Baird Private Wealth Management, a division of Milwaukee-based Baird has not said exactly how many advisors they want to recruit from the wirehouse channel this year, but this much is clear: the Arizona market is heating up.

The company announced Monday that it hired Russ Guard, a senior vice president and Jacob Duffy, a vice president, as advisors for its Scottsdale, Ariz. office to serve its Phoenix-Scottsdale market. Guard and Duffy previously were advisors at Morgan Stanley Smith Barney. They oversaw a combined $150 million in client assets, and produced more than $1 million in commission and fees for the firm, and have almost 35 years of experience in the business.

There is also room for three more advisors in its Phoenix office, said Mark Peterson, senior vice president and Arizona Market Manager for Baird Private Wealth Management. Depending on how things shape up elsewhere in Arizona, Baird might add a Tucson office to its network of advisors, he said.

The move reflects just how serious regional firms are about hiring wirehouse advisors. Transition packages, that wirehouse firms are offering to lure advisors from one firm to another are up as much as 330% for first and second quintile teams, said Mindy Diamond, president of Diamond Consultants, a Chester, N.J.-based financial services recruiting firm.

Advisors are leaving the wirehouse space in significant numbers, partially because of planned attrition of less-productive advisors at large brokerage firms, according to Bing Waldert, a director at Boston-based Cerulli Associates. Lower-producing wirehouse advisors average about $23 million in client assets under management, compared with $40 million managed by the average regional brokerage advisor.

Another important consideration is that a lot of those advisors are leaving the large wirehouses—and regional firms—to join the registered investment advisory firms, hybrid firms, and even bank brokerages, according to the latest Cerulli research. The company estimates that the wirehouse channel has lost about 2.6% of its advisor headcount every year between 2004 and 2008, and regional firms lost the same amount.

The industry has probably overestimated the cultural leap advisors have to make when switching from a wirehouse to an independent firm. Regional firms benefit from that because they represent an intriguing middle point. Generally, the amount of advisors that leave wirehouses amounts to a 50 to 100 basis-point loss annually. “That is continuing, but I think it is more of a slow evolution, rather than a massive sea change,” Waldert said.

Baird did not say this morning how much it had dedicated to funding recruitment packages for this year. And Peterson said the firm falls somewhere in the middle of the range of the value of transition packages it will offer advisors. Peterson said the firm is well capitalized to take advantage of opportunities as they come up.

In the case of Guard and Duffy, Baird spent one year recruiting that team, feeling that it was more important to land advisors who were well respected by their local communities and their peers. That, said Peterson, is the type of advisor who will make a good cultural fit for Baird, while high production is also important.

The move also means that regional firms like Baird have what it takes to lure advisors from the wirehouse channel. Last November, the company pulled off a major coup when it picked up Denise Wypiszenski, the former director and chief operating officer of Morgan Stanley Smith Barney’s western division, as its new chief operating officer of private wealth management.

And not all regional brokerages are created equal, Waldert said. Serious firms like Baird, Janney Montgomery Scott and RBC have fee-based platforms, equity research and also offer investment banking services. They also set production minimums for recruits.

“There is a huge percentage of advisors looking to get away from wirehouses,”
 Diamond said. “Those [regional] firms are having great success in picking off disenfranchised wirehouse advisors.”