Interview: Five Questions for the Top Recruiter

A conversation with Andy Effron, National Director, Recruiting, Investors Capital

What's the current environment?

Over years, we've seen a lot of changes. But in the last six months, we've seen the most with all the consolidation in the wirehouses and other changes at the large banks. This has created opportunity, and a lot of folks see the golden-handcuffs and deferred-compensation days are gone. Payouts are being reduced on a regular basis. The lower-level producers aren't wanted. That really creates an opportunity for us at Investors Capital, because our sweet spot for is the $150,000-$300,000 producers [in terms of yearly sales/commissions].

These are the producers who are having reduced payouts and are even being laid off. So they are looking for a firm to help them, take them on and help them growth their business and take that business to the next level. We have a coaching program that allows the reps to work on growth via prospecting and building their business at a time like this.

When it comes to consolidation at the wirehouses, recruiting senior wirehouse brokers still takes time. It doesn't involve as many advisors nor is it as easy as you might think. It takes time for wirehouse or bank brokers to understand what it takes to run their own business and to then take that leap of faith.

The situation is still very competitive, with everyone still looking for the same type of broker. Yet, the days of the big upfront dollars are generally over, though some firms are still doing it. But we're all mostly at the same level.

What factors are affecting today's recruiting market?

The competitive landscape of the industry is a big factor.

As we all look for the same broker, what differentiates us is our value proposition and our message that we convey to the market, which is that we provide Ritz-Carlton type service to our brokers. We give them the independence to run their own business.

Taking the opportunity to go independent requires a leap of faith ... so the recruiting team has to be able to provide that roadmap to success. We must show advisors how to move their business and how to start their own businesses.

We are positive, but it's a longer sales process today as people chose not to move unless they have to.

How is this playing out for your firm?

We had a great year in 2008 in terms of recruiting. We were at the same level as the year before, took no step backward and maintained the level of brokers and gross production [or sales] coming in.

We've gotten much better at working with the recruits, at helping them and educating them to the process. The recruiters have become more business consultants in this. This has helped us to differentiate ourselves and to show that we will help them grow their business when hey get here.

We are maintaining our recruiting team [of six] and off to a great start in January of 2009. We have a lot of big groups that we are talking to and that are in the pipeline, and a lot of large OSJ branches. We are confident that we are going to have a good quarter.

What trends are you seeing?

From the wirehouses and the banks, a lot of people are looking to join forces [as members of teams] and to start their own office and their own branch. It's a lot easier to move three or four people and share the resources and office expenses. We are seeing more of these types of groups that are looking and putting out feelers.

Today we are also seeing the need for flexibility. The RIA market and those doing fee-based want to be able to have a home where they can do both fees and commissions. So, we need to support the hybrid business model, and that's a trend that we're seeing more and more. We are able to provide and supervise that type of business, including the technology.

There's also a need to provide an environment that doesn't entail any blemishes. Brokers are concerned with where the money is and who is holding it. With Bank of New York/Pershing, we have a good partner. This is a good, safe story in this market.

How are you taking advantage of this climate?

This has all created opportunities for a mid-size broker-dealer like us. We have enough scale with 700-plus advisors throughout the country, and we aren't too small or too big. We are able to provide that niche, boutique-type feel for a representative.


With everything that's gone on, to be able to have relationships with the home office and to have home-office staff that understand the business and their needs and can adopt to their changing needs, are what we intend to take advantage of as people look for that type of firm. The market conditions have warranted the ability for us to be successful in this field.


We've also got a great new leader, Tim Murphy, who has been with the firm for a long time. And that consistency in management is a good thing right now. He has great vision and is a great leader. He's brought in Franklin Covey and Ritz-Carlton to help us provide the best service possible, to hold each other accountable and be measurable for the growth and direction of the firm. He's instilled great morale at the home office to help us weather some of the storms. That's important.

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