After a strong recruiting year in 2016, large broker-dealers continued to ring up recruiting gains in the first quarter.
For example, Ameriprise Financial Inc. said that close to 100 veteran advisers moved their practices to the firm in the first quarter, compared to 77 in the prior quarter.
Commonwealth Financial Network continued to attract advisers, snagging advisers producing about $15 million in total revenue — known as gross dealer concession in the industry — for the second consecutive quarter, according to a senior executive at the firm.
And LPL Financial Holdings Inc. said that it added 95 advisers in the quarter, but those gains were tallied only after excluding the previously discussed large departures of advisers — 118 — related to institutional clients and client separations. With a net loss of 23 advisers in the quarter, LPL's newest total of advisers now numbers 14,354.
There is no doubt the landscape for recruiting brokers has changed in the past 12 months. The large wirehouses have pulled back on their largest recruiting packages because of the DOL fiduciary rule that prohibits tying compensation to sales incentives. And independent firms are focusing much more on the profitability of advisers they recruit, not just assets under management.
At the start of the year, brokerage executives were mixed in their assessment of how recruiting would kick off in 2017, particularly because of the DOL rule, which has been delayed at least until June.
Were advisers thinking about moving to larger, more established independent broker-dealers because of their resources to to adapt to the new DOL rule? Or would they simply stay put and delay moving until there is more clarity about the rule?
Both theories remain prevalent, said Jonathan Henschen, an industry recruiter.
"One reason I see reps changing firms is because, with the DOL, their broker-dealers are not allowing commission products in qualified accounts, retirement accounts," he said. "They want to move now because of changes at the broker-dealer due to the DOL."
"Others are complaining about changes at their B-D, like increased costs for advisory administrative fees or mark ups on third-party money managers with fewer managers on the platform," Mr. Henschen said. "But I've also seen quite a few reps who are in limbo because of the DOL. They have a wait-and- see mentality."
Regardless, large firms continued to gain traction with recruiting over the first quarter.
"I'm proud that Ameriprise has become a top destination for advisers who are looking to grow and adapt in a dynamic environment," said Ameriprise Financial CEO James Cracchiolo on a conference call with analysts on April 25 to discuss first-quarter earnings. "And the productivity of our more recent hires is about 20% higher than advisers recruited a year ago, and our pipeline looks good."
"On the recruiting front, we continue to see good adviser movement across what I would call the independent and employee-based channels we typically recruit from, so that's encouraging," said Matt Audette, LPL's chief financial officer.
"The DOL is more a point of curiosity," said Andrew Daniels, managing principal of business development at Commonwealth. "It's not at the forefront of what's driving people to move to Commonwealth. Advisers are moving to find a better platform to support their business."
"The advisers we have always attracted are not significantly affected by the changes coming with the DOL rule," Mr. Daniels added. "They are already doing largely advisory-based business, the adviser as portfolio manager, for example."
Despite success to start the year, there's no crystal ball when it comes to attracting new advisers to a firm, he noted. "I feel good about the rest of the year in recruiting, but who knows?"