Recruiting surges at regionals, indies ― wirehouses not so much
It's shaping up to be a strong recruiting year ― just not for the wirehouses.
"I've got five recruiting meetings in the next day and a half. At a wirehouse, if you had five recruiting meetings in a month you would be the star of the country," says Jim Gold, CEO of Steward Partners.
Recruiting momentum at independent firms such as Steward Partners as well as regional BDs and those that assist breakaways is outpacing the wirehouses.
So far this year, the big four have recruited advisors who managed approximately $14 billion in client assets, according to hiring announcements. Their smaller rivals have announced new recruits who oversaw about $60 billion.
The shifting fortunes are partially driven to policy changes at three of the four wirehouses; UBS announced recruiting cutbacks a year ago. Morgan Stanley and Merrill Lynch made similar announcements this year.
But it's also a reflection of advisors’ changing preferences and the growing appeal of independence to both planners and their clients.
"Independence is doing to wealth management what Amazon did to shopping. The wirehouses are like the old shopping malls," says Gold.
Steward Partners, which is affiliated with Raymond James, has added a number of new hires this year, including three teams that managed more than $600 million in client assets and opened a new office in Boston, the firm's 10th.
"In 2016, we recruited more than we did in the prior two years. We'll be 50 to 60% more of that this year. The level of interest is not slowing down," says Gold, whose four-year old firm now counts more than 60 advisors.
Firms that have multiple channels, like Raymond James, have done particularly well in terms of recruiting. Regional brokerages such as Janney Montgomery Scott and RBC Wealth Management have picked a number of new recruits.
RBC hired more advisors in the first half of this year than it did in all of 2016, according to a spokeswoman.
"This is a window for these regional firms to really explode," says Rob Blevins, a recruiter in Dublin, Ohio.
Blevins adds that larger and larger advisors have been willing to leave the wirehouses for regional firms or RIAs.
"The average producer in my pipeline is doing $1 million. In years past, it was closer to $500,000," he says.
St. Louis-based Stifel is bringing in advisors with larger average AUMs than in the past, according to John Pierce, heading of recruiting.
Many of Stifel's new hires have come from the wirehouses, but not all. Among recent hires was a team from Oppenheimer & Co. that oversaw $342 million in client assets. Stifel currently has more than 2,200 advisors.
Pierce says that improvements in platforms at regional firms such as his have boosted their appeal.
"They've clearly invested in the capabilities to handle the larger advisors who have typically been at the wirehouses," he says.
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Another factor leveling the playing field: wirehouse recruiting deals aren't what they used to be.
Regional BDs and other small firms typically offer smaller signing bonuses than their larger competitors. But three of the wirehouses cut the size of signing bonuses last year. Stifel CEO Ronald Kruszewski predicted earlier this year that would "benefit us competitively."
Wells Fargo, unlike its three main competitors, has reportedly maintained a lucrative signing bonus among other recruiting efforts. And the firm has continued to pick up new hires, particularly for its independent broker-dealer arm.
However, scandals at the bank have dampened overall advisor interest in the firm as a potential employer, according to recruiters. The company's headcount has fallen by more than 500 advisors since the fourth quarter of 2016.
Wells Fargo has moved to make new investments in technology and training, according to a company spokeswoman.
"We have also put a lot of thought into our local markets, recently adding a new southern region to streamline our field leadership and bring them closer to the voices and needs of our clients and advisors in each region," she says.
To industry insiders like Blevins and Gold, the current trend lines aren't likely to change.
"There's a groundswell of interest [in going independent], and the more people who do it and have success doing it, then the momentum will continue to grow," Gold says.