Financial Planning Magazine writes about Corey Kupfer’s presentation at the Echelon Deals and Deal Makers Summit:
The problem may get even worse for RIAs hoping to lure experienced advisors to their firms, said Corey Kupfer, director of entrepreneur services at MarketCounsel, an Englewood, N.J.-based consulting and compliance firm.
Large platform service providers and aggregators are about to step up their own efforts to lock up wealth managers looking for a new home.
More providers will begin to offer advisors considering selling their practices “succession backstop plans” to lock them up and keep them off the market, Kupfer told the deal makers at a session on human capital. If the advisors are looking for a succession plan or want to eventually sell their firm, these companies will agree to be buyers if needed, while also allowing the advisors to pursue a better deal if they are able.
In addition to standard inducements such as equity participation, profit sharing and stock options, larger firms are also increasingly offering “phantom equity” to advisors bringing over substantial books of business, Kupfer said. Phantom equity allows advisors to be contractually treated as if they owned equity with a right to participate in net profits, though without ownership rights such as voting at board meetings, said Kupfer, who is also an attorney for MarketCounsel president and chief executive Brian Hamburger’s law firm.