R.M. Zalatimo wants to grow by wooing big wirehouse advisors to his independent broker/dealer practice. Zalatimo is managing partner at HudsonPoint Capital in Edison, N.J., an office of supervisory jurisdiction with National Securities Corp. It’s a mostly transaction-oriented, asset management practice with more than $150 million in assets. The focus is on high-net-worth individuals and small businesses, for whom he performs such duties as managing 401(k)s, helping with buy-sell agreements and offering some investment banking services. Zalatimo positions himself as what he terms a “wealth concierge” for clients who have a lot of different advisors, including CPAs, attorneys and insurance providers, among others, coordinating the activities of those disparate professionals and, when he identifies a gap in a needed service, finding someone to fill it.
Zalatimo’s goal is to increase assets by boosting his recruiting efforts to attract more reps with $100 million or more in assets. He primarily approaches wirehouse reps, who can more than double their payout with him, he says, to around 70 percent to 90 percent. Zalatimo says these reps also tend to like his platform, with its open architecture and back office and compliance services, among other benefits. Thirty-one of his current 43 employees are Series 7 reps, about one-quarter of them from wirehouses. He wants to bring on board three to five reps with high quality books each year.
Zalatimo says his mentoring program is also a draw. New reps are assigned to more senior folks, shadowing them to see how they do their jobs. That also helps the more experienced people because, while the newbies are learning, they’re also doing things like helping to set up appointments for their mentors and other time-consuming tasks.
His recruiting is driven primarily by the full-time business development person on staff, who recruits largely through LinkedIn and does some cold calling. His “centers of influence”—wholesalers, CPAs and attorneys—also do some recruiting for him. Zaltimo has made other investments in his recruiting effort, as well. For example, last November, the practice moved to a new space that, though similar in size to his previous digs, is configured in such a way that it will allow more people to work in it.
Managing partner, Strategy & Resources
The challenge firms face when recruiting is defining their value and how that differentiates them from other practices. Sure, everyone wants a bigger payout. But I think that every firm he‘s competing with also has attractive payouts and strong operations platforms. There‘s likely limited distinction between these platforms. And, if you’re just playing the payout game, it’s hard to create attractive margins for yourself.
What’s interesting about his approach is the mentoring program, having junior and senior people work together, along with his business development capability. These likely make him stand out versus competitors.
My recommendation is that he should play up the mentoring and coaching and business development. Those capabilities can create a whole lot of value for recruits. This would mean expanding the mentoring program—making it more formal. He should also add additional functions, creating more marketing and business development capabilities that advisors can tap into to grow their businesses.
I think he can make his business model, which is transaction focused, work to his advantage. The fact he’s clear about that is a good thing. The fastest growing segment of the industry is the hybrid model. But there’s a segment of the population still looking for a place where they can just be reps. It’s now a bit of a niche. He should play that up and attract people who are still interested in that segment.
President, Advisor Solutions
Zalatimo has some good selling points: the platform, a bigger payout and a mentoring program. But there has to be a stronger reason for someone to join him.
First, he needs to define the ways his practice can benefit advisors with bigger books of business, so he can convey them more clearly. In the process, he should find out why advisors producing more revenue would want to leave their current employers in the first place. Second, he needs to strengthen his brand: his marketing materials should focus on what value he can offer the producers with big books of business who he's targeting.
His LinkedIn page should emphasize this branding as well. On his page, right in the summary at the top, he should create a statement about the value the practice can provide to new recruits. His website should make similar statements about the benefits of moving to his firm. And of course, he must get approval from compliance for all of these materials.
I think the business development person should have a clearly defined strategy, starting with a LinkedIn campaign. For example, the person should sit down with a handful of people at HudsonPoint and describe the game plan: They should be asked to supply names of colleagues and friends who might want to move to HudsonPoint. Perhaps, he could create an incentive program, with a signing bonus for anyone who refers a new recruit. Then the business development person would link to these friends, contact them and take them out to lunch together with the individual they know at HudsonPoint. Before that meeting, the business development person should confer with the advisor who referred the potential recruit about possible objections and be ready to counter them if they come up.
If it doesn’t work out at the lunch, then there should be a strong DRIP campaign (automated periodic contacts), with news about HudsonPoint—this could take the form of a quarterly e-newsletter. He could also make quarterly phone calls. He’s building a pipeline.
Director of business consulting, The Ensemble Practice
I think the fact that there are senior people willing to help out more junior advisors is extremely powerful. It’s also great that he can use this mentoring program to alleviate management concerns, so the more experienced individuals can focus on the big picture; they can worry about being practitioners, instead of managers. Those are great leading points for recruiting.
The mentoring culture can also create a more collegial atmosphere, as well as offer some benefits an advisor might not have at a wirehouse. People like to belong to groups, and advisors who work at big firms might not feel they’re part of a group. In a larger place, you may have access to more resources, but you don’t necessarily have the camaraderie. Plus, for wirehouse employees, it could be appealing that this firm is smaller and more nimble, as well as not bound by proprietary products.
I would suggest he think about additional services he can offer that relate to these features and market them in his recruiting efforts. If he can unify his advisors so that there’s a cohesive group of people who support one another, then he can build more value. That means things like helping to educate the advisors, helping them to improve their practices and grow. If they’re there primarily for a higher payout, the practice is much more likely to lose them the moment a better deal comes along.