Financial advisors looking for a new role in this
While those with established networks or specific targets may not benefit from the extra help, recruiting professionals can offer some advantages. For advisors considering this route, here's what to know.
What's a recruiter?
Recruiters work as matchmakers between employers and financial advisors. Advisors might hire transition consultants to help sort through options, but traditional recruiters are free for the job seeker, as the employer pays the recruiter's fee once a hire is made.
Some recruiters just want to put workers in slots, said Phil Waxelbaum, who heads advisor-recruiting firm Masada Consulting in Scottsdale, Arizona. More experienced recruiters care about whether a placement is a good fit for a particular advisor.
"There has to be some sense that this is a fiduciary transaction, that the planner is not being marched at the point of a gun into a firm where they don't belong," he said. "A truly competent recruiter has the diagnostic experience to look at the advisor, where they are today, how their practice is constructed, how they would like to build it from here and whether that business plan is a practical one. That recruiter can boil your options down to two to three firms."
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Why work with a recruiter?
Job-hunting advisors can identify potential options, but recruiters can sometimes shorten the search process and help advisors benchmark compensation packages, leveraging their industry insights.
"Any person could do this on their own," said Shelby Nicholl, founder of Muriel Consulting in Chesterfield, Missouri. "I don't believe they should do it on their own."
In her view, a recruiter can offer a financial advisor a faster path to a firm that's a great fit, whether that's a small, independent firm, a wirehouse or something in between.
They can also help an advisor land a better compensation package.
"They've seen other deals with frequent-destination firms, and they have an idea of what constitutes a good deal," Nicholl said. Compensation might include ongoing payout, back-end bonuses, different fee structures and marketing or administrative support. An advisor might want to be paid a percentage of client fees or prefer a higher base salary plus a bonus.
Some recruiters also offer transition support to job changers, such as providing templates for client communications and helping prepare the advisor for the new opportunity.
Last but certainly not least, some jobs are only available through a recruiter, said Hesom Parhizkar, chief product officer at AdvizorPro in Atlanta. A company might have a first-look arrangement with a third-party recruiter, who serves as a gatekeeper for those positions. Other firms, however, rely on internal recruiting divisions or direct networking for hiring.
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How to find the right recruiter
Recruiters generally have no formal licensing or degree requirements. The lack of industry standards can make experience and specialization especially important when evaluating recruiters.
"Anyone with a telephone can be a recruiter," said Waxelbaum. It's important for advisors to do their due diligence in finding a good one.
Begin by considering a recruiter's background. Many have long tenures in the financial services industry, often as planners or firm managers.
"The most effective recruiters come from the business side," Waxelbaum said. "They were employed as a manager at least at a large broker-dealer and they know the ins and outs."
Don't just take the recruiter's word for it. If they claim to have an industry background, advisors should go to FINRA's
Ask the recruiter for transparency on how they are compensated by different potential employers. Recruiters should be looking for the best professional fit, not the placement that pays them the most.
Advisors should think about what kind of business they want to run and what's most important to them, then look for recruiters who fit that theme.
"Some recruiters only place advisors at wirehouses. Others might specialize in very small RIAs. Someone else might specialize in moving teams or work only with particular firms," Parhizkar said.
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What advisors should expect from a recruiter
A recruiter can't force a hiring firm to offer a particular amount of money, but they can and should advocate for the advisor economically.
They should also act as a mediator for all other points of a compensation package.
"Look for someone who is a true consultant to you as the planner," Nicholl advised. "Ask if they're going to attend all the meetings with you. The answer should be 'yes' for them or someone on their team. Are they going to run a financial pro forma for you? Can they coach you through the transition and help you with communications?"
Advisors should also consider that the recruiter they choose should be someone with whom they can have an ongoing, long-term relationship.
"A planner might move more than once in the course of a career," Parhizkar said. The ideal recruiter keeps track of those they help and their evolving professional needs. By the same token, it's never too early in a job or career to build a relationship with a recruiter.
Job hunters should keep in mind recruiters' incentives. Advisors should make sure any potential move makes sense with their long-term goals, not simply a recruiter's incentive to complete a placement. Ideally, the advisor, recruiter and employer would all be aligned in creating the best advisor-firm fit, Waxelbaum said.
