Recruiters in the financial services industry are hurting, and they are blaming LinkedIn.
Job openings for which companies had previously hired the services of third-party recruiters are now routinely posted on LinkedIn, and large companies employ in-house recruiters who scour LinkedIn for candidates, according to Mark Elzweig, an executive-search consultant whose business includes representing financial advisers seeking career moves with national, regional and independent firms.
“It's actually hurt a lot of recruiters,” Mr. Elzweig said. “LinkedIn has been both a blessing and a curse.”
Stephen Marsh, chief executive of Smarsh, a document storage technology firm, has noticed that many of his broker-dealer customers are regular users of social-media site LinkedIn, and one of the ways that they are using it is to recruit advisers away from competing firms.
“A lot, if not all, of our customers are on Linkedin, and they use it for recruitment efforts. We also use it at Smarsh,” Mr. Marsh said.
“It changes the recruitment game,” he said.
Not only does it change the game, but it also is contributing to a change in the recruitment profession, Mr. Marsh said.
Rather than just wait to see who gets introduced to them by recruiters, broker-dealers are able to “proactively seek out people,” he said.
Mr. Marsh pointed to the fact that 98% of independent broker-dealers are allowing advisers to use LinkedIn, and the majority of advisers now post their biographies on LinkedIn.
Like many other broker-dealers, Securities America, a Smarsh user, became more active on social media when the Financial Industry Regulatory Authority Inc. in 2011 provided guidance to brokerage firms about social media.
Gregg Johnson, Securities America's senior vice president of branch office development, is involved in the firm's recruiting efforts, and he recently found John Behn on LinkedIn and hired him to serve as national director of recruiting. In his new position, Mr. Behn will manage all Securities America's nine in-house recruiters on a daily basis.
“LinkedIn's network is a national classified ad, and we had a number of quality contacts,” Mr. Johnson said.
Not surprisingly, everybody at Securities America's branch offices maintain LinkedIn profiles.
Another direct assault on third-party recruiters comes from LinkedIn itself, which offers a "Talent Solutions" recruiting tool.
The irony is that the recruiters themselves use LinkedIn as well.
Recruiters use the site to perform keyword searches on people, post content about industry trends and to stay in regular touch with their networks, Mr. Elzweig said.
His own firm has more than 500 LinkedIn connections, though his proprietary database of contacts includes many more personal e-mail addresses and phone numbers, he said.
As for himself, Mr. Elzweig has added several books about how to use LinkedIn to the top of his reading list.
“It's an almost effortless way to stay in touch with our adviser network,” he said.
“We have made some very good contacts just by participating in a discussion. It's a new tool for us, and it's just the beginning of the curve to see how LinkedIn will work for us," Mr. Elzweig said.
Recruiter Howard Diamond, managing director and general counsel for Diamond Consultants, a search and consulting firm specializing in the placement of advisers, said that his firm uses LinkedIn daily to build relationships by publishing “thought leadership” content and posing provocative questions in discussion groups about topics such as the broker rule.
Asked if he considered LinkedIn to be “the enemy” of recruiters, he answered, “Hardly. I'm sure there are recruiters out there who comb though LinkedIn” for prospects.
But trolling LinkedIn isn't the best use of his firm's time, “and it doesn't get us the best candidates,” Mr. Diamond said.
As for the recruiters themselves, the best ones still pick up the phone and cold call and speak to advisers and build a relationship over the long term, he said.
“It's not a quick sale,” Mr. Diamond said.
For example, his wife, firm president and chief executive Mindy Diamond, recently placed somebody in a new position after speaking to the adviser over the course of 10 years, he said.