Last June, when the financially troubled Brookstreet Securities Corp. collapsed, some 500 advisors were instantly out of work. Behind the scenes, recruiter Larry Papike was helping many of them recover and regroup.
Larry Papike, President; Cross-Search; Jamul, Calif.
On his workday: “There’s a sizzle. You never know from one day to the next what’s going to happen when you walk in that door.”
Sound Bite: “I think the biggest thing about him is that he’s a people person. He establishes personal relationships that are ethical and honest and that comes across. People know they’re going to be taken care of.” — Jodie Papike on her dad/business associate
“I can’t tell you the pain I feel when you have a broker going along fat, dumb and happy and suddenly you get an e-mail saying: ‘Stop. You’re out of business.’ I had my whole staff working all weekend to help as many as we can,” says Papike, who heads Cross-Search, a Southern California-based recruiting firm that specializes in the independent broker-dealer sector. “It was awful. Some of these people lost up to $80,000 in their last commissions.”
That Papike, 58, approaches his job from a humanistic perspective is not surprising when you consider his own career arc. As a former founding executive with Sentra Securities, Papike ran every department of the firm, helping it grow from a single registered rep in 1981 to 410 in 1989. Shortly after the sale of Sentra to a life insurance company in 1989, the entire senior staff was fired.
“To this day, I’ve never figured it out,” says Papike. “It’s where part of my passion comes from. I know what it’s like to be on the street.”
It wasn’t long before Papike regrouped, forming Cross-Search in late 1989. Since then, the firm has placed nearly 1,000 brokers with 51 firms, along with filling 71 executive positions. As one of the senior recruiters in the channel, Papike has observed huge change in the independent contractor marketplace — much of it recent.
Up until a few years ago, according to Papike, the independents could not compete with wirehouses or regionals on technology — or basics like research, consolidated statements and online trading. “We could not provide the things wirehouses could supply,” he says. “We were second-class citizens.” Not so, today.
“Look at Raymond James or LPL and I’ll stack them up against Morgan Stanley or Merrill Lynch any day,” Papike adds. “Once advisors began to recognize the advances that had been made — not only in technology but in products and services — my phone, and everybody else’s, began ringing off the hook.”
In recent years, Papike reports, there’s been a “tremendous” flow from wirehouses and captive insurance agents. Not surprisingly, Wachovia Securities’ purchase of A.G. Edwards has given a new boost to the marketplace.
As Papike frames it, “It’s created a whole new momentum. The biggest flow, right now, is A.G. Edwards. Out of all the major wirehouse firms, they were the one I got the least business out of. People like the culture. People felt it was a family. I’m getting a ton of calls from A.G. Edwards brokers looking for options in case it doesn’t work out.”
At the moment, Papike has data sheets on 75 broker-dealers, listing their strengths and weaknesses on everything from practice management offerings and compliance to marketing support and corporate culture.
“What I’ve found, in being a recruiter for so many years, is that brokers are proficient at financial planning and understanding stocks and bonds, annuities and mutual funds. But a lot of brokers make mistakes when looking for a broker-dealer,” Papike says. “They don’t know what questions to ask. My job is to know the questions — and find the answers.”
Ideally, a transition takes 60 to 90 days — a process that starts with interviews and ends with getting staff up to speed on how to conduct business with the new broker-dealer.
“The worst possible thing that can happen is a broker thinking he or she understands what they need to know to do business, only to find out they don’t,” according to Papike. “You need to find the right broker-dealer and make sure the broker and staff are completely trained on everything they have to do — before they pull the trigger.”
In recent years, Cross-Search has turned into something of a family firm. Daughter Jodie, 29, is a recruiter while son Jesse, 26, heads up the back office. Jodie’s husband, Justin Sladavic, leads the executive search arm of the business.
Jodie Papike, in business with her father for nine years, has established her own track record. More than 180 of the firm’s broker placements are hers.
“I always saw the thrill my father took from his business. I knew he loved what he did and I wanted to be part of it. But it wasn’t until I started developing my own relationships that I realized why he loved doing what he does,” she says. “He really takes his job to heart. It’s not about money; it’s making sure people get to the right home.”
In a conversation following the frenetic weekend after Brookstreet Securities collapsed, Larry Papike was tired but energized.
“It’s a fast-paced environment. You’ve got to stay focused. There are so many lives at stake. It’s not just the brokers, it’s all their clients,” he says. “We feel that weight also. The good part is that we really do understand the marketplace. We’ll help you get to that home.”
Freelance writer Ellen Uzelac is based in Chestertown, Md., and is a contributing editor of Research.