CHICAGO - A proposed new rule requiring advisors to disclose their transition packages when switching firms could change the tone of the conversations in the war for top industry talent.

The proposed rule, put forth by the Financial Industry Regulatory Authority, would require financial advisors to disclose the bonuses and other compensation they receive when switching employers. If the rule goes into effect, it could influence how advisors weigh their transition options, four leaders who spoke on a leadership panel at the Securities Industry and Financial Markets Association Private Client Conference said Thursday.

The fact that advisors have a financial incentive to change firms most likely will not be news to most clients, Merrill Lynch Wealth Management Managing Director and Complex Director Jennifer MacPhee said, but operating under the new rule could put financial advisors on notice: if they cannot articulate why the services or resources are better at a new firm, they should not move.

“They really shouldn’t come just for a check,” said MacPhee, who runs an Albany, N.Y., complex with about $100 million in revenue and 140 financial advisors. “I think this will force the people who are moving for the wrong reasons to rethink that.”

In a perfect world, advisors would only move based on what is best for clients and not for a check, said Wally Chapman, branch director and senior vice president – financial advisor at RBC Wealth Management, but that is not always the case.

“You will probably see a whole host of people that are probably going to start moving before this gets implemented,” said Chapman, who runs a $20 million branch with 38 financial advisors, as well as his own book with about $175 million in assets. “But I think at a positive standpoint, it might do a lot for retention,” he said.

For Robert Samson, a managing director and Chicagoland market manager at Wells Fargo Advisors, the proposed rule is not a welcome change.

“If I had a choice, I would rather not have our clients see that our advisors who join us are getting large upfront payments,” he said. Nevertheless, Samson, whose market includes 13 branches and 225 financial advisors, said he has had “a lot of success” in recruiting and is not worried that will slow down.

“We want to go to the best doctors, not the cheapest doctors” and that also goes for financial advisors, Samson said. “At the end of the day, I think our clients will value their relationships with the advisors and not just think about the financial side of it.”

Jason Chandler, head of the Wealth Management Advisor Group and Private Wealth Management at UBS, said that the industry should embrace increased transparency, while advisors should use their transition as an opportunity to have a frank conversation with their clients.

“I don’t think it will have a dramatic impact on the recruiting market, especially at the high end where people have really deep relationships with their clients,” said Chandler, who leads almost 7,000 advisors and $800 billion in client assets.

But for advisors who are looking for a way to explain the transition incentives to their clients, Chandler said, they may want to consider having a conversation that sounds like this: “I feel like I was putting myself in a position to much better service your needs and here’s why. And by the way, I’m good at what I do and they pay me to do it.”

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