The disruption brought by the DOL's fiduciary rule presents an opportunity for BDs to attract advisors who don't want to manage the compliance burden on their own, but it's not the only factor driving growth in the rep force. The leaders of the 2016 Broker-Dealers of the Year share where they're getting the best new recruits for their firms.
Brian Murphy, Lion Street Financial, Division I: We're getting people who [have] already got formidable insurance practices and they want to bring everything under one roof, so that's the independent space and career breakaways.
Eric Schwartz, Cambridge Investment Research, Division IV: This is the advantage of your niche position. The three of us would be in a tougher position to compete for a guy that's doing $1 million in insurance and very little in securities.
Murphy: You also might be in a difficult position to compete for the guy who's doing $500,000 of each. We've got the resources on the other side. We're not going to set him off onto a [brokerage general agent]. Clearly, you guys would be an excellent option for a wirehouse or a bank advisor who's out.
You have to know what your value is, what your profile is, and stay on it. Don't have revenue drift. All times are really good recruiting times, save for those extreme exogenous events, like 2008.
Ralph DeVito, The Investment Center, Division II: Besides the normal recruiting process, which is steady, we're finding that we're getting a lot more play because of the DOL, based on some restrictions or changes some of the firms are making out there that the reps don't like and that puts them in a position to want to move.
The other thing is, probably all of us are seeing play from firms in distress.
Schwartz: Pockets of chaos.
Murphy: There's a lot of disruption.
DeVito: Right, and disruption makes it great for recruiting, for firms that have a service model that's ready to help [reps] grow, treat them with respect, be able to give them a system and all the things that they need to do their business.
Schwartz: If you look at the last four or five years, we get about 40% of our reps from insurance broker-dealers. We get about another 30% to 40% from other independents, and that leaves 20% to 30% from wire firms, banks and miscellaneous other categories; sometimes from an RIA, second career people joining an existing branch.
We don't measure [recruiting] by number of reps, but by GDC. For the last eight years it's been between $50 million and $60 million almost every year. This year, after seven months [Ed. Note: The roundtable was held Aug. 2.], we had the second biggest recruiting year we've ever had. We're already at $65 million in recruiting.
The difference this year is the chaos. There were three large insurance-oriented broker-dealers that sold — AIG, MetLife and Transamerica — and the difference between our normal recruiting year [and this year], that extra $30 million or so, came out of those kind of groups.
Jamie Green, Investment Advisor: What about women? Any more women?
