Forgive my ignorance

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Oct 10, 2008 5:11 pm

But I have a large RIA client who wants to tap the talent pool. What will it take? Will wirehouse FAs even look at an RIA?  

Oct 10, 2008 5:15 pm

What does your RIA client plan to offer wirehouse FAs in an attempt to "tap the talent pool?"

Oct 14, 2008 11:49 pm

Will wirehouse FAs even look at an RIA?  


that question makes no sense. In the first place an FA is a person, an RIA is an organization. If you (RIA) don't have access to independent research, household named BD, what talent pool r u talking about?
Oct 14, 2008 11:58 pm

MinimumVariance,
The question makes no sense to you, because you apparently do not understand why certain wirehouse FAs would love to join an RIA.   Many would - the question is why this particular one?  But opal45 needs to respond to answer that question, and I'm not sure we'll hear from him again.

Oct 15, 2008 12:08 am

Morphius, that's exactly what I want to know...what does my RIA client have to offer in order to lure a wirehouse FA over?

 
I'm in new ground here b/c I spent 20 years recruiting financial wholesalers so I apologize if my question isn't as well formed. And my client is also in new territory. All I'd like to know is what is customary for a significant producer to be lured over to a new firm. Is that clearer?
Oct 15, 2008 12:27 am
opal45:

Morphius, that's exactly what I want to know...what does my RIA client have to offer in order to lure a wirehouse FA over?

 
I'm in new ground here b/c I spent 20 years recruiting financial wholesalers so I apologize if my question isn't as well formed. And my client is also in new territory. All I'd like to know is what is customary for a significant producer to be lured over to a new firm. Is that clearer?


Here's where I'm confused, opal - why would an RIA client hire you to recruit on their behalf if you are not able to articulate the value proposition you would be presenting to a potential recruit? 

There is a small window here.  Decent producers can generally either join an established branch of an independent b/d or start their own and get a payout of roughly 90-95+% (give or take depending on production and the firm involved).  An RIA can certainly try to compete with those basic payouts, but it's questionable if the incremental revenue is worth the incremental hassle/cost.  All depends on the fit, I suppose.

As an RIA, a prospective recruit would either have to be a very close fit to how we already operate or he would have to be content with giving up at least 10% in order to make it worthwile from my standpoint.  Which puts you back in direct competition payout-wise with the indy b/d'ers, if not below them.

That's why I say there is a small window here.  In my opinion, you have to compete not on payout but on the busines model and the freedom to operate without the constraints of a b/d.

Your client may be able to compete with alternatives, but does he want to?

Oct 15, 2008 12:50 pm

Opal,

Just my 2 cents for what it's worth.

I know FAs who've joined established RIAs.  They were motivated less by cash or payout, and more by ownership in the business.  A stake in the deal or a combination of some cash, solid payout and ownership, even if over time based on production targets achieved.

Oct 15, 2008 1:12 pm

Opal, are you a recruiter? Get your client to educate you over lunch, you need to be able to call FAs up an' talk dirty to them.

Oct 15, 2008 2:24 pm

Opal, I agree with the comment above.  If you're going to dance in the retail side, you need to get up on what's going on and know your offering inside and out. 

Oct 15, 2008 3:02 pm

All, I truly appreciate your thoughtful suggestions and questions. However, please let me restate my issues.


20 years in executive search ($1 million producer so I'm not the schmuck some are perceiving)
My first stroll on the retail side
My client's first stroll to proactively nab talent (let's face it, this is a new world for all right now)
I'm here to do what everyone is suggesting -- looking to educate myself on what sort of $$$/package/equity/etc. is needed to lure a wirehouse FA to an RIA so I can help guide my client effectively.
As for the value prop, I'm fine there. We spent a day there and this firm has a very compelling story but I know a story alone isn't going to cut it. I just want to know how much to tell my client they're going to have to pony up to attract high performing human capital from a wirehouse.

How much equity is needed? How much cash? I appreciate the input but specifics would be very helpful.

Oct 15, 2008 4:43 pm

opal,

 
If you are as experienced in search as you say, I'm surprised that you would accept this search by yourself when neither you nor your client have any experience in this space.  And this is NOT a "new world for all right now."  There has been considerable movement of wirehouse FAs to RIAs, and recruiters used in that process.  It's certainly not new to them.
 
I would also say that the value proposition you're fine with isn't worth all that much if it doesn't lay out exactly how your prospects would be benefit by joining with your client rather than any of their many other alternatives.  Pretty critical missing piece if you ask me.  But if you're determined to learn on the job you might want to start by ordering the most recent industry benchmark study put out by Moss Adams (until their recent decision to leave the business).  Lots of insight and data there, including some of the questions you ask. 
 
You may be a search guru in your familiar industries or nice, opal, but this particular search just sounds to me like the blind leading the blind.
 
Good luck.
Oct 15, 2008 4:57 pm

From what I have seen recruiters generally think the understand the job but they are usually far off due to lack of actually doing the tasks. When your job is basically to find jobs for other people, how much can you really know about everything actually done at the jobs? This post is a shining example of a recruiter just trying to stuff people into a job they don't know much about, how can you possibly ask people here what type of package will move them? These details are specific to the deal and are up to the candidate and depend largely on their production levels not random people on a message board... Some recruiters really show their hand way too easy.

Oct 15, 2008 5:14 pm

I completely get it Opal.  Here's the value prop for a strong retail FA, say in a wirehouse

50% of T-12 cash at signing, covered in 3-5 year forgiveable note, keep term short as possible.
Ownership equal to % of total AUM/REV that FA brings to firm at specified date (was 120 days)
Substantial payout increase, for most, it's going to be dramatic anyway.

This is close to a deal a nice RIA ran by me about a year ago. I did not go for other reasons.

Oct 15, 2008 6:28 pm

burton,

Are you saying you they were offering to GIVE you (not sell to you but
give to you) an equity stake proportionate to your AUM?!  And in addition to
that they were going to pay an 50% of T12 upfront?! 

And you turned it down?!?!  

Something doesn't add up there, and I assume it was something so horrendous as to cause you to walk away from such generous terms.  At least one of you was crazy... or maybe both of you were! 

Oct 15, 2008 7:16 pm

I just want to know how much to tell my client they're going to have to pony up to attract high performing human capital from a wirehouse.

How much equity is needed? How much cash? I appreciate the input but specifics would be very helpful.



Check out some of the Schwab RIA white papers on the equity question.
 
"High performing human capital" is a very interesting term, I guess you don't use that terminology when you cold call brokers.
 
 
Oct 16, 2008 10:56 am

Yes, but here's why I did not take it. I agree, it was strong! 

The RIA and it's principals were HQ'd in the upper Midwest where they'd operated for about 7 years. They really had it going there.   They wanted to expand here in my market (southwest) and focus on the affluent clients in the area here where I work and live.  Their goal was to bring me and my $120M book on board to get an office open and ultimately expand upon that with me taking the leadership role locally.  My ownership interest would have been about .05% as they manage just over $2B.  Ultimately, in this case, they simply did not have much of a plan to support me and the growth here. Too many unanswered questions and frankly, I don't know it would have been for me. I'm very accustomed to the creature comforts built in the wirehouse models I've worked in and already have all the autonomy I really yearn for.

Call me crazy but I did pass