Covid-19 slowed recruiting efforts for independent broker-dealers for a short time, but most firms have come roaring back in the last few months.

Some of the independent broker-dealers believe the pandemic might even have had a positive impact on the industry because it forced them to operate more efficiently.

Commonwealth Financial Network is one such broker-dealer among several. “We had a strong start in 2020 and then a slow finish followed by a slow start this year, but now activity is picking up,” explains Andrew Daniels, managing principal of business development at Commonwealth. “Now we are focused on expanding our number of recruiters.”

The nature of the industry has shifted somewhat and not all because of Covid, he says. “Historically, we have been able to recruit by word of mouth, but about three years ago that began to change. The total scope of options for independent wealth managers has grown and evolved. That is a good thing for the industry, for the advisors and for the clients. Now we are getting more aggressive. We want to expand from six or seven recruiters to double that in the near future. We want to get in front of more folks,” Daniels says.

Commonwealth, the nation’s largest privately held independent broker-dealer, had $232.5 billion in assets under management at the end of 2020 with 2,012 advisor representatives, a dramatic increase from the $161.1 billion in AUM and 1,885 advisors at the end of 2018, and faster growth is predicted for the future.

“Even as we seek to recruit at a higher level, we are not recruiting higher numbers at any cost,” Daniels says. “We want firms that are client-centric. We are not trying to harvest the entire field [of available advisors]. We continue to take a targeted approach.” Connections made through videoconferencing are now as effective as in-person connections because representatives can still see each other while they explore new deals and everyone is becoming used to the new business techniques.

Likewise, Fidelity Investments also has seen activity pick up.

“We have seen continued strength of movement to the independent model and movement to broker-dealers is part of that,” says Charles Phelan, who leads the practice management and consulting group at Fidelity Institutional. “Advisors want to provide conflict-free advice and to be entrepreneurs” and the movement to broker-dealers reflects that.

“There was a dip in the pipeline for a while. It was frozen during the first of the pandemic, but by early May of this year it was starting the rebound,” Phelan says. “Firms pivoted from in-person ‘home office visits’ to virtual ones.”

Phelan notes that typically 7% to 9% of advisors move each year, and activity is back to that level after a pandemic-induced slowdown.

Fidelity supports all sizes of advisors and institutions that can affiliate with Fidelity directly or through another firm.

“Through Fidelity research, we got a good sense of the profile of a ‘mover,’” Phelan says. “Ninety-six percent of 500 advisors surveyed said they were happy they moved and 30% said their assets grew after moving. We are constantly refining our capabilities. The most important factor now is the acceleration of the adoption of technology for clients. When advisors make a move, they get a lot of support establishing their brand.”

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