Time for Action!

New boutiques and independent firms are providing alternatives to wirehouse firms. Some new players are wooing $2 million-plus teams with recruiting packages that rival the cash and stock deals offered by major firms.

Wall Street MVPs are commanding packages in excess of 200 percent from established wirehouse players. That would include advisors with at least $1 million in commissions and $100 million in assets, or teams with $2 million in commissions and $200 million in assets.

But the contracts are longer than ever — nine years, up from seven years in March. (Contracts were four years in the mid-1980s.)

Show-me attitude will make switches tougher.

Branch managers will focus on how you fared in the last three months – not just the last 12 months. Firms are leery about paying for damaged goods. They will be conducting extensive due diligence to ensure that your asset base is transportable.

Recruiting is becoming more selective.

Brokerages are no longer awash in cash. Commercial banks are the new employers. And commercial banks use less leverage which is both safer and less profitable. That means those firms will be using their recruiting dollars much more strategically – spending generously on top quintile producers and less so for middle-of-the-pack advisors.

The structure of American finance may be forever changed by the sub-prime mortgage crisis. But the needs of individual investors have not.

Financial advisors will remain a mainstay. I observed that as the debacle unfolded over the past two years, financial advisors began thinking differently about Wall Street, even before major firms cratered.

Instead of asking me about what firms were “hot,” they began assessing firms in terms of damage control skills. They asked: “What firms are least damaged?” “Where would my business be safest?”

Advisors understand that ultimately the safety of their franchises depends not on where they are but on the quality of their relationships with clients. In a volatile world, that’s the only part you can manage.

If those relationships are solid, financial advisors will be able to attend to larger questions about what to call home base.

As we bid adieu to the old “undefeated” Wall Street, new players are filling the void. In these difficult times, we are all blessed to be in an area where individuals and institutions need advice from trusted advisors.

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Mark Elzweig is president of New York-based Mark Elzweig Company, an executive search consultancy that relies on cutting-edge technology to aid clients. He has worked with financial advisors and investment managers for more than two decades.