The rising tide of the markets lifted virtually all boats among independent broker-dealers last year — at least 82% of the firms in our 26th annual FP50 Survey reported revenue growth. Great time to have been looking for a job as an advisor, right?
Not so fast. The hiring cycle clearly lagged the renewal in investor confidence.
An outright majority of the Top 50 firms reported a drop in total reps, and the median decline for the FP50 was 2.2%. Six independent broker-dealers reported contracting their rep workforce by 10% or more. Even among the 10 largest broker-dealers, our research found that half had fewer reps at the end of 2010 than they did at the end of 2009.
Firms that did not load up on new reps last year may have been absorbing prior efforts. "We added relatively few reps last year," John Rooney, managing principal of Commonwealth Financial Network, tells us, "but we had a spectacular recruiting year in 2009. It took a while for those reps to get settled in and for their assets to transfer, and the results really showed in 2010." Commonwealth's rep staff grew just 1.4% last year.
Yet at a handful of firms, the appointment calendars of executives must have been filled with candidate interviews. Among the firms where organizers of orientation seminars for new reps were surely kept busy: Lincoln Investment Planning (up 55%), Triad Advisors (up 36.7%) and CFG/H. Beck (up 31.2%). And among the largest independent broker-dealers, Wells Fargo (up 15.3%) and Cambridge Investment Research (up 13.1%) posted significant increases.
But enough of looking in the rearview mirror. At many top firms, recruiting is now a top objective. The ranks of reps at LPL Financial, which has held on to the No. 1 spot on the FP50 for several years, will surge to 20,000 from nearly 12,000 at the end of last year, Tiburon Strategic Advisors predicts. As I see it, that broader trend makes sense.
At a recent industry event, Bill Dwyer, LPL's president of national sales and marketing, told me that the current crop of pre-retirees is especially attractive to financial planners. "There are more of them now and [there're] going to be even more, as the oldest baby boomers reach that age group," Dwyer added in a separate interview with FP. "They've been contributing to defined contribution plans for nearly 30 years. Now they'll be responsible for managing that money and they're seeking advice."
And that will mean a lot more hiring.
Scott Wenger is the Editorial Director of the Investment Advisory Group and Editor-in-Chief of Financial Planning magazine.