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Why recruiting numbers don't tell the whole breakaway story

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The amount of financial advisors changing firms doesn’t capture the breadth of the challenge broker-dealers face to retain them, recruiter Jodie Papike says in an episode of Financial Planning’s podcast.

Papike is president of Encinitas, California-based Cross-Search, where she and the team act as consultants to advisors undertaking a search for a new affiliation. The recruiting firm works with IBDs, RIAs and hybrid practices, with a policy against cold calling advisors and a reputation earned since Papike’s father Larry launched the firm in 1989.

In the interview with FP Senior Editor Tobias Salinger, Papike discusses how advisors’ expectations have shifted over her more than two decades in the business — and what firms are doing to keep up.

Recruiting remains the lifeblood of wealth management, with the traditional career path leading from captive employee BDs to independent firms and RIAs. About 9% of the industry’s advisors change their BD in a given year, and more than 15% are either undecided or unlikely to remain with their current firm, according to a 2018 study by Cerulli Associates.

The numbers would vary widely among different firms, according to Papike. However, the amount of advisors who would like to make a change isn’t the same as the volume of those who actually do so, she points out.

Recruiter Jodie Papike is president of Encinitas, California-based Cross-Search

“My guess is that, if it was easy to move, if it wasn’t a disruption to someone’s practice the way that it is and it wasn’t the amount of paperwork that it is, way more advisors would make the move,” Papike says. “I think way more advisors are unhappy with their broker-dealer or not getting much from their broker-dealer for what they’re paying their firm than is shown in the statistics of the advisors that actually pull the trigger and make the move.

“There’s a lot of room for improvement with firms,” she adds, “in the way that they interact with their advisors, in the offerings that they provide, and, unfortunately, I think that means that, at some firms, advisors are pretty unsatisfied.”