The pandemic has weakened, recession has taken a back seat, advisors have eased up on the brakes and recruiters in the independent broker-dealer space are at the ready, or have already begun, to deliver the goods. All signs for record-pace advisor movement within the industry in the months ahead.

Rich Steinmeier, managing director and divisional president of business development at LPL Financial, said the firm saw record recruiting in the first quarter and continued to see strong movement after that. New client assets were $8.4 billion as of March 31, an 18% year-over-year jump, contributing to a trailing-12-month total of $36.2 billion, he says.

Amy Webber, president and CEO of Cambridge Investment Research, says that as of the first week in June, her company added $40 million in new financial professional revenue and she expects that number to grow to $57 million by the end of the month. “Our pipeline beyond that continues to be very strong. Something unexpected would have to happen for us not to hit $100 million in new revenues this year,” she says.

Andrew Daniels, managing principal of business development at Commonwealth Financial Network, says he expects Commonwealth to bring in about $8 million in new revenues in May. “Given all the external conditions, I am very happy with our ability to continue to attract and transition new advisors.”

Still, Daniels, Steinmeier, Webber and others say advisor recruiting hit the brakes in March and April. But some of those advisors who had pending transactions began coming back in May. All three are betting on a busy June, July, and August, with strong results.

The projected increased recruitment activity and movement of advisors among broker-dealers for the months ahead does not surprise Jeff Nash, a recruiting consultant and CEO of BridgeMark Strategies. Nash says he, too, has a bunch of prospects to move in June and July, especially breakaway brokers leaving wirehouses. He says that advisors usually change firms after a market downturn.

“I fully expect to see a very large breakaway contingent coming out of [Covid-19],” Nash says. “I mean I can go back and look at 20 years of recruiting, and when you see down markets and recessions, you see up markets of recruiting [of] wirehouse advisors.” He notes that the exodus of advisors from the wirehouses after recessions usually has to do with the companies’ belt-tightening.

“So, throughout Covid, the wirehouses have said very clearly, ‘We are not going to do any layoffs.’ Well, what if profits are down? What’s the next thing to do?” What they do to save money is lay off support staff and cut payout or add fees to the advisors or to their clients, Nash explains. Those measures drive advisors out of the companies, he says. “More wirehouse advisors leave after a recession more than any other time.”

The pandemic has also made infrastructure part of the sales pitch to advisors. “So, if you are at a Merrill Lynch, you think you need this big office and all this stuff. Well, now everybody is working remotely, and they are realizing how successful they can work remotely, and they are scratching their heads as it relates to commuting and, also, what their actual needs are.”

Advisors are also prompted to consider moving when their firms consolidate, notes Louis Diamond, executive vice president and senior consultant at Morristown, N.J., recruiting firm Diamond Consultants. He points to mergers such as those of Ladenburg Thalmann, which, along with its subsidiary Securities America (and its own subsidiaries) was merged into Advisor Group. In other significant deals, Warburg Pincus bought Kestra last summer, and Genstar acquired Cetera in September 2018.

Deals like these, Diamond says, mean some advisors will feel displaced and other firms can scoop them up. “Anytime there is dislocation or anything like this, it’s an action that these firms that are recruiting can capitalize on,” he says.

And that could already be playing out, as three teams within six weeks recently exited Ladenburg’s Securities America subsidiary for LPL and Commonwealth. Ironically, Securities America was probably the biggest beneficiary of National Planning Holdings reps who felt displaced after LPL acquired that firm in 2017.

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