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Practice Management > Building Your Business > Recruiting

Advisor recruiting at big brokerages slows down

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Top advisors are thinking twice before moving on to another big firm. According to Dow Jones News Service, steep declines in the market have forced major brokerages to slim down recruiting deals and some have even changed their method of calculating a broker’s production.

Back in December 2008, Colorado-based recruiting firm RJ & Makay reported advisor uncertainty at major firms made for a fourth-quarter “perfect storm.” The firm said advisors were increasingly losing esteem for company names and as the bigger firms pulled back on their transition deals, the thought of moving on was gaining more appeal. Plus, as CEO Darin Manis explains, company buy-outs, diminishing retirement assets and plummeting revenues were taking a toll on advisor retention.

But recruiting has reached a major slowdown, writes Brett Philbin for Dow Jones. “Recruiters say companies are cutting deals because of diminished annual production levels due to market declines. In addition, firms are mindful of increasing scrutiny over high compensation payouts. A lot of high producers are also unavailable after receiving retention packages from Bank of America Corp. (BAC), which bought Merrill Lynch, and from the pending tie-up of Morgan Stanley (MS) and Citigroup Inc.’s (C) Smith Barney unit. Other brokers would rather set up their own shops and go the independent route.”

One reason for slow recruiting, Philbin says, is because the advisors available are not the ones with the highest assets under management. Other brokers are frustrated at the lack of options available with all the recent industry deals.

At the moment, for example, more than 6,000 representatives and advisors at AIG are waiting on a decision regarding the sale of the three broker/dealers that comprise the AIG Advisor Group. As of April 5, InvestmentNews reports AIG sent letters to its reps and advisors indicating it was in the final stages of negotiations with a potential buyer.


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