There comes a time in almost every industry when its fundamental principles are challenged. This phenomenon is often observed after a consolidation period, where important policy decisions are made by C-level executives who may not possess sufficient knowledge about the field. This process is gradual and its detrimental effects may take years to become apparent.
Nowadays, this dynamic can be observed in the financial-services industry, particularly among those who serve as the lifeblood of the sector: the front-line financial advisors.
In the aftermath of the 2008-09 financial crisis, major banks have continued to introduce new products and services targeting wealth management clients. As a result, these banks put pressure on their advisors to promote these offerings, even if they primarily benefit the bank and its shareholders rather than the clients.
Consequently, the advisors employed by these banks may find themselves becoming less relevant to their clients, who, in turn, become more closely aligned with the bank. This situation draws parallels to what has transpired within the healthcare industry since large pharmaceutical companies began pushing new, exclusive drugs — some of which have addictive properties — through networks of trusted doctors nationwide.
Independent Financial Advisors: Preserving Client Trust in a Changing Industry
Financial advisors consider themselves independent, held to the highest fiduciary standards mandated by law. Often compared to physicians, these professionals have embraced a fiduciary credo akin to the Hippocratic oath: “do no harm.” However, this fundamental principle is now facing unprecedented challenges. As a second-generation Wall Street broker-turned-recruiter (following in the footsteps of my father, Norman Gershman), I have witnessed advisors who refuse to sell proprietary products or accept reduced compensation from banks as a result. Instead, they choose a different path—the path of independence.
While this shift may not spell Armageddon for large financial institutions, a day of reckoning looms on the horizon. Recent failures among regional banks have cast a spotlight on the industry, intensifying public scrutiny. Once clients realize that wealth managers and advisors are motivated by financial gain rather than their best interests, the very foundation upon which our financial industry stands—client trust—threatens to crumble.
In response, an increasing number of advisors are leaving major banks behind to establish their own practices. These ventures empower advisors to prioritize what is truly best for their clients’ financial well-being. The future of our industry—my industry—depends on this ongoing exodus as courageous advisors courageously say “no” to the influential giants and emphatically “yes” to their clients.
It is time for the financial industry to embrace a new paradigm, one that places client needs above all else. Independent advisors are leading the way, redefining the wealth management landscape. As they continue championing their clients’ best interests, a brighter future emerges—one built on trust and unwavering dedication.
Roger Gershman
Roger Gershman is a highly accomplished professional with a vast experience in the financial industry. He has held various significant roles throughout his career, including serving as the CEO of The Gershman Group, an esteemed executive recruiting firm. Prior to this, Roger spent 30 years as a financial advisor, successfully managing a remarkable $1 billion practice at Hambrecht & Quist, UBS, and Credit Suisse.
Roger’s expertise and strategic insights have allowed him to excel in his profession. With an impressive track record in the financial sector, he has earned a reputation for delivering exceptional results and exceeding client expectations. His extensive knowledge and commitment to excellence have proven invaluable in various organizations he has been associated with.
Considered a visionary leader in executive recruitment, Roger continues to make significant contributions to the industry. His dedication to building strong relationships and identifying top talent has positioned The Gershman Group as a leading firm in executive search. With a keen eye for identifying potential and a deep understanding of industry dynamics, Roger consistently provides clients with tailored solutions that drive success.
Overall, Roger Gershman’s impressive background and wealth of experience make him a highly sought-after professional in the executive recruiting field. His unwavering commitment to excellence and a client-centric approach continue to shape the future of the industry.
