From the February 2010 issue of Research Magazine • Subscribe!

February 1, 2010

Blood in the Water

Over the past few years, there has been a massive feeding frenzy among broker-dealers. Financial advisor recruiters (sharks), both independent and proprietary, are always out there slowly swimming amongst the broker-dealers looking for signs. The recruiter never sleeps and must keep the cold calls flowing through his gills or he will lose his paycheck and die.

Like a Great White searching for an injured tuna, the FA recruiter is searching for an injured broker-dealer. In reality, the broker-dealer doesn't have to be actually injured, it just needs to appear injured or weakened. Once that first drop of broker-dealer blood seeps into the ocean, every shark for thousands of miles knows it. Excited over the prospect of an easy meal, the frenzy begins.

Many of you have been the target of the frenzy. For those of you who haven't, let me share with you how it works. At first it's innocent enough: a phone call or e-mail from a friendly Mr. Shark asking if you've ever considered changing broker-dealers. When pressed to find out how the shark got your number, he stammers... it is simply a miracle. He can't explain it.

After the seventh phone call of the day you start to realize something is a little fishy. By this time a friend or colleague points out an article from one of the financial trade publications. There it is, a picture of your CEO refuting unfounded rumors and touting the strength of his bleeding tuna. Before you finish the article, you notice there are four phone calls waiting for you...none from clients or prospects.

After work, while sharing a couple dozen martinis with your co-workers, you discover that Mr. Shark has called them all. Suddenly, you feel cheap and used. As you and your associates talk, one of them inevitably asks, "Do you think maybe our tuna is bleeding?"

Now that all the advisors at your firm are worried about the possibility of getting eaten, they will gladly take Mr. Shark's call. Mission accomplished.

Let me share an inside secret and run the risk of losing my merit badge: It wasn't a miracle that gave Mr. Shark your phone number. It was most likely one of several services available that broker-dealers can subscribe to. If you google "stockbroker database" you will find a bunch of these services.

You would most likely be stunned at the information most of these services provide. Home and office contact information is there. In many cases they also have your personal e-mail address. Other items I've seen include GDC, product sales breakdowns, years at firm and mortgage balances. They also tell what percentile you fall into in terms of production among your peers. If a recruiter wants to only call reps that are in the top 20 percent of their bleeding tuna, it's as easy as a few clicks on an Excel spreadsheet. I'm sure someday they will have a field telling recruiters if your belly button is an innie or an outie. For now, I'll just have to guess.

Is all this information accurate? Of course not. But enough of it is to make it worthwhile for the shark. Next time you get one of these calls, let Mr. Shark know you know the game. Tell him you're glad he called. Mention you have a son heading off to college and that you are in the process of filling out a financial-aid application. "Mr. Shark, can you help me with this? How much do I owe on my house? I can't remember." And then swim quickly away.

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