2013 is shaping up to be a bleak year for advisor recruiting, at least if judged by the sheer number of individuals changing firms. Only 12,330 advisors moved during the first seven months of the year, down almost 2,700 from the same period in 2012, according to data gathered by Meridian IQ.
A major factor in the slowdown, some industry observers say, is the upturn in the market itself. “Advisors are loathe to move during periods of rising markets only because they fear that would break that momentum,” says Ron Edde, president and director of recruiting at Millennium Career Advisors.
More often than not, a peak recruiting environment is in flat markets, says Jodie Papike, executive vice president of the advisor placement firm Cross-Search. “When the market's doing really well and when advisors are really busy, their pain points don’t seem as painful as when markets are flat and they have more time to think about it,” she says.
Complacency also plays a role. Most advisors move not only because of a sparkling opportunity elsewhere, but because a current situation has become untenable. “The pull, or the sizzle, of the acquiring firm, has to always be there, but it’s never enough by itself. There has to be something pushing,” says founder of Leitner Sarch Consultants Danny Sarch.
Nevertheless, some firms did edge ahead of the competition in finding new advisors. Cambridge Investment 
Research led the pack, according to Meridian IQ, with a net gain of almost 160 advisors.
Eric Schwartz, founder, chairman and CEO of Fairfield, Iowa-based Cambridge Investment Research, says advisors find the firm an attractive destination because it is independent and privately held. “I think that resonates with advisors who are tired of working for firms that are owned by parent companies—whether they’re insurance companies or banks.” So far, Cambridge has recruited $37.5 million of a $60 million advisor revenue target.
Raymond James also gained ground by aggressively moving to strengthen its RIA platform and rolling out a compensation model designed for managers who have at least $100 million in discretionary fee-based assets. “Raymond James has made internal moves that’s making it a more compelling option,” says Ryan Shanks, founder and CEO of Finetooth Consulting, as well as managing partner of Join A Firm.
LPL posted a net gain of 117 advisors, despite losing more advisors—over 400—than any other independent broker/dealer during the time frame, according to Meridian IQ. Keeping the firm from dipping further are its 14 in-house recruiters, says Brad Fay, president of IBDSearch. “It’s a harder sell; they’ve had a lot of negative press,” Fay says, citing recent supervision rule changes and compliance issues.
Based on headcount, the wirehouses continue to bleed the most. The channel overall experienced a net loss of almost 575 advisors so far this year. Morgan Stanley lost the most by far, with more than 800 advisors walking out the door and only about 375 new advisors coming on board, according to Meridian IQ. “Everyone still sees Morgan Stanley as a target” from which to poach advisors, Sarch says, noting that in his opinion, the wirehouse firm lost many more advisors of substance than it brought in.
UBS, however, had a net gain of over 100 advisors this year. Frank LaRosa, founder and CEO of Elite Recruiting and Consulting, says UBS seems to attract advisors who work more with high-net-worth clients, which benefits the bank financially, as it usually means more revenue per advisor.
The second half of the year should pick up for recruiting overall, Fay says. “Firms that are behind their goal will step up a little bit, and focus a little more on recruiting and spending the money it takes to bring on advisors in the second half.”
And it won’t just be big firms with money to spend. Advisors are also interested in smaller firms like Texas-based Prospera, which recently recruited the $1.2 million-production Cottonwood Group. Prospera is a medium-sized broker/dealer, but one that feels like a small firm, which is the appeal, says Rick Rummage, founder and CEO of The Rummage Group. “There’s the personal relationships advisors are looking for there.”
“The midsized firms have to get creative because they can’t compete with the LPLs and Raymond Jameses of the world when it comes to up-front compensation to attract people,” Papike says.
