Recruiting In Bulk
In fact, big offices of supervisory jurisdiction like Cooper McManus have become important recruiting avenues for IBDs, offering support for breakaway brokers who don’t want to go through the pain of starting their own businesses.

“The captive guys think they understand what independence is like, and the reality is, they have no clue,” Cooper says. “They’re always shocked how stressful [going independent] is.”

The high level of transition support that B-Ds and large OSJs offer has helped attract captive recruits, like wirehouse producers.

“Previously [captive reps] thought [independents were] on an island and figured they had to get their own technology, do their own payroll, find office space and figure out whom to affiliate with for clearing services,” Edde says. “But that’s all been done for them. Now they’re pretty much aware that those things are available.”

Steve Dudash, president of IHT Wealth Management, an LPL Financial office based in Chicago, targets wirehouse reps by offering what he describes as a “plug and play” high-end office.

Dudash left Merrill Lynch last year and has recruited $600 million in assets, opened a second office in Naperville, Ill., and has a third location coming in St. Louis.

The wirehouse advisors he targets are “sick of being told how to run their practices by middle management who are failed advisors or were never advisors,” he says.

All reps at IHT work as W-2 employees just like they do at big firms, except that they own their books and get a higher payout, Dudash says.

Another recruiting strategy independent B-Ds are using: acquiring other B-Ds.

AIG Advisor Group has a unit dedicated to scouting out broker-dealers that might be ready to throw in the towel. The firm is targeting B-Ds with $3 million to $75 million in revenue, Beard says.

“We have a strong pipeline” of firms, he says. “These are firms that have done well and have a great business, but they have no succession plan, or they’re seeing increased costs” to recruit, compete and meet the growing regulatory burden.

Papike, the recruiter, has a list of about 700 smaller B-Ds that he’s targeting as potential acquisition targets.