It's homecoming season for some wirehouse advisers.
As headcount
continues to decline and competition for assets of veteran advisers grows, firms like Bank of America Merrill Lynch are now more comfortable extending bonuses and employment offers to what was once considered an off-limits group: advisers who had left the firm to join a competitor.
“The competition for top advisers has gotten more fierce,” said Mindy Diamond, a recruiter with Diamond Consultants Inc. “Where people are going if they chose to leave is becoming more fractured, so the firms need to be more open-minded and flexible about who they are willing to consider.”
Ms. Diamond and other recruiters and former wirehouse managers said that while it's still not a common practice, they are seeing it happen more often and noticing firms are shifting their tone toward ex-advisers. Hiring returning advisers has now become a selling point for some firms, according to Danny Sarch, a recruiter with Leitner Sarch consultants.
“It's desperation for firms … as well as the fact that they can say they thought the grass was greener then they came back,” Mr. Sarch said. “There's a PR benefit.”
Bank of America Merrill Lynch, for example, made two announcements this past quarter spotlighting a manager and adviser who had boomeranged from competitor firms.
'MY HOME'
“Merrill Lynch is my home,” said Michael Casey, who is a director of the firm's Nevada complex, in a statement announcing his move. “I like the people and their spirit of doing what is best for their client.”
Mr. Casey left in 2009 to work at Wells Fargo Advisors and then Morgan Stanley before returning in April.
Last month, Merrill Lynch brought back a team in Baton Rouge that had $350 million in assets and had left in 2008 to join UBS Wealth Management Americas.
“Merrill Lynch is pleased to have The David/Robertson Team re-join our company,” said Jeremy Silvas, a manager for the Louisiana and Mississippi market, in a press release.
“We're very glad to be back at Merrill Lynch and believe the breadth and depth of their services will help us serve our clients well,” the adviser, Chad David, said in the statement.
A spokeswoman for the firm, Susan Atran, declined to comment beyond saying in an email that the firm's platform was “resonating with advisers.”
Other firms preferred to stay quiet on the issue. A spokesman for UBS Wealth Management, Gregg Rosenberg, declined to comment, as did a Morgan Stanley spokeswoman, Christy Jockle and a spokeswoman for Wells Fargo Advisors, Rachelle Rowe.
“No other firms are willing to blatantly admit that they are doing it, but they are,” said a former UBS branch manager who left the firm last year, on the condition of anonymity because he did not have permission from his current firm to speak publicly.
“Hiring somebody back after they jumped to another firm used to be a no-go,” he added. “As recruiting pressure increased and the number of firms dwindled, senior management abandoned the principle and went with the practical.”
Most managers avoided hiring former employees and firms had unofficial policies that an adviser had to be gone for eight to 10 years, the average length of a recruiting contract, before they could come back, recruiters and former managers said. Even after 10 years, most managers shied away for fear of inciting blowback from advisers in the branch.
“We couldn't even look at the guy who had been at the firm recently,” said Tony Sirianni, a former wirehouse manager with Morgan Stanley Smith Barney who now runs an eponymous marketing firm. “What does it say to the guy sitting there who has been loyal?”
It's also hard to justify to clients, Ms. Diamond said.
“For an adviser to say to his client, 'I left there for a good reason several years ago and now I'm coming back,' it sort of looks like you have your tail between your legs,” she said.
Mr. Sirianni said that it was also not a good growth strategy for firms because it would not result in a net increase in headcount.
'PRISONER EXCHANGE'?
“It's a prisoner exchange,” he said. “They have to keep paying more and more money to get these guys to come over, and it's a shrinking pool.”
Ron Edde, founder of the recruiting firm Millennium Career Advisors, said that he found around 140 examples of around 14,000 current Merrill Lynch advisers who had left and been at one other firm before coming back to Merrill Lynch, according to a proprietary database he maintains using publicly available registration data. UBS, which has about 7,000 advisers, had around 20 such examples, he said.
Mr. Edde admitted the calculations were likely not exhaustive, but said it resonated with what he was seeing in practice.
“There's some increased activity in that area,” he said. “It's kind of like someone who lives in a community for a long time then moves away because they want to see the world, and then they move back home.”
Mr. Sarch noted, however, that it makes sense for some advisers to come back now, particularly since many may have jumped ship around 2008 and 2009 when the industry was going through rapid consolidation. Senior leadership and platforms have since changed at all the firms.
“It's not hard to be cynical about it that they left for the money and came back for the money,” Mr. Sarch said. “But I think the truth is somewhere in the middle. It all depends on the individual case if they left on relatively good terms and they can justify the reason at the time.”
