Will other firms follow UBS, Merrill Lynch, and Morgan Stanley and stop paying recruiting bonuses to quality advisors? We don’t think so. Here’s 3 key reasons why:
- These 3 wirehouses have a combined forgivable loan balance of around $10 billion (with Morgan Stanley alone at almost $5B) caused mostly from trading top advisors amongst themselves. Other firms didn’t allow themselves to be put in this position or didn’t have the balance sheet to do it in the first place. Employee channel firms like Ameriprise Advisor Group, Stifel, Oppenheimer, Baird and others, only have tens of millions to hundreds of millions in forgivable loan balances. Well-capitalized firms will capitalize. Firms like these are in full recruiting attack mode and are literally giddy with the wirehouse retreat.
- Wells Fargo (the remaining wirehouse left) can’t go this route because Wells Fargo is still in reputation crisis management and is having a difficult time recruiting advisors even with a big check. Though Wells Fargo is about the biggest firm in the industry, there are 25 other firms who have recruited more AUM this year than Wells Fargo (see AdvisorHUB Recruiting Winner List). That’s got to be embarrassing. We have spoken to recruiting managers at more than a handful of firms who tell us half their recruiting HOVs this year are made up of Wells advisors.
- Just about all firms understand the importance of recruiting the next generation of advisors as our industry is faced with a flood of retiring advisors over the next decade. But the firms we work with are doing this in conjunction with recruiting the best advisor talent in the industry, not instead of it. We expect most competitors will pounce and try to make a recruiting push to maximize recruiting success during this period of diminished competition. We have had firms who have been hot in recruiting this year tell us they are even looking at raising their deals.
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