With Pay Gap Shrinking, National, Regional B/Ds Surge
December 20, 2017
National and regional broker-dealers out-grew the competition this year, in part by capitalizing on wirehouses’ recruiting pullback.
The firms’ assets have climbed 9.1%, compared with 7.2% for the industry overall, according to Cerulli Associates. They’ve been emboldened to go after wirehouse advisors and their assets as the pay gap between the channels has shrunken.
Not long ago, the big Wall Street firms paid bonuses upwards of 300% of a rep’s trailing 12-month production, John Henschen, a recruiter in Scandia, Minn., tells Advisor Center. Due to compliance concerns—and weariness of the recruiting arms race—those bonuses have fallen to the 150% or 200% range. Nationals and regionals are having recruiting success by pairing their 100% to 150% bonuses with the promise of less stifling, more entrepreneurial cultures, says Henschen. That’s been a winning combination for firms like Raymond James and Stifel, he says.
Culture is more than a buzzword, Cerulli’s research confirms: Of advisors who moved from a branch network firm in its survey, 75% rated culture as a moderate or major factor in their decision. Bureaucratic and impersonal cultures are a turnoff, the firm says.
Also helping power nationals’ and regionals’ growth this year were European banks’ recent exits from U.S. wealth management, which loosed a flood of brokers into the recruiting market.