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Industry Spotlight > Broker Dealers

Five Questions for a Top Recruiter

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Research: What’s your view of the recruiting market in 2009 year?

The market’s slower; fewer brokers are moving. From the recent numbers that I’ve seen, this means 60 percent fewer brokers are moving than two years ago, when the number of brokers moving each month was about 3,000. Now it is 1,200.

There are less brokers moving for a variety of reasons. Some are afraid their clients may not move with them, because of all the market turmoil.

Now, these numbers are really hard to quantify. In the past year, about 6,000 wirehouse brokers left their existing firms and went to new firms, namely regional firms and others. This is a golden era for the regional firms.

About 8,000 brokers left all of the large national firms, and 4,800 went to regional or some independent firms. This means regional firms like RBC, Stifel Nicolaus, Oppenheimer, Raymond James, Janney Montgomery Scott, Morgan Keegan and others.

How are recruiting deals looking?

The talk about the large deals, 200 to 300 percent, is misleading, in my view. It’s a lot of
smoke and mirrors.

Yes, the big firms are offering from 100 to 130-140 percent upfront, with the rest in back-end bonuses.

But you have to jump through a lot of hoops and be really qualified to get this. And even with the major wirehouse firms offering this, they are still losing brokers, left and right.

What advice would you give advisors who are looking to move?

Money is important to everyone, especially in this environment. But it’s not the sole reason to go to a firm. You have to carefully compare firms and know where you want to be. You don’t want to change firms every few years.

Hopefully, when you go to a firm, you plan on being with the firm for the rest of your career.

Thus, if you’re being offered 100% upfront or 70% upfront, it’s not so easy to just say, “I’ll take 100.”

Make sure you choose the right firm and not the right check.

It’s very important. You can end up miserable and lose a lot of clients and business in the process.

What advice could you share with advisors who may want to go independent?

I love the independent model, but you have to have enough assets and clients to do it. You need much more than $20 million in assets of $200,000 in sales and commissions (or production) to do this.

It’s a great model, especially if you team up with one or two other brokers to share expenses. It does take lots of effort to set up an office, though the independent broker-dealer firms will support you. So, a base of $40 million to $50 million in assets is a minimum to make such a move.

What trends do you expect to see in 2010?

One recent trend has been the return of the producing manager.

While four or five years ago, the major firms insisted that branch managers give up their books, now there’s hardly firm out there with a non-producing manager. This is true at all the major national firms and the regional firms.

Also, the wirehouses are putting, say, eight offices together in their organizations as a complex, and the complex manager is non-producing. The local, on-site manager has to have production. This is a complete change from a few years ago and represents a cost savings.


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