Recruiting at independent broker-dealers is roaring along.

What Long Island planner Doug Flynn wanted during his days at his former wirehouse was to serve his increasingly affluent clients and grow a business. "The problem was I kept hitting my head on the firm's ceiling," says Flynn, an advisor for more than a decade.

Executives at the wirehouse, he says, would have meetings to schedule meetings, didn't offer the full universe of products he needed and didn't offer a model that allowed him to build business equity for all of his long hours. "Even though I was an independent contractor and paid my overhead, the clients and business were theirs. They'd hand your clients out in a heartbeat if you left."

Flynn decided that he was already accepting the risks. Now he wanted the rewards of being able to build a going concern that he owned. He interviewed several broker-dealers before signing up with Linsco/Private Ledger (LPL), jointly headquartered in Boston and San Diego.

Today Flynn, 36, who with a partner created Flynn Zito Capital Management in Garden City, N.Y., is bringing on a CPA who is interested in transitioning his tax planning business into a full-scope financial planning practice. "They never would have let me do this at a wirehouse," says Flynn, who has doubled his income since joining LPL and had his best year ever in 2002.

Independent broker-dealers are looking for more Flynns, and they're finding them at wirehouses and insurance broker-dealers across the country. In fact, the number of planners who are making the leap to independence is climbing steadily, increasing 37% between 1999 and 2002 to more than 95,000 planners, according to Boston-based Cerulli Associates. Meanwhile, employment of reps at the top wirehouses is off by some 6% in the same period, the firm found.

The lure of freedom, business equity and higher payouts has a notable number of brokers with more mature practices making the leap to independence. Many, in effect, have been running their own businesses for years and now want to do it away from the production quotas, control and product-of-the-week pressures some traditional broker-dealer relationships foist on them. "More than 60% of our new recruits are joining us from wirehouses, and the other 40% from other independent firms or insurance-based broker-dealers," says Bill McGovern, senior vice president of business development at Raymond James Financial Services. The remaining 5% of recruits come from banks.

The firm has 3,650 producing reps generating annual sales of $60 million to $65 million, McGovern says, and last year opened 140 new branch offices for a total of 2,000 offices nationwide."Some people are motivated by the thought that they can get paid a little more," says the veteran brokerage executive. Independent firms can make payouts of 70% to 95%, compared with Wall Street's more typical 40% to 60%. "But a decision to go independent is usually far more driven by the desire of a rep to take control of their business and life. A lot of people who talk to us focus on the money initially, but it becomes clear early on they want to build a business they can control," says McGovern.

That doesn't mean that independent broker-dealers are refuges for tired and underperforming brokers. Broker-dealers across the country say they have plans underway to weed out weak planners and replace them with more efficient producers. McGovern says he requires planners to have at least $175,000 in annual production to qualify for their own shop. "We have been actively pushing some people out," he says.

Securities America in Omaha, Neb., which has 1,455 reps, last year brought on 350 new planners and lost about 250 to attrition, says Clint Flint, vice president of branch office development. "The interesting piece of that is the average producer going out at Securities America has about $25,000 in production, while the average producer coming in has about $100,000," says Flint. "We're seeing people wash out and choose a different career path."

Securities America's big recruitment numbers are coming from insurance-owned broker dealers. "I think the sales process at firms is built more around selling the company's products, which isn't always a good fit for folks who are growing a practice," says Flint. "We're finding the people who come on want choice, access to efficient, scalable technology, and practice management and business development tools. They also want the option of using a consultative fee-based approach for delivering services, and that doesn't always exist at their current broker-dealer."

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