Research: What’s your view of today’s recruiting market for advisors?
Michael King: The deals are going up again for good-quality brokers, which is a positive sign for the industry. This started about six months ago at Merrill Lynch, which was the only firm offering unusually attractive deals. And Morgan Stanley is now offering such deals also. And that means deals are really becoming more attractive.
What do today’s deals look like?
Some of the upfront offers are from 120 percent to 140 percent of trailing 12-month production in cash. When a deal is above 140 percent, an additional 20 percent is a cash bonus related to 70 percent of assets coming over.
This is very comparable to the pre-crisis levels. There were many cases back then of 150 percent and up, but what’s going on today is that the backend part of the deal is being increased based on production and/or assets coming over.
Now, the backend is increasing based on the movement of assets and production. Backend bonuses are also longer, and are offered every year for the first five years, vs. three years earlier. Again, this is very attractive.
The firms are putting more responsibility onto the brokers for them to achieve what they’ve said they are going to achieve. This is the current direction.
What’s been the movement of brokers in the past six months?
There really hasn’t been much movement since April.