Planners and advisors continue to switch independent broker-dealers.

When Russell T. Jones went looking for a new broker-dealer, he used graphs to compare his options. He used charts. He ran copious and in-depth analyses of the many independent firms vying for the dollars his 56-rep producer group was generating. Then he used his findings to narrow his list of potential brokerage suitors from 21 to five. "At that point we got on a plane and went to each firm for a visit."

When he set out on his five-day whirlwind journey to find a new broker-dealer for Financial Resources, his five-office firm, Mutual Service Corp. (MSC) was third on Jones' list. By the end of his journey, West Palm Beach, Fla.-based MSC had moved squarely into first place.

"Don't believe what recruiters tell you. Go to the broker-dealer and see for yourself," says Jones, a vigorous negotiator who made the president of MSC's parent company, Pacific Life, put in writing his promise that there would be no sales quotas or pressure to sell proprietary product-ever. Jones also negotiated a custom contract with MSC, so that no matter how many times management at the company changes, Jones and his reps will get the same access to active money managers, client services and speedy payouts they were promised at the outset. In short, he wanted guarantees that his firm's independence would be preserved-and that's what he got.

Today the longtime Troy, Mich.-based planner, a master of recruiting in his own right, has grown his independent producer group to more than 90 reps and about $10 million in annual gross broker-dealer commissions, up from $4.5 million in commissions just two years ago. Jones credits much of that success to the programs and education MSC provided. "We spent nine months looking for the right broker-dealer, but it paid off in terms of what we need to service our clients," adds the planner, who also manages his own RIA, with assets of more than $135 million.

Likes Jones, independent planners in the market for a new broker-dealer are tough customers, seeking the best products, the right services and the highest payouts. And despite the market's turnaround, planners are still looking for new homes. In fact, independent broker-dealers report that recruiting is at peak levels and in some instances is even soaring, though not without a steady infusion of new technology, better products and more competitive payouts to sweeten the draw. Providing such services is no easy feat, considering payouts to planners at some firms are as much as 94% and averages about 82% industry wide.

MSC is on target to add approximately 400 advisors and reps to its 1,600 planners this year, up from 350 last year and 250 in 2002. "We're having a banner recruiting year," says Jay Vinson, vice president and manager of new business development. "The majority of individuals I speak with, like Russ, are looking for a change because of a lack of relationship with their current broker-dealer."

Planners shopping for a new B/D also tend to be looking for a way to elevate their firm to the next level of profitability. MSC's "Fast Track" program provides planners with a quick transition plan and a 12-month analysis of the firm's book of business, which allows MSC consultants to customize products and services to the firm's needs. "To make this happen, we'll either send a consultant to their firm or bring their executives in," says Vinson. "The goal is to increase assets over the first 12 to 15 months, as Russ did."

Another draw is MSC's "commission-on-demand" program, which allows planners to see exactly when commissions checks are posted online. On the spot, planners can ask for wire transfers of their commissions. "Planners think that broker-dealers hold money and often they do, so it was refreshing that MSC would let us track money and wire it as quickly as it arrives," says Jones.

Commonwealth Financial Network, based jointly in San Diego and Waltham, Mass., is also having a bang-up recruiting year, according to director of field development Andrew Daniels. "We are in the throes of the best year in the history of the firm in terms of adding gross production dollars," he says. In the last 12 months, Commonwealth has recruited 78 planners with just shy of $30 million in gross production, compared to the $24 million recruited in 2003. Commonwealth is still under 1,000 reps (it has 859 actively producing reps as of August) and wants to keep it that way at least for now, using the close-knit, rep-driven, family atmosphere the firm fosters as a selling point.

"What's really neat, too, is the average production per rep has gone up each successive year, so we're recruiting more gross dollars from a fewer number of planners," Daniels says. "Of course, I'll take a rep with a $100,000 and a good assistant over one with higher production but little business acumen any day."

In fact, you have to be a nice person with a clean sales record first and foremost before Commonwealth will consider you a desirable recruit, the chief recruiter maintains. "Commonwealth recruiters are salaried. We're not compensated by the production dollars we bring on. So that allows us to make decisions based on true fit," Daniels says.

Along those high-touch lines is the emphasis the company places on helping advisors hire and develop good assistants. "When a rep comes in the door and needs an assistant, our practice management department will help them analyze the jobs they want an assistant to perform, create a job description, write ads, develop interview questions and then analyze candidates to find the best fit. We believe a good assistant is worth their weight in gold," Daniels adds.

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