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Practice Management > Building Your Business > Recruiting

Where BDs Are Getting Their Best Recruits

By Danielle Andrus, James J. Green

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The disruption brought by the DOL’s fiduciary rule presents an opportunity for BDs to attract advisors who don’t want to manage the compliance burden on their own, but it’s not the only factor driving growth in the rep force. The leaders of the 2016 Broker-Dealers of the Year share where they’re getting the best new recruits for their firms.

Brian Murphy, Lion Street Financial, Division I: We’re getting people who [have] already got formidable insurance practices and they want to bring everything under one roof, so that’s the independent space and career breakaways.

Eric Schwartz, Cambridge Investment Research, Division IV: This is the advantage of your niche position. The three of us would be in a tougher position to compete for a guy that’s doing $1 million in insurance and very little in securities.

Murphy: You also might be in a difficult position to compete for the guy who’s doing $500,000 of each. We’ve got the resources on the other side. We’re not going to set him off onto a [brokerage general agent]. Clearly, you guys would be an excellent option for a wirehouse or a bank advisor who’s out.

You have to know what your value is, what your profile is, and stay on it. Don’t have revenue drift. All times are really good recruiting times, save for those extreme exogenous events, like 2008.

Ralph DeVito, The Investment Center, Division II: Besides the normal recruiting process, which is steady, we’re finding that we’re getting a lot more play because of the DOL, based on some restrictions or changes some of the firms are making out there that the reps don’t like and that puts them in a position to want to move.

The other thing is, probably all of us are seeing play from firms in distress.

Schwartz: Pockets of chaos.

Murphy: There’s a lot of disruption.

DeVito: Right, and disruption makes it great for recruiting, for firms that have a service model that’s ready to help [reps] grow, treat them with respect, be able to give them a system and all the things that they need to do their business.

Schwartz: If you look at the last four or five years, we get about 40% of our reps from insurance broker-dealers. We get about another 30% to 40% from other independents, and that leaves 20% to 30% from wire firms, banks and miscellaneous other categories; sometimes from an RIA, second career people joining an existing branch.

We don’t measure [recruiting] by number of reps, but by GDC. For the last eight years it’s been between $50 million and $60 million almost every year. This year, after seven months [Ed. Note: The roundtable was held Aug. 2.], we had the second biggest recruiting year we’ve ever had. We’re already at $65 million in recruiting.

The difference this year is the chaos. There were three large insurance-oriented broker-dealers that sold — AIG, MetLife and Transamerica — and the difference between our normal recruiting year [and this year], that extra $30 million or so, came out of those kind of groups.

Jamie Green, Investment Advisor:  What about women? Any more women?

Schwartz:  We’re up to 16%, 17% women now. I find it interesting that in doctors, lawyers and accountants, women are approaching 50%. In one of those, that’s actually over 50% of new graduates. In our space, it just doesn’t attract them. I don’t know entirely why.

Planning and coaching is something women really are good at. I think you still have the image of BDs being a high-pressure sales business and maybe they just don’t know what the opportunity is.

While we have a number of milliondollar producers that are women, the average production of those 17% [of reps] that are women is less. Mostly, because they’re younger.

They’re getting in, and they’re in the No. 2 [position] right now, and they’re going to become the No. 1 down the road. Heck, our president [Amy Webber], soon someday to be CEO, is a woman. For some reason, [the industry] doesn’t attract women the way it should, really.

DeVito: Lately I’ve been getting more and more women. It’s to the point now where our advisor marketing program has a niche just for women. Our goal is to help them do their business, to get them up to the production levels that their counterparts are doing.

We meet with them quarterly, have retreats, and at conferences we have breakouts geared just to them. When we do our customized marketing programs, it’s individual for every single person. We’re not just coaching out of the box. We customize it for everyone, but we’re specifically covering women.

It’s a growing marketplace and easy to deal with and they want it. They’re hungry. They want it to run.

Dolber: In our network, women represent a small percentage of the advisors, but they represent a disproportionate share of the production, actually. Women are just better listeners and better planners. Part of selling is listening. You’ve got to just, at some point, be quiet and listen.

For us, the recruiting has been very steady. We’ve always recruited about $15 million to $25 million a year. Until last year, we were a secret. Not many people knew who we were, except people in the industry. We did very little advertising. We were a bit of a secret, but now, we have a whole approach to recruiting where we used ActOn [and] we’re actually driving content to a filtered group of about 20,000 that we’re interested in.

I put all my resources into the systems, from the very beginning. Right or wrong, it’s what I did. Now we’re pushing on marketing more than we’ve ever done before. We’ve done some things, for instance, [it's a] big blessing winning the Broker-Dealer of the Year this year. Also, we won the best firm in New York state to work for in our size category.

For me, that was important, because [getting positive feedback on] what the advisors feel about you and how your employees feel about you is extremely important as well.

— Click here to see more coverage of the 2016 Broker-Dealers of the Year.

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