For financial advisors considering a move from the one-size-fits-all model of the wirehouse, there’s no better resource than a financial advisor recruiter. A recruiter is a counselor, a consultant, and ultimately a resource that you can rely on at every stage of your career. We sat down with Michael Terrana of the Terrana Group to understand why there’s never been a better time for advisors considering a move, what Terrana Group can bring to your career, and the most exciting opportunities for advisors right now. This interview has been edited for length and clarity.
Q: Thanks for taking the time to speak with us today, Michael. To get started, give us a sense of your background in the industry.
A: I started out myself at a big wirehouse firm, then got into management. I found I really loved the business development aspect of being a manager. All along, though, I always wanted to have my own firm. I’ve always felt the pull of an entrepreneurial spirit and the nature of being able to do exactly what I wanted to do when I wanted to do it. I think that’s part of why I relate so well to advisors who want independence, and the freedom to do what they want when they want to do it, rather than being managed by the bureaucracy.
I’m definitely an “outside the box” thinker, which has been useful to me, and what pushed me to start my own firm. When I started TG, I was a partner at a boutique brokerage firm, and we agreed I could start Terrana Group at the same time. This was in 1992, and a lot of advisors weren’t yet looking for a boutique independent brokerage, so I was able to place candidates with the larger traditional firms and really used that momentum and synergy to my firms’ advantage. Our brokerage firm was sold about four years in, just as Terrana Group was catching fire, so I redirected all of my energy into my business development and recruiting firm.
Q: How has Terrana Group evolved over the years?
A: I’ve really found that Terrana Group has evolved with the business itself. As technology and information advanced, the big firms became less dominant, as smaller firms were able to develop or outsource everything that the big firms had, but with a more broker-friendly culture. The business really shifted, as smaller firms were able to operate with less bureaucracy, putting the broker first. Then as things continued to advance on the technology and platform fronts, the business shifted again, this time into independence in a very big way. A lot of the advisors began to want to get away from being managed to the lowest common denominator when it came to oversight and compliance, and found that they could operate their own firms more efficiently with less bureaucracy, helping them respond to client needs in a more nimble way. That, plus having the ability to truly own their business and have real equity in their practice, has driven the explosion of that sector of the market.
With the advent of a lot of growth in the independent broker-dealer space, we chose to move away from sourcing for the big broker-dealers, and into sourcing for the independent broker dealers and regional firms. We’re experts in the independent broker dealer (captive IBD, hybrid IBD, and fee-only RIA) space. In addition, as a byproduct of being experts in that space, we’ve developed a lot of institutional knowledge when it comes to succession and M&A as well. Those two areas are growing in a big big way.
We represent everyone from the 60 plus year old advisor at a wirehouse who is looking for someone to buy their practice or partner on their practice, to big brokerage teams, or even smaller IBDs who are looking for scale and size and want to get paid now based on their business. We’ve seen leaps and bounds growth across a variety of sectors. A lot of the acquirers or the roll-up firms or the aggregators are aggressively buying up books of business and in some cases those advisors don’t have to exit — they can continue to work their practices and take care of the clients they wish to manage.
Just as an example, say a million-dollar producer moves to a firm looking to buy their business. That firm is going to value that business typically at about a 3 times multiplier, so they’ll pay that advisor 3 million for the million dollar business, and the advisor gives up their equity in the business. Some firms want to exit the advisor, but some firms will continue to give them a reduced payout to run the business in perpetuity. With the advisor being paid for the equity in their practice, the acquiring firm obviously keeps a larger portion of the revenue, but you can keep working the practice for as long as you want.
Q: How has all of this movement in the industry changed Terrana Group?
We’ve grown! We’ve more than doubled in size over the last year or so. We have a long-term management team with a lot of institutional knowledge, and we’re growing and hiring at the associate and senior recruiter level. We offer recruiters a strong culture and a lot of opportunity for advancement — if you’re producing, you’re going to move up quickly, and we offer a strong platform for growth. We’ve also brought to our team many former financial advisors and managers and industry leaders of various financial services firms who have elected to join us in the business development and recruiting capacity because we offer such a robust platform for their skills, so there are resources available at every level to foster growth. Once our recruiters reach the senior level, they also have the ability to manage some of our retained clients, which offers other mechanisms to help them grow their own personal business.
As we’ve grown, so have our technological offerings for advisors. We use integrated cloud-based tools that are usable anywhere on the planet, which gives our recruiters — and our clients — a significant edge.
Q: What do you say to advisors who are reluctant to move with the recent uncertainty in the markets?
We hear this a lot — advisors will tell us, if the market is unstable, I’m not sure my clients would move with me. My response to that is that there’s never a better time to move. Now, rather than when the markets are doing wonderfully and returns are easy, it’s the time when the client needs you more than ever! When the market is down, your clients need your good judgment, and they trust you — that’s why they give you their money to begin with.
Moving often gives advisors the opportunity to deliver products and services that are a step up from where the client is currently invested, making a move lucrative for both the advisor and the client.
The bottom line is: there’s no perfect time to make a move. Life happens, business happens, and things get in the way. The best time to move is immediately when you’re thinking about moving. I often say that time is the only thing we can’t buy more of — today we all have one less day than we had yesterday. If you’re an advisor and you’re somewhere you don’t want to be, don’t waste that precious time. Obviously, no one should act rashly, and it’s critical to do your due diligence and find the right partners, but I always advise that advisors should start putting things into motion immediately, as soon as they realize you want that change.
Q: What is the first thing a financial advisor considering leaving the wirehouse should do?
A: Investigate. It’s important to understand why you’re looking to move and what you are trying to accomplish in a move. Are you looking to work with your clients exactly the way that you are now, or do you see things working better if they’re different? Are you thinking about selling some or all of your equity in your business? Typically, the wirehouses do enable an advisor to sunset, but you’re only getting a 1x multiple on your revenue when you sell. But, if you move that same business to an IBD, that multiple is typically 3x, and if the book of business is highly fee-based and you’re at an RIA, you can even see up to an 8x multiple. These factors all play a role, but the advisor needs to do some investigating to find the best platform for their goals.
We also represent advisors who just want a better culture for themselves and their clients, and aren’t thinking about exiting just yet. There are firms that will allow an advisor to be a W2 employee, but they provide an advisor bill of rights that clarifies that the advisor owns 100% of their business. These firms will support you as much or as little as you want to be supported, really allowing you to choose your own customized model.
We also work with a lot of advisors who have a truly entrepreneurial spirit and want to be fully independent. These advisors get to build their own business from the ground up, and make the kind of choices that every business owner does, down to hiring employees, choosing technical and compliance services, and even buying office supplies and paying the light bill.
In the end, there are a wide variety of options out there, and it all depends on what the advisor has an appetite for.
At Terrana Group, we focus on helping our advisor candidates understand what they’re looking for and we then give them best-in-the-industry advice regarding which firm or firms is going to meet those needs. We help advisors evaluate each firm’s technology, transition team, and we then work with those firms to make sure they’re set to help advisors move.
The great thing about Terrana Group’s experience is that we can be as involved as little or as much as the advisor or client firm needs us, because we have the systems and institutional knowledge to carry the ball from the beginning all the way through onboarding and transition.
Q: What’s the most important skill for an independent advisor to have?
A: The biggest skill for an advisor looking at independence is self-knowledge. All advisors are by nature entrepreneurial, but not all advisors necessarily want to be business owners. Understanding what level of independence is going to work for the advisor is critical. Depending on what the advisor is willing to undertake, we can help them pick a platform ranging from a complete turn-key model to “supported independence” all the way through to complete independence. We’ve got the experience to help advisors bolt on to any of those models seamlessly.
Q: What, in your mind, is the most exciting opportunity for financial advisors right now?
I’m really excited about the independent broker-dealer space right now. A lot of the regional firms do it really well and offer supported independence for brokers, where they tell you what you need to do, but then it’s up to you to do it on your own. Firms like Raymond James, Ameriprise, and LPL have attractive models in that space, and offer advisors a lot of options.
I also think there’s a tremendous benefit to being an independent advisor versus being an employee advisor. Most importantly, you can get back a lot of your valuable time by managing your own practice within your own firm. There are also tax advantages, and advisors can leverage their opportunities by partnering with other like-minded independent advisors to stack certain payouts and share some of the bigger fixed costs.
Making the leap to independence can be scary! A lot of advisors feel uncertain because, until you’ve made the move, you don’t know what you don’t know. But the big IBD firms have made it pretty easy to transition, and when you’re partnering with an experienced firm like Terrana Group, we’re going to stay with you every step of the way.
Q: Finally, what do you like most about working with financial advisors?
Advisors are my favorite people! For the most part, they’re Type-A personalities, and they have the ability to think outside the box. I also like working in a sector that really matters to people. Wealth management really, truly matters. It provides security and opportunity for families and generations and it gives us purpose.
Want to Keep the Conversation Going?
Going independent is more complicated than ever, and the right partner can make all the difference. At Terrana Group, our experienced and knowledgeable professionals welcome the opportunity to consult with you to determine the right platform for you going forward — one that satisfies your long-term objectives and is also best for your clients!
Over the course of nearly 30 years, we have helped facilitate thousands of professional placements for advisors, with client assets transferred exceeding $67 billion dollars. We have completed placements in most every major city throughout the United States, while building deep relationships with the advisory world’s most sophisticated and notable firms — including major Wall Street brokerages, most Regionals, Boutiques, Banks, Independent Broker Dealers, RIAs, and Custodians. We have a broad knowledge of the deals that are currently being offered and will ensure that you are being presented with the offer which will be best for you.
Confidentiality, professionalism, and respect are essential to our practices and beliefs; we handle each and every step of the placement process with complete communication, keeping you informed while making the process smoother from beginning to end.
We are proud to always be considered as a great asset by our clients because of our proven expertise, many years of knowledge, and acute attention to detail. Financial Advisor Recruiting Services are not all created equal; we guarantee that the TG experience for clients and candidates is always world class.
