OnWallStreet spoke to their elite Recruiter Roundtable members to get their reaction to the Raymond James-Morgan Keegan acquisition this week.

Most of them agreed it looked like a good “cultural” fit, but when it came to the retention packages being offered the financial advisors and the discussion as to how many of the 1,000 will “walk” the opinions differed.

Willis Consulting, Inc.’s President and CEO, Bill Willis sits on this financial recruiters roundtable and had this to say:

“Once someone is offered money to stay, it kind of puts them up for bids, and some people are going to say, ‘Gee, that’s great. I’m going to just stay.’ Others are going to say, ‘Well, if I can that to stay, I wonder what I can get to leave. There’s some of that.”

“Some of the top producers, who are in major markets, might find a match at some of the boutique firms, just because the size may appeal if their business is a fit. Others in more medium to smaller markets, are really going to have fewer choices. If you’re in a small town, and if you eliminate the wirehouses, sometimes there’s not much more left.”

“I do believe that culturally I think they have a chance of making this work … Even though Raymond James is national, it maintains a regional flavor, and has a very good reputation for being in the brokerage corner and have a lot of good common sense. I think there’s a pretty good match.”

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Did you know that non-bloggers are fast becoming the minority?

According to Hubspot’s latest study the number of companies that blog has grown from 48% in 2009 to 65% this year. And the ones that do blog have

- 55% more visitors
- 97% more inbound links
- 434% more indexed pages

compared to those that do not.

T.J. Gilsenan, journalist for OnWallStreet states that “blogging provides opportunities for advisors to interact with clients and prospects” and he offers six things FA’s can do to launch a new blog.

However, there has been some discussion on the validity of an advisor blog, with some RIA’s claiming web-marketing doesn’t work for them. Could be that “how” you use it and what kind of clients you cater to might be the key here.

On the other hand, advisors who are utilizing their company website are discovering ways to serve their clients and develop new business and successful blogging is rapidly becoming an integral part of this.

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Lots of “scuttle” out there regarding Broker Protocol and the changes we’ve seen the past two years (U.S. Trust and their “Garden Leave” has brought the topic back into the limelight).

Since the 2004 origin of Broker Protocol, which was used to aid the big firms to recruit, lately the Protocol is also being used by financial advisors to break away on their own or leaving for smaller independent firms.

As a result, there has been a dramatic increase in the number of companies belonging to the Protocol. (Very easy to do; just notify the Securities Industry and Financial Markets Association and complete the joiner form at no cost and with no review of the firm.)

Thus, we’re seeing some new and creative interpretations of the rules which have led to a lot of “buzz” about the need to find a process for amending the Protocol and regulating it in some way.

So the big question is, without some regulation to assure compliance with the rules, will we return to the era of firms spending money and time suing each other over recruiting practices, making it more difficult for advisors to move between firms without fear of repercussion? Any views on this?

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During 2010, brokers and financial advisors have continued to leap into the independent channel at a swift pace.

Whether it was to set up their own shop, join another RIA or sign on with an independent broker-dealer 56% of 1,046 investment professionals said the independent model has become more attractive in today’s economic climate and 70% expect independent advisors and brokers will make more money in the next year and a half.” *

So, if you are an advisor thinking to make “the leap”, you need to carefully vet the firm you are considering, and more than likely you’ll need a professional recruiter to help you do this.

At Willis-Consulting, Inc. we can give you the insight into each firm’s infrastructure, investment philosophy, marketing strategy and compliance records to assure they are compatible with your and your clients’ needs and objectives. It’s all about the right “fit” so doing your homework is mandatory.

*Broker and Advisor Sentiment Index survey conducted on behalf of Fidelity Investments

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What exactly is the “Garden Policy” and will it hamper recruiting?

Traditionally, wealth management firms largely follow a broker protocol, whereby an advisor cultivates a personal relationship with clients and has ownership of their business. A garden leave restriction would require an advisor to not only stay with a firm for a certain period of time, but also hold off on contacting existing clients.

In February, Bank of America Corp. gave its U.S.Trust advisors notice that they were subject to the garden leave restrictions if they left the company. (Advisors could take a leave from the firm for up to 60 days, during which time they may or may not be assigned work. They would also have to wait six months before soliciting business from their existing clients) Not surprisingly, this sent some tremors throughout the industry.

In March, Bank of America assured its Merrill Lynch wealth unit they will remain under the broker protocol. The debate around these restrictions continues with U.S. Trust claiming a “protection of the client approach.” While the client still has the option to decide to follow an advisor who leaves, both the client and the advisor become less “portable.”

On the other side of it, an advisor being recruited by a firm with the garden leave policy becomes even more challenging. Not many advisors I know are going to be too happy to move to a firm with such a controlled employment agreement.

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It’s no secret that the advisory workforce throughout the industry is aging, and now that the economy is recovering, firms are acknowledging that they need to bring in new FA’s to counter-balance that. So what are some of them doing?

OnWallStreet reporter, Frances A. McMorris, ran a comprehensive piece on February, 1, 2011, regarding current trends in training new advisors. As an overview of the article, “From Book Smart To Street Smart” here’s the lineup:

Wells Fargo-A 19 week training program, with a core program of two and a half years including an extensive interview process. Wells Fargo placed 27^th in Training magazine’s annual ranking of top corporate training departments. The firm has the capability to train 100 advisors a month and is focusing on bringing in more women and minorities. Puts a high priority on training as witnessed by the Wells Fargo “University” in St Louis with 250,000 square feel and 41 classrooms.

Merrill Lynch- Noted for decades of devoted training, the financial crisis caused them and other firms to cut back on training, but last year Merrill (now part of Bank of America) reportedly began ramping up its program.

Morgan Stanley- Expects to hire 2,000 trainees, consistent with what they did in 2010. Emphasis will be on placing trainees on teams.

Edward Jones- Based in St. Louis, they opened a new facility two years ago to train recruits with little experience as well as mid-career changers. Currently has a one-week, interactive session, followed by five weeks in the field and another two weeks focusing on prospecting.

Raymond James- Expanding its old four week program. For the past two and a half years, the firm has run a residency program in St. Petersburg, Florida that allows the recruits to focus on how they want their practice to be built as well as on their technical skills. Rookies already have their Series 7, so focus is on practical skills. It’s pretty much a year long program with enables the firm to watch and adjust the training process before moving it to the branches.

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The Dow Jones Industrial Average continues to rise slowly, as it has for the past two months. Although we have seen several instances of apparent recovery followed by another dip, we may be seeing the beginning of the end.

As the White House reports unemployment rates improving (or at least not climbing as rapidly) and the financial district sees some influx, it may be time for wary personal investors to get back into the market. Many cashed out their stocks and bonds when the going got tough, and for good reason.

Stay tuned to see if the next few months become the time to buy and hold for the long haul of recovery.

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Wirehouses have been beaten up lately mostly because of all the bad press and the destruction of their brand names. Financial advisors are looking to breakaway to other channels. Every channel has seen double-digit growth within the past year except the wirehouse channel. Granted, they still have the majority market share.

With this troubled economy we see a significant amount of advisors looking to breakaway primarily due to lack of cash flow. Advisors are getting paid up front for moving to another firm and that helps those who are struggling. It does surprise me that financial advisors are willing to leave a quality firm or wirehouse just for the money. It is unfortunate to see because is this really helping their clients or are they just being self-serving?

According to a survey conducted by the Aite Group, “A desire for a higher payout (came in) third place among rationales for leaving…”

Wirehouses are aggressively trying to retain advisors while recruiting advisors from other channels or younger advisors. It is a tough uphill battle for wirehouses, but the deals they are offering advisors to move may be too good to pass up as well.

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According to a quarterly study conducted by Bank of America Merrill Lynch,

“57% of affluent investors turn to their financial advisors for advice after making a financial mistake or financially irresponsible decision. This is the same percentage that turn to their spouse or partner. Forty-two percent consult an advisor before making a significantly expensive purchase and another 13% haven’t, but feel they should.”

Many people feel they will receive more sound advice from an actual person they know and trust rather than any online article or tool. This is why financial advisors are so important in this economy. Most affluent investors have very complex situations and each need to be handled differently. Dean Athanasia, the head of Bank of America’s global wealth and investment management and Merrill Edge, states,

“No one wants to simply talk to a machine for their financial advice…We have designed partnerships with advisors so that investors can gather information from our systems, but we back it up with licensed financial advisors.”

Investors are having to put off retirement for a few years due to their financial losses and need help regaining these losses. Dean Athanasia states,

“Investors are still skeptical…They are still seeking returns, but they have low tolerance for risk. They want to be sure that they are investing and working with advisors to proceed in the best way possible.”

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Despite the turbulent financial world, RIA firms expect to see their revenue growth up approximately 15% from 2009. According to the 2010 Charles Schwab RIA Benchmarking Study, “The RIAs we surveyed—870 of our clients, with more than $300 billion under management—estimated that their revenue will increase by a median of 15% this year, a result of continued client additions and the market rebound, which has done its part to replenish assets under management.”

With this growth, financial advisors need to learn how their firms can be most efficient. Because the advisor’s main goal is to spend the majority of their time focusing on finding new business, they need to find a way to decrease administrative and operational tasks. Most firms use a portfolio management system to manage their clients’ accounts efficiently. Some also use rebalancing software, trade order management software and/or financial planning software. According to Gunning For Growth, Bernie Clark states,

“…RIAs who used a dedicated rebalancing system in 2009 said they were able to perform that task in 15% less time (the median reported improvement) than when they were doing rebalancing manually or using a nonspecific software.”

Another important key to the growth of an RIA firm is using a client relationship management (CRM) system. Most RIA firms already use this to track their client interactions. Bernie Clark states, “…the CRM can become the window into a client relationship, moving well beyond the management of contacts and personal information to include more detailed client information, transaction and performance history, holdings information and client correspondence.”

There are many growth opportunities for RIA firms these days. Many clients from full-service brokerage firms are moving towards independent financial advisors. According to the Cerulli Report, “…RIAs, independent broker-dealers and dually registered advisors will nearly match wirehouses’ market footprint by 2012, taking a 39.3% market share of assets under management while the wirehouses take 40.7%.”

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