On the high-tech side, the firm is also preparing to unveil a consolidated reporting tool and a proposal develop-ment/portfolio review tool, both of which were developed in-house by Commonwealth, says Daniels, who expects 2004 to be another stellar recruiting year in terms of gross production dollars.

Other firms are also seeing good recruiting growth. Torrance, Calif.-based ING Advisors Network is looking to grow by about 10% in 2004, adding approximately 850 new reps to the 8,500 who currently work with the firm's four newly consolidated broker-dealers. One impetus driving more and larger reps through the door is the increasing regulatory burden that the entire securities industry is laboring under, says ING President Valerie Brown. "We're seeing a number of larger shops come in the door, from fee-based firms with $1 million or more in assets to commission folks with $500,000 or more in gross production," she says.

When it comes to RIA migration "regulation is the final straw for many of them," says Brown. "There has been a tremendous increase in requirements in terms of audits and compliance. A lot of independent folks are looking for some help managing this."

Brown says that she believes production for each rep is going up because the expense of operating a part-time securities business is forcing a number of folks to give up their licenses. "The barriers to entry and to staying in the business profitably are getting higher. We have not changed our minimums yet, but we are looking at it," she says. Currently ING requires $30,000 in gross production, much lower than the average $100,000 required by most broker-dealers catering to independent reps.

The recruiting pipeline at Datalynx, which works exclusively with registered investment advisors, is operating at full capacity these days. The firm added 411 advisors in 2003 and $2.5 billion, an increase of 39%, says Dean Rodewald, vice president of advisor services at the Denver-based firm.

"We're predicting a 40% growth in assets in 2004 and looking to add another 80 advisors," Rodewald says. In contrast to other firms, Datalynx is looking for advisors with $10 million or more in assets.

He says the firm's calling card is its rock bottom trading costs. Datalynx has an omnibus fee structure that allows advisors to trade blocks of stock for a multitude of clients, making portfolio rebalancing and tax loss harvesting more affordable. For instance, an advisor can make trades in five different mutual funds for 100 clients for a total fee of $125 at Datalynx. A similar trade at a competing broker-dealer would cost as much as $10,000, Rodewald says. "This is an advantage that really resonates with advisors. Our pricing gives them the structure to do the right thing all the time," he adds.

Raymond James Financial Services raised its minimum to $200,000 in gross production recently, but is still seeing recruiting growth. "So far this year, we've brought in $38 million in historical gross revenue and opened up 67 new branch offices, so we hope to do a little better than last year," says Bill McGovern, senior vice president of Business Development. "Things are going well, and my sense is they're going better in the last few months than they were earlier in the year."

The firm is getting choosier in terms of whom it recruits. "We're being more selective when we look at criteria like years in business (the minimum at Raymond James is now two years), compliance history, credit history and character."

Raymond James has also begun looking at the types of portfolios planners are building. "We're typically looking at people who bring in a mix of business, diversify client assets and pay attention to what clients need, rather than someone on the other end of the spectrum who sells a lot of limited product." As part of this push to ensure that investments are suitable, Raymond James has begun to analyze the level of a planner's revenues in light of his client assets. "A good rep may generate about 1% in revenues from their clients' total assets. That would mean about $1 million in revenues for $100 million in assets," McGovern says. A planner with revenues in the 2% or higher range, relative to client assets, would set off alarm bells. "We want to be a firm working with bigger, better, more successful people, and we're making adjustments all the time to ensure that happens."