“The recruiting deal rubber band has been stretched out as far as it’s going to go, and the reason circles back to advisor demographics.”
This prediction, according to Mark Elzweig, who heads a New York-based executive search firm focusing on the asset management community, was reported to OnWallStreet.com’s Donald Korn on Monday, July 22.
As Elzweig explained it, a shrinking and aging advisor population generated the bountiful bonuses.
“There aren’t enough new advisors to replace those exiting the industry”, Elzweig contended.
For top producers, wirehouses are willing to pay anywhere from 100% to 150% in upfront signing bonuses while top performers may receive total packages reaching 300% in front- and back-end bounties.
However, there is a catch–in the form of required long-term commitments. And there is advisor pushback concerning the length of these deals. Some financial advisors are willing to take less money for shorter deals, and others are seriously exploring other channels.
Regional firms might be offering smaller upfront bonuses (60%-100%, according to Elzweig) and total packages (up to 200%), but the commitments may be as short as five years. Independent firms and high-end boutiques also are in the recruiting mix.
“Today’s advisors are in the catbird seat,” Elzweig concluded.