A confluence of factors has shrunk the pool of potential recruits for wirehouse firms, and that means competition for the best advisors is fierce. Retention packages, the departure of some advisors for independent firms in recent years, and the growing number of business model options available to financial advisors has reduced the number of potential recruits for wirehouses by about 25 to 30 percent, according to estimates from Rick Peterson, who heads industry recruiting firm Rick Peterson & Associates in Spring, Tex. And, the pool is not that large to begin with, he said. “Industry studies indicate that, at any given time, no more than 20 percent of advisors in any branch office are considering moving.”

Branch office managers are having to work harder and get more creative with deals, say recruiters.

“Successful advisors are doing a tremendous amount of due diligence on all of the major B/Ds before they’ll consider joining any of them,” said Barbara Herman, senior vice president of for Diamond Consultants, a Chester, N.J., industry recruiting and consulting firm. Not only can't BoMs dismiss the lure of independent firms for top advisors anymore, potential recruits are asking them in-depth questions about their firms’ financial situations and stability for the long-haul, she said. “These are questions they’ve never really had to answer before—particularly in such detail.”

Since the wires offer comparable recruitment and compensation deals, advisors considering moving are looking for more than just money. “Senior advisors need to feel comfortable with making a move,” said Herman. “They’ve raised the bar for recruiters. They want to know that making a move is truly in their best interest across the board.”

To recruit successfully, said Herman, BoMs should be armed with substantial data on their companies’ financial health, positioning, and projected outlook. “Prior to 2008, it was assumed that the major firms were strong and stable. But, that’s all changed. BOMs should proactively work with their complex directors and upper management to offer both internal discussion on balance sheets and sufficient third-party financial data. Some firms are sending potential recruits to visit their home offices to see what’s going on and ask these questions for themselves.”

Another important strategy for successful recruiting is to offer the potential recruit strategies for growth. “BoMs must take a very close look at each prospective FA's individual business and give him very specific information about how he—and the firm—will help him grow that business,” Herman said. “The regionals are succeeding at recruiting with less money by doing this. And, all types of independent hybrids are popping up which offer more and more operational support to reps who don't want to deal with that end of the business.”

And, despite debates over the exodus of wirehouse reps to independent firms, it is ultimately assets and revenues rather than headcount that matter most to firms on both sides of the divide. Recent data from Cerulli Associates indicates that the wirehouse channel’s market share of assets will decline to 35 percent in 2013 from 40.1 percent today. It also estimates the RIA’s s market share of assets will climb to 14 percent in 2013 from 12.4 percent now. The dually registered market share is predicted to remain stagnant at about 7.3 percent over the next year or two.

“BOMs are compensated on net AUM and new asset growth,” Peterson said. “But, how they want to try and get there is up to them. Recruiting advanced, high- producing reps is the easiest way to do it, but fewer of them are available to recruit. And, if you manage to recruit this advisor and most of his business comes with him, that’s great. If not, you’ve got a challenge on your hands.”

Trainees are also a gamble, Peterson said. The relatively high expense and low success rate of broker trainee programs has been a problem in recent years. Wall Street b/ds hire only about four to five percent of the prospective rookies who apply for a job, said Andre Cappon, who heads the NY-based CBM Group—an international industry research and consulting firm. But that kind of selectivity doesn’t necessarily lead to success. “Less than 20 percent of these hires, who cost as much as $300,000 to fully train, survive past year two or three of a four-year training plan,” he said.

The ‘fundamentals’ of recruiting have remained pretty much the same throughout the 30 years he’s been in the industry, Peterson said. “Prospective recruits want to know, first, what you can do for their clients, and, second, what’s in it for them? Money is still a very powerful motivator. But, since the wirehouses firms are pretty comparable in that department, advisors considering making a move are asking a lot more questions about a firm’s financial health and reputation. They’re doing a lot more due diligence on competing firms, too. This really stems from what they know their clients will ask them if they were to switch firms.” Clients will want to know what is so much better about the new firm, Peterson said, and if they are in good shape, he said. “FAs are asking branch managers, ‘How do I explain to my clients if I make a move and then things go further south?’”

The BOMs who are most successful at recruiting are those who can provide individualized recruiting ideas and packages. “Established FA’s want to know that you are not going to micro-manage them; that they’ll be given a nice office and basically left to continue running their businesses as they have been,” said Peterson. “Younger recruits want the opposite. They want to know how you can help them grow their businesses. You really have to sit down and show them that you have the resources and creative ideas to help them bring in more clients, and to do more business with existing ones.”