IBD recruiter Jon Henschen IBD recruiter Jon Henschen.

As the markets have turned turbulent, recruiters generally remain upbeat on the movement of advisors — at least in the first half of 2019.

“I see firms gearing up, committing dollars and hiring staff,” said Jon Henschen of Henschen & Associates in an interview. “And some firms are making other changes and getting their ducks in order.”

The recruiter points to Kestra Financial, First Global, ProEquities and SA Stone as broker-dealers looking to do more recruiting in the year ahead. “The midsize firms are spending money and getting [their recruiting infrastructures] together to attract advisors,” he said.

Other firms that seem to have been adding to their recruiting budgets are large firms like LPL Financial and Cetera, according to Henschen.

The ideal recruiting environment is when the stock market is flat, the recruiter says.

“In a good market, advisors don’t want to disrupt the gravy train,” he said. “And in a down market, they generally don’t want to hurt their client relations” by making a move to another BD.

The past 10 years of a bull market have put the pressure on smaller broker-dealers, some of which have lost registered reps to other firms. “Some of these firms are struggling with what to do now,” Henschen says.

This situation could lead to more buying and selling of firms that are “stressed out,” he adds.

In the event of an extended market correction, many small and midsize BDs will face financial pressures, and that means buying opportunities for those with capital, Henschen says.  

“For private-equity-owned BDs with larger scale that potentially take the longer trajectory of going public, like Cetera and Advisor Group, new acquisition opportunities will emerge at value pricings,” he explained.

Still, Henschen points out, choppy or down-trending markets are “not friendly to recruiters, and I’ve been through them numerous times.”

That said, some firms are likely to keep trying to attract reps with good compliance records. “The trends are getting tighter and tighter when it comes to compliance,” he explained. “Reps with a job-hopping history or with issues like forged client signatures are very toxic.”

As for Wells Fargo, the scandal-ridden bank should “continue to struggle” in its recruiting and retention of advisors, according to Henschen. “It could take a half-year or year or so of no [bad] news. So far, we are not seeing this happen, and its [troubles are] lasting longer than I thought they would.”