The momentum gathered by advisor recruitment in late 2019 has recruitment bosses at most big broker-dealers confident 2020 can be a banner year.
Breakaways looking to jump ship and find a new home will have no shortage of potential destinations, depending on their experience and specialties.
In the broker-dealer space, firms have a range of different target advisor groups they are looking to attract. Stifel Financial has hopes of another record-breaking year in recruitment, while LPL Financial has its sights on independent advisors. Edward Jones is looking to poach experienced talent, and Raymond James and Ameriprise are looking for larger teams.
“2018 was fairly transformational for us,” says Stifel Financial’s head of recruitment John Pierce, adding that 2018 was a record year for the firm and “it looks like our 2019 numbers are going to be even better than 2018. So we’re very excited about how the year ended up and we’re excited about the future.”
When asked about the firm’s year, LPL Financial’s managing director and divisional president of business development Rich Steinmeier says, “We feel solid, that the momentum continues in our recruiting efforts and the receptivity that we see from recruits in the marketplace.”
LPL's focus in 2019 was the addition of independent advisors.
“The independent space has been a very strong source of new recruits for us. That’s historically been our center of gravity as well. But our participation in the independent segment has strengthened materially during the course of 2019,” says Steinmeier.
Edward Jones also has had strong recruitment in recent quarters. The firm's target recruiting group is experienced advisors at other shops.
“We’re projecting that we’ll be somewhere around 265 hires with experience and that’ll be an increase from prior years,” Matt Burkemper, the firm’s principal and head of recruitment, told FA-IQ about the firm’s 2019 numbers in a prior interview. Burkemper added that Edward Jones was looking to nearly double its experienced advisor recruits in 2020 from about 8% last year to nearly 14% or 15% in 2020.
Scott Curtis, president of Raymond James’ Private Client Group, said of Raymond James in 2019, “Recruiting activity remains strong and it remains strong in the independent channel independent affiliation option as well as our employee options, including Raymond James and Associates and Alex.Brown.” The firm made clear last year it was on the prowl to attract larger teams — and that’s something it hopes to continue doing.
Larger teams from wirehouses are what Stifel focused on as well -- with much success, according to Pierce.
“Merrill Lynch was the firm that we recruited the most from,” says Pierce, “followed closely by Wells Fargo, then Morgan Stanley.” Attributing some of the wirehouse attrition to frequent compensation changes and inadequate support, Pierce says, “We’ve clearly seen the vast majority of our recruits come from the wirehouses. In fact, I saw the numbers recently -- we had 55 different home office visits. They were either in groups or individuals, and over 90% of those came from the four wirehouses.”
Ameriprise also had a strong past year with large teams coming in, according to the firm’s senior vice president of business development Manish Dave.
“I think running through the third quarter of last year, we were on pace to have a record year in the amount of assets and amount of revenue and productivity that we saw from practices joining us. It’s safe to say that that trend continued into the fourth quarter,” says Dave.
When asked where those recruits came from, Dave said almost 40% to 50% of them were from bank-owned wirehouses.
Improving Offerings in 2020
Edward Jones is unlikely to change focus and strategy, continuing to look to talent pools of experienced advisors or professionals to mine recruits, says Burkemper. But there are others who are looking to expand offerings in order to entice potential recruits.
“You’ll see us expanding the aperture of the markets in which we compete materially in 2020,” says LPL's Steinmeier, talking about not just the firm's plans to expand affiliation options but also the services it offers advisors.
LPL announced its foray into the employee RIA model through its acquisition of Allen & Company, along with a premium RIA segment, last year. The firm also unveiled a suite of services like virtual CFOs and assistants to help advisors with business development.
“I think you’ll see us building solutions where we can help independent advice-minded advisors achieve their independence, and sometimes that will be by helping them come out into independence and sometimes that will be by providing them employee-like solutions like benefits and space,” says Steinmeier.
And LPL is not alone.
Ameriprise’s Dave acknowledges the stiff competition among broker-dealers for top talent but says the gap between his firm and others is widening.
“It means that the investments that we’re making in helping practices grow, whether it’s our marketing support or technology support, probably most importantly the commitment that we’re making around goals-based advice, which is a clear industry differentiator,” says Dave.
Raymond James, too, is making investments in digitizing processes to make life simpler for advisors and deliver a better client experience.
“In terms of focus, and it’s not specific to recruiting, but I do think it impacts retention of existing advisors as well as delivering a better client experience, is focus on processes and moving processes that primarily have been paper-based to a more digital experience,” says Curtis. The firm, Curtis says, has already begun rolling out smart forms to a small pilot group but will ramp up the effort in 2020.
With focus on larger teams that typically service high net worth clients, Raymond James has upped its game and made investments to meet the requirements of more sophisticated clients, according to Curtis.
“And as more and more Raymond James advisors have focused on ultra-high net worth clients, we’ve really improved our resources and capabilities from a lending standpoint as well as a product access standpoint -- resources to support them so that that has become more common, a more frequent discussion topic when they come to visit with us,” says Curtis.
But while broker-dealers may be gung-ho about upcoming recruitment opportunities, they’re not unaware of challenges that lie before them. And while regulatory and other issues may hinder advisor moves, the biggest hurdles to recruitment are advisors themselves.
“I think the biggest challenge we all have is indecision. A lot of advisors are past their tipping point of making a move, but they just don’t pull the trigger,” says Pierce.
“The major challenge in recruiting — and it’s not in 2020, it’s any year — is that about 7% of advisors change firms. And even if they’re dissatisfied with their existing firm, 93% of advisors don’t move. And most often, they don’t move because they don’t understand how easy it is to move and they’re intimidated, and it feels like a black box,” says Steinmeier.