Help Wanted

As much of the nation reeled from fresh layoffs late last year, SolomonEdwardsGroup was busily recruiting financial professionals in south Florida. In little more than a month, the executive search firm filled 22 jobs at Morgan Stanley, Salomon Smith Barney and UBS PaineWebber, among others. In fact, the recruiting firm found so many good brokers in one part of Florida that Morgan Stanley and PaineWebber

As much of the nation reeled from fresh layoffs late last year, SolomonEdwardsGroup was busily recruiting financial professionals in south Florida. In little more than a month, the executive search firm filled 22 jobs at Morgan Stanley, Salomon Smith Barney and UBS PaineWebber, among others. In fact, the recruiting firm found so many good brokers in one part of Florida that Morgan Stanley and PaineWebber are considering opening offices there to accommodate them.

Brokers — really successful brokers — are jumping ship, and many are finding comfortable berths. One $2 million producer, who identified himself as Robert, says he received $1.9 million up front to move from one wirehouse to another. And he wasn't even actively looking.

“Business is very hot and very happening,” says Nicholas Ferber, managing partner of SolomonEdwardsGroup's banking and brokerage division.

“Market demand for good producers is robust,” says Mark Elzweig, president of New York executive search firm Mark Elzweig Co. “One of the interesting developments that we've seen is that even as a firm is slashing staff, it continues to bid for big producers.”

Case in point: After firing 15,000 to 16,000 employees last year, Merrill Lynch is actually hiring brokers for its domestic retail unit. A Merrill spokesman says, “We will have more financial advisors at the end of the year than we have now.” (See related story at www.registeredrep.com.)

Not surprisingly, brokers who produce at least $1 million a year are in the greatest demand, but lower producing brokers aren't being ignored.

“At $1 million, everyone's saying ‘yes.’ At half a million, almost everyone's saying, ‘yes,’” Ferber says.

That's not to say that brokers are immune from the recession. Robert, for one, says he would have received 50 percent more up front had he made the move two years ago. He's not complaining, though.

“I'm guaranteeing my financial stability forever,” he says. His compensation package includes a 20 percent bonus if he equals or exceeds his 2001 production levels, and his commission was raised to 50 percent for the next 18 months from 42 percent.

Recruiters are finding no shortage of job candidates. A Prince & Associates/Institutional Investor survey conducted in October found that about 21 percent of 4,100 registered reps polled were “very” or “extremely” likely to change firms in the next two years. More importantly, about 38 percent of the most successful reps — those with more than $400,000 in annual production and fewer than 150 clients — were likely to jump to another firm in the next year and a half.

That figure seemed unlikely a year ago as brokers' trailing 12-month production numbers wouldn't quit sliding, but, Elzweig says, since about October, “people who want to move are regaining the confidence to do so.”

One fear was that clients wouldn't follow if the broker moved. As far as Elzweig is concerned, that's a moot point since the most successful reps have (or should have) solid relationships with their clients, whose allegiance to them is stronger than to the firm.

Robert discovered that after he informally polled his clients. He says he expects 85 percent to 90 percent to follow him to his new firm.

Golden Handcuffs

Michael King, of Michael King & Associates in New York, says golden handcuffs are still keeping some brokers chained to their employers, and that's hurting business. True, he says, a recent NASD ruling loosened the bonds that made some brokers feel like indentured servants (see REPorts, page 14), but the change hasn't yet caused mass departures.

Of course, not all brokers can easily switch to another job. Ferber says reps need relatively clean records if they don't have stellar production numbers like Robert's $200 million under management.

And if you have a clean record, but lower production numbers, Ferber says employers are being more lenient now.

While the October study says the No. 1 reason reps would switch firms is unhappiness with their current job, Ferber says it's more than that. The grass always seems greener, he says.

“I don't think [recruiting] can get slow” because there's always something to tempt someone to move, Ferber says. He even noted an acceleration of interest as the new year began.

Elzweig agrees, adding, “There will never be enough retail brokers. Firms can't get enough of them. They are mini-revenue generators, not costs.”

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