- Understanding Your Perspective
- Big Pay-Day vs. Long Haul Value Building
- The Truth behind Transition Packages
There’s a glass of water on the table. The water sits at about the halfway line of the glass. Now the classic question, is it half full or half empty?
There’s no right or wrong answer and everyone sees it their way. The real insight gained from this question is one of the attitude, disposition and biases of the person answering. Seeing the glass half full is often a sign of an optimistic outlook, while seeing the glass half empty is typically associated with a more pessimistic one.
Big payouts, including forgivable loans, being tied to recruitment isn’t a new concept for advisors and other professionals in the financial industry. For years, it’s been the norm for advisors to make the most out of a move and negotiate big transition bonuses as part of the deal, especially when going to a competing firm. But not all advisors, especially independent advisors, are in favor of these big deals. They opt for the greater control and independence, as well as the allure of building significant value in a firm they own.
And that’s where the glass half empty or half full comes in. Each point of view has strong points, so it’s time to break down a few of them to get a clear perspective.
Glass Half Full:
- Strike While the Iron is Hot – As an advisor, you’ve worked hard to get to where you are today. You know the sacrifices you’ve made to build your book of business and now is the time to take it to the next level. A big recruitment package is the reward you’ve been waiting for — and, with the current environment, the timing couldn’t be better.
- Banking on the Big Pay-Day – Recruitment deals can range from 150% up to, and in some cases above, 300% of an advisor’s trailing 12-month revenue. One big time move with a big-time recruitment package can be the ultimate event an advisor needs for success over the course of their career. And if you make the right move and plan ahead, you can get that big pay-day twice.
- The Grass has to be Greener – For some advisors, the whole reason for their transition is due to being dissatisfied with the support they were receiving (or not receiving, as it were). Of those that made the big move last year, many had decided a switch was needed due to a lack of satisfaction with the current service and support, and were going to make a move regardless. Getting that big recruitment package pay-day is the icing and cherry on top of the cake.
Glass Half Empty:
- Tax Consequence Hangover – The big payout that comes with a transition can be alluring, and many advisors feel that the celebration is short-lived due to the tax impact that stems from these big deals. Transition packages can be subject to taxation at a much higher rate, 30%-40%, in comparison to the independent space.
- Locked In Long-term – Big recruitment deals often come with a significant time commitment, with the terms of the deal lasting up to 10 years. And while some advisors might be fine with this timeline when they first sign on, circumstances may change. After the big deal honeymoon, what you first loved about the new firm could fad or even vanish all together. And when things change, advisors can be left feeling stuck because of the deal they signed.
- Control Freak – When an advisor takes the transition deal, it often leads to them having to relinquish some of the control that comes with running a business. Such deals typically result in the firm legally owning the advisor’s business, giving the firm the ability to make any changes they see fit. Many advisors see that as a variable with too much downside, even with that big pay day.
Regardless of you seeing the cup as half full or half empty, a good home for your business is out there, and 3xEquity is here to help you end up in the right spot. We’ll help you navigate the ins and outs and pros and cons of transitioning, making sure you end up with your glass filled to the brim. Best of all it’s easy. We will secure you three anonymous offers and help you have a level perspective on what the mean for you and your future.
Visit 3xEquity.com to get the conversation started today.
