Talent Search

The increased competition for top talent among broker/dealer firms has caused many firms to step up the recruiting initiative, according to The Cerulli Edge—Advisor Edition recruiting issue. In response to the competition, broker/dealer firms are restructuring their models to include more than monetary incentives. The report notes a trend toward matching the needs of an adviser’s practice with resources of the firm.

At large wirehouses, monetary “transition assistance” packages of forgivable loans are common, reaching as high as 260% of one year’s gross revenue. If the adviser stays long enough, the loan is forgiven. Recently, these packages have been offered to more advisers than before, including third- and fourth-quintile advisers.

In addition to the classic extension of these packages, more practice management tools also have been implemented, the report finds. For instance, firms might offer a seminar program or investment in technology that is attractive to advisers. Technology is becoming more important to advisers as a tool to running a more profitable and efficient business.

Cerulli says that retention issues might be “felt most acutely in the wirehouses.” Existing advisers at the firm can feel resentful toward the new, experienced advisers entering the firm after accepting a hefty transition package.

While the report notes the need for firms to continue to recruit for top-notch advisers, it also points out that some industry observers question whether firms can remain profitable when doling out so much in order to recruit.