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Michael Kitces’ #FASuccess Podcast: Jon Henschen on How Broker/Dealer Recruiting Really Works

Jon Henschen describes to Michael Kitces the key factors advisors should consider when evaluating a prospective IBD.


Welcome, everyone. Welcome to the 83rd episode of the “Financial Advisor Success” podcast. My guest on today’s podcast is Jon Henschen. Jon is the president of Henschen & Associates, a recruiting firm that specializes in helping advisors find and match themselves to the right independent broker/dealer when making a switch to a new platform. What’s unique about Jon is his willingness to be transparent in how broker/dealer recruiting really works in a segment of the industry that historically has thrived by keeping much of its compensation hidden with back-end commissions and markups.

In this episode, we talk in-depth about the key factors to consider when evaluating a prospective IBD. Why the ownership structure and whether the IBD is publicly owned or privately owned, whether the private owner is an individual, a bank, an insurance company or a private equity firm is so important; the ways that certain b/ds specialize in certain types of reps, how forgivable loans work when advisors are recruited to a new IBD, and the ways that IBD have created profit centers above and beyond the payout grid, which is crucial for advisors to know so they don’t unwittingly switch to an IBD that may drive higher pass-through costs to their clients.

We also talk about how the IBD recruiting model itself works. How recruiters are paid by IBDs in finding new advisors for the switch, what IBDs really spend upfront in order to attract advisors to make the switch, and how the dynamics differ when being recruited to a larger versus smaller IBD.

And be certain to listen to the end, where Jon talks about the trends advisors should know when considering where to build their business in the long run; how the growth of the RIA channel and the fee-based business is impacting the b/d model; and how different b/ds are taking very different positions on whether or how to support hybrid RIAs.

So whether you’re interested in hearing about the various ways in which b/ds make money, how their recruiting process works, the most important things to consider when evaluating a prospective IBD, or what changes may be coming down the pike for the industry in the coming years, then I hope you enjoy this episode of the Financial Advisor Success podcast!

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