The Thundering Herd Flees to UBS or Independence

3 billion. After touring the US noting they “listened to advisors,” Lindsay Hans and Eric Schimpf continue to come up way short despite the bones thrown to advisors in the 2024 comp grid announcement last month. To do away with unpopular measures was even seen as positive by some and negative by others. Certainly, it won’t be enough to stop the stampede out of the firm.

In the month of November, The Gershman Group was closely familiar with the Keating Group’s move from Merrill to UBS in Hartford, CT, with $400 million in client assets and $4 million in production, a team that is ranked 46th on the Forbes “Best in State” list. Other recent moves included:

• Hartigan Schehl Group in Manchester, NH, with $700 million in client assets and $2.6 million in production.
• Charles Drew Group in Washington DC, with $460 million in client assets and $2.6 million in production.
• Betesh Group in New York, NY team with $780 million in client assets and $2.3 million in production.

The reasons quoted for their departure included: heavy handed compliance and operations oversight, changing culture at ML, ML’s pressure on advisors to sell banking products and services, ever-changing grid dynamics, and then of course the deal at UBS!

Many of the advisors we speak with consider UBS for its attention to serve HNW and UHNW clients and their advisors with its dominant wealth management platform, and with one of the most lucrative and flexible packages out there, paying upwards of 400% with front and backends via five modest hurdles that reward growth uncapped in a short period of time. UBS has also opened offices for teams when appropriate and provided the customization teams required, along with a strong retirement package at up to 290%.

The moves aren’t just to UBS however, 50% of advisors leaving are opting to go fully independent on a supported platform. New Edge, LPL, Sanctuary, Kestra, FiNet, are just a few winners but there is also great interest in Goldman Sachs Advisor Solutions as an ex-Morgan Stanley team in Baintree, MA just did with $650 million in client assets and $7 million in production, and another $1.9 billion team in Vero Beach, FL. Both teams were keen on the idea of providing boutique wealth management services with the “backbone” of Goldman Sachs behind it – a firm with considerable cachet, rightly or wrongly in the clients’ eyes.

Advisors are increasingly “getting loud” about their ability to serve their clients the best way they can. Advisors are clear that they are the ones that have worked tirelessly to obtain clients and to garner their trust. Big firms are concerned about the bottom line, not what is best for clients, even though that action might come to bite them in the rear as assets flow out the door.

As big firms increase compliance and operations under the SEC and FINRA’s dictates, including under Reg BI, and with the current administration loudly firing away at advisors managing commision-based IRA rollovers and annuities. The mandate to advisors is clear – do best by your clients or there will be a consequence – a fine, practicing rights, and in the very worst case, jail.

When firms encourage advisors to sell certain products and services that may or may not be in the best interests of the client, the advisor has the ultimate responsibility for the course of action as the client’s fiduciary despite firm pressure.

There are several, but two primary golden pathways trending out of Merrill Lynch right now – UBS and independence. As moves are announced weekly it seems, no matter what Merrill tries to do, it is likely too little too late. Each Advisor’s business is unique, and he or she would be well advised to consider their options to determine the best course of action.

If advisors survey the options and deem Merrill needs to remain home – then great, due diligence brings peace of mind and security. However, for those that review and determine a move is optimal, there is no time like the present given the deals being offered, future equity and earnings potential, and the level of unique customization.