attentive administrative support. An established local bank or credit union will have this infrastructure in place and awaiting occupancy.

2. Full suite of customer-centric financial services. Community FIs place a strong cultural emphasis on customer service and relationship banking, which is an attractive draw for investment professionals with their own client book. Advisors can then position their move to the FI as a "broadening" of the services they offer, enabling them to holistically serve all of their client's financial planning needs.

3. Brand recognition. Some local FIs have been cornerstones in their communities for many years or have been formed and capitalized by local businesspeople with strong reputations and deep community roots.

In either case, an FI's brand recognition and trustworthiness, along with a deep referral base of deposit and loan customers, can be an invaluable resource to a newly relocated investment advisor.

4. Full benefits and transition package. Transitioning advisors may not need to worry about funding wellness and health care benefits, or setting up retirement savings plans. Most FIs will handle this, as well as provide interim salary and forgivable transition compensation to help new advisors stay focused on transitioning their business and establishing key FI relationships.

5. Ability to allow advisors to focus on providing advice, rather than running a small business. Advisors at large, national firms may have little experience running their own business. So the prospect of managing program fees, leases and utilities, in addition to their advisory job, can give even the most independent-minded advisor pause. Those advisors wary of the financial and management responsibilities that go along with becoming a small business owner may likely be more receptive to joining a well-capitalized institution willing and able to provide the necessary infrastructure for a financial advisor to run his or her practice.

6. Recognition of the value of advisor's existing client relationships. When it comes to recruiting experienced talent, it often requires rethinking employment terms and compensation packages to attract, retrain and maintain the right talent for the right employer. For example, banks that allow new advisors to maintain ownership of their existing client relationships and accept a lower margin on that business can establish goodwill and trust from the start of a relationship. In return, the bank may attract a new class of advisors, gain some margins where none previously existed, and discover a great opportunity to cross-sell banking products to the new relationships.

Compensation also needs to be more realistic. The advisors you want to attract are those who may not need to take a position at an FI, so make it worth their while. Ensure that their compensation level will remain consistent through a mutually agreed upon transition period. Offer healthy and achievable performance incentives tied to future asset growth and collaboration with banking colleagues. And do not expect overnight profitability — it takes time and money to build a business.

7. Robust broker-dealer and investment advisory platform. The prospective bank's broker-dealer affiliation can be the tipping point for a savvy financial advisor weighing the pros and cons of joining a community FI. Having a top-tier investment services partner sends a clear message that the bank is serious about building its financial advisory practice for the long haul.

A strong B-D partner will offer strong trading and portfolio management solutions, mobile and online access, simplified reporting and record-keeping tools, effective marketing and client communication tools, compliance support, timely and credible research, and guidance on practice development and management strategies.


The need among U.S. households for financial planning strategies is growing larger by the day as the baby-boomers begin to retire, college costs soar and Americans continue to strive to realize their financial dreams.

Community financial institutions still have tremendous opportunity to become "providers of choice" of financial advice in cities and towns across the country.

Recruiting top advisors is paramount to accomplishing this strategy but these advisors are not in unlimited supply. Competition for quality talent is on the rise, so now is the time for banks and credit unions to ramp up their recruitment program.

As evidenced in the seven strategies suggested above, your keys for success in attracting successful investment talent are hidden in plain sight.

Frank Smith is Vice President, Recruitment at LPL Financial Institution Services.

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