Wells Fargo’s FiNet Using ‘Grassroots’ Push to Bolster Recruiting
After a record 2016 the only independent network for advisors run by a wirehouse says it’s starting to recover from a “significant” recruiting slowdown earlier this year.
The Wells Fargo Advisors Financial Network isn’t alone in suffering through a dramatic drop in mergers and acquisitions. Along with other indie broker-dealers and RIAs, FiNet’s directors put much of the blame on market uncertainty surrounding the Department of Labor’s new rule mandating a fiduciary standard for retirement planning.
While full-scale governance of the new regulation remains in doubt, the indie network’s managers say they’re now seeing less hesitation about making moves after the DOL rule began partial implementation in June.
“Our conversations with potential recruits have really picked up since July,” says Tim Boostrom, FiNet’s national recruiting director.
Through Nov. 10 he counts a total of 46 new advisors managing nearly $4 billion in assets joining the 1,400-plus network in 2017. That came after a record-setting 126 new FAs producing $80 million in revenue signed up last year.
It’s taken time for advisors to digest regulatory changes, Boostrom suggests. But he’s also finding a surge in participation for a program designed to support affiliates’ own efforts to attract new advisors from other firms.
Known as Recruiting in a Box, the service – which was rolled out network-wide in 2015 – is “really gaining grassroots momentum” with affiliates, Boostrom says.
The program provides bonus money and other referral incentives to FiNet advisors taking a more active role in recruitment practices. Last year alone, Boostrom figures Wells Fargo invested more than $1.5 million in referral bonuses to member firms involved in Recruiting in a Box.
Another perk being offered affiliates going out and recruiting more on their own is capital to help finance mergers and acquisitions, says Alex David, FiNet’s head of branch development and marketing.
“Despite a significantly slower start to the year,” he says, “we’re seeing an increasing number of our network’s business owners turning to M&A to complement their long-term growth plans.”
In 2014 David estimates only about 10% of FiNet’s recruiting wins came from internal referrals. “Today, half of all our new affiliations are coming from FiNet business owners getting involved with Recruiting in a Box,” he says.
An ongoing cross-selling scandal that engulfed Wells Fargo’s banking operations late last year has been a “distraction,” Boostrom admits. But he counters that FiNet’s affiliates operate as independent business owners.
“Recruiting is an emotional game and the headlines have been a little negative for a while,” Boostrom says. “But greater participation by our advisors in taking advantage of Recruiting in a Box – and our continued buildout of resources to help complement their long-term growth – are combining to keep FiNet’s recruiting pipeline strong heading into year’s end.”
FiNet advisor Tim Adams in Yardley, Pa., is also finding renewed interest by wirehouse employees interested in breaking away.
His firm, which manages more than $500 million, has already brought in three new FAs this year. Meanwhile, he’s planning to keep talking to prospective advisors.
“This program is helping to turn an ordinary financial advisor like myself into a business owner who can confidently talk to potential recruits about how joining our firm can make their lives even better,” Adams says.
Meanwhile, FiNet is tweaking its compensation plan and keeping up pressure on rival indie networks by offering “top-tier” transition packages, notes Ron Edde, chief executive of consultancy Millennium Career Advisors.
“It’s clear that FiNet’s transition package is tops among independent broker-dealers,” says the San Diego, Calif.-based recruiter. “In fact, the runner-ups in this marketplace aren’t even close.”
FiNet, which has been a Millennium client in the past, is “generally” offering new recruits forgivable loan terms that Edde finds come with “a high degree of flexibility.”
Working capital to help with startup costs or to help repay existing loan balances from old employers, he adds, is typically being offered at 1% above prime rates. “But those are loans that need to be paid back usually within five years,” Edde says.
Earlier this year, he points out that FiNet’s payouts were changed to take a more “blended” approach. That contrasts with broker-dealers who prefer to pay on more of a flat percentage basis.
“The current FiNet model is to use a sliding scale where payouts are increased as revenue production increases,” Edde says. “In effect, higher producers can wind up getting a bigger piece of the pie while smaller producers might wind up getting slightly smaller pieces.”