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Industry Spotlight > Broker Dealers

Red Flags in Recruiting

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Recruiting is a mating ritual, which means that there is an understood set of rules. Etiquette violations signal trouble ahead for any potential relationships.

Advisors seeking new home bases should take note of the following red flags:

‘No Problem’ syndrome

Advisors need to be wary of any overly solicitous branch manager who answer “no problem” to every request. Firms have strengths and weaknesses and advisors need to understand each fully. By pretending to be a super-hero who can deliver anything, a hiring authority does a disservice to the prospective employee.

Aversion to Due Diligence

Changing firms is a big deal; advisors naturally need in-depth information about a prospective firm before signing on. When serious about a new firm, advisors naturally would seek opportunities to meet with product specialists, home office personnel and other advisors to discuss how the firms operate on a day-to-day basis and to kick the tires on the firm’s product platform.

If branch managers are impatient with careful investigations, don’t back down. Make it clear that due diligence is important to you and to your clients.

Murky Authority

Who can really approve the deal you want? Branch managers typically need to have a proposed deal approved by regional and sometimes national sales managers. Deals must fit into the firm’s format.

It’s critical to distinguish between the deal that a branch manager hopes to be able to deliver and what has actually been approved by the firm. Sometimes branch managers claim that that they can offer deals that they may not be able to get approved.

A Handshake Instead of a Letter

Watch out if the branch manager or higher ups won’t put critical parts of the deal in the offer letter. Stringent non-compete clauses in the contract are also a non-starter.

Vague Transition Plans

Firms must be well versed in the Recruiting Protocol, which prevents your old firm from suing you and smoothes the process for clients who wish to follow brokers to their new firms.

The new firm must show that it is committed to working with advisors to adhering to the protocol, which both large and small firms have signed. This is your best assurance of a successful lawsuit free move.

Firms that don’t have dedicated transition teams to facilitate your move can also cause unnecessary headaches.

Firms with High Turnover

If a firm has a perennially high turnover rate, there’s probably a reason. One firm I work with has a very small amount of “regretted attrition” – people they are sorry to lose. The firm says that rate is only 1 percent — a powerful endorsement.

Mark Elzweig is president of New York-based Mark Elzweig Company, executive search consultants.


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