RJFS doesn’t report recruiting data, but as of March 2017, the firm had 3,663 advisors in total, an increase of 243 from the same period a year ago.
Curtis says a “degradation of service” at competing independent firms, and at the wirehouses “an erosion of flexibility,” is driving advisor moves. At the wires, incentives to push lending products rub many the wrong way, he adds.
The Advisor Group doesn’t disclose recruiting data, either, but Price says its four B-Ds—FSC Securities, Royal Alliance, SagePoint Financial and Woodbury Financial Services—are as a whole on track to hit internal targets. “And we’ll probably come in above” target, he says. The Advisor Group is also seeing more large teams than in the past.
“I get a sense … scale matters now, that advisors want to make sure the firm ‘has my back’” as the DOL rule takes effect and the industry moves to a fiduciary model, Price says.
Price was somewhat surprised at the high retention rates among Advisor Group reps as the firm went through ownership and management changes (Price himself took over last November). He chalks that up to a desire to affiliate with a firm that can make adequate investments for the future.
Through the first half, Cambridge was on pace to recruit about $50 million in production this year, which is typical, but well below the record $82 million brought in last year when some advisors and small B-D recruits were in a “panic” over the DOL rule, Webber says. “But it could be another record year” given the changes afoot. “We may not know until December,” she says.
Cetera Financial Group also doesn’t disclose numbers, but recruiting “is shaping up very nicely. We’ve had a very strong first half [and] close to the best year we’ve ever had in the aggregate,” says Adam Antoniades, president. The draw? Advisors want a firm with the resources to help them “thrive in a fiduciary world,” he says.
LPL is seeing “remarkably steady” recruiting, Morrissey says. The company doesn’t provide data on recruits, but in the first quarter its advisor count was 14,354, up by 261 year over year. In calendar year 2016, LPL gained 323 advisors.
The DOL rule has also helped recruiting at 1st Global, a Dallas-based B-D catering to CPA firms.
CPAs “generally view themselves as fiduciaries as part of their profession, and maybe they’re paying a little more attention now” to becoming wealth managers given the DOL’s action, says David Knoch, president of 1st Global, which serves about 100 mid- to large-sized accounting practices that together have 900 professionals working as advisors.
The interest among CPA firms to add wealth management services is high right now, Knoch says, with the recruiting pipeline “stronger than we’ve seen in a while.”
DOL rule aside, independent broker-dealers are cautiously optimistic about attracting a few more recruits from the wirehouses this year, given the cutbacks in recruiting bonuses at most of the big firms. “Transition assistance has never been the basis upon which people transition to us,” Antoniades says. But with the pared-backed deals, “we think there’s ultimately much more opportunity to recruit from the wirehouses.”
Others aren’t so sure. Daniels notes that UBS pulled back on deals a while ago, and that hasn’t made much of a difference in landing UBS advisors. Others note that Wells Fargo Advisors has not yet cut back on recruitment incentives, so wirehouse folks still have options to land a hefty check.
Then there’s the fact that many captive reps just aren’t constituted to run their own businesses. Managing an office instead of just servicing clients is not something they want to take on.
“The first decision is, ‘Do I want to be independent?’” Curtis says. Many don’t. On the other hand, independent offices that run a tuck-in model where a wirehouse rep can join as an advisor will probably be able to attract some big-firm recruits, he says.
Wirehouse brokers “tend to concentrate toward an LPL or Raymond James,” Henschen says. “They want that brand name—they feel they need it.” Plus, the fiduciary rule will encourage more to simply set up a pure RIA firm, he predicts.
LPL’s Morrissey says the firm recruits across all channels, and in addition to the wirehouse market, he expects to see action out of the insurance company-owned B-Ds.
“Even prior to the DOL, the trend line around insurance B-Ds hasn’t been great,” he says. A number of insurers have dumped their B-D units as proprietary insurance sales have suffered.
“That business is getting more and more difficult,” Morrissey says.
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