Despite reports that upfront money is back and bigger than ever, recruiting at the wirehouses is tougher than ever, say some branch managers. The long bull market, growth of deferred compensation plans and the shrinking number of competitors take the blame. Managers also say they're not seeing their firms open wallets to ease the problem.
Brokers who want to move have been putting it off over the last two years, reports Tom Zeleznik, a PaineWebber branch manager in Akron, Ohio. "They didn't want to upset the apple cart with their clients because things were going so well with the market," he says.
Ward Petty, a branch manager with A.G. Edwards in Nashville, Tenn., says, "I hear brokers saying, 'I'm making too much money; I can handle this branch manager I don't like.'"
Zeleznik targets his recruiting to brokers with estate planning specialties-an emphasis in his branch. "I look for those brokers who may be the only ones in their branch doing estate planning," he says. "Branch managers can't just sell a broker on the firm anymore; we have to differentiate our branch."
PaineWebber hasn't given more money to make deals, says Zeleznik, but is helping by allowing managers to pay for a recruit's in-person visit with New York product people who support the broker's specialty.
PaineWebber's reticence to increase recruiting bonuses has hurt, says another PaineWebber branch manager in Florida. "We aren't even in the ballpark with competitive compensation," he says. "The financial loss a broker has by leaving firms like Smith Barney and Dean Witter is more than the transition income we can offer."
Money aside, "A lot of people who are movers have already moved," says the Florida manager. "Plus, there aren't a lot of places to go because of the industry consolidation." PaineWebber also now prohibits managers from recruiting anyone with even a single complaint on their record, he adds.
What works? Targeting brokers who need a better relationship with a branch manager, he says.
What also works for Petty is a new software program the firm developed about nine months ago. It allows branch managers to graphically illustrate to recruits what their compensation would have been if they'd been at the firm the previous three years.
"Benefits often get lost in the shuffle in recruiting decisions," says Petty. "This program highlights them."
Gene Engardgiola, a branch manager with Prudential Securities in San Diego, believes the bull market has improved his recruiting. "Because brokers have made more money this year than ever," he says, "they're saying they need more assistance, more access to product coordinators." Better product support in the branch helps counter skimpier recruiting deals, he says.
Brokers are staying put more than ever, says the Securities Industry Association in its annual survey of broker earnings. Turnover was at a record low 11.5% in 1996. More than one-third of those who left their firms exited the industry.