Two large independent broker-dealers racked up strong recruiting gains in the third quarter, while all four wirehouses lost advisers on a net basis in the period.
LPL Financial, the nation's largest IBD, had a net gain of 94 advisers, while Raymond James Financial was right behind with 90 advisers, according to Discovery Data, an industry data base that tracks broker and adviser moves.
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Three of the four wirehouses — Merrill Lynch, Morgan Stanley and UBS have all recently backed away from recruiting and that may account for their loss of advisers in the quarter. Instead of bringing in new blood, they are introducing programs to get their advisers to focus on increasing existing business and attracting new clients.
Wells Fargo is still actively recruiting but has seen a large number of advisers leave since 2016 when its parent bank, Wells Fargo & Co., revealed its first in a series of embarrassing incidents involving clients.
Merrill Lynch saw a decline of 72 advisers and Wells Fargo 67. Morgan Stanley lost 43 advisers. UBS, the smallest of the wirehouses, had far less of net decline, down only 13.
Advisers at the wirehouses on average are the largest and most profitable in the brokerage industry. And part of the decline in headcount across the industry is due to advisers retiring or selling their practices.
The leaders of Raymond James and LPL talked up their recruiting gains during calls with analysts last week to report earnings for the quarter that ended September 30.
"On a gross recruited basis, our private client group, domestic, had its second best year just behind 2018 with advisers joining during the fiscal year with nearly $300 million of trailing 12 production and $43.5 billion of assets under administration at the prior firms," said Paul Reilly, Raymond James' CEO. "This is an excellent result, especially given the slow start to the year and the increasingly competitive environment. I can't remember seeing so many $5 million to $10 million teams in the pipeline."
"If you look back over the past 12 months, we've recruited roughly $33 billion of assets," noted LPL Financial CEO Dan Arnold.
According to one industry recruiter, LPL is seeing advisers join from other independent broker-dealers, while Raymond James is continuing to generate interest from wirehouse advisers.
"Raymond James is just a better pitch right now for the wirehouse advisers," said Casey Knight, executive vice president and managing director at ESP Financial Search, a recruiting firm. "You can work there as an employee at a branch or as an independent contractor. It's the brand. Take a Merrill Lynch adviser or one who has moved from Morgan Stanley 10 years ago to Merrill. That adviser thinks he needs the name."
"Raymond James bought Morgan Keegan, expanded, and [it has] a great headquarters," said Mr. Knight. "Advisers think that's a brand they can get behind. If the advisers want to remain an employee, they are going to look at Raymond James."
One advantage for LPL is its recruiting package for advisers with RIA assets, Mr. Knight noted.
For more than a year, LPL has been selectively offering a bonus in the form of a five-year forgivable loan that pays an adviser 50 basis points on assets transferred to LPL's corporate advisory platform, potentially a far more lucrative structure for the adviser than traditional recruiting deals among independent broker-dealers.
"Now, LPL is throwing around big dollars and that means something to advisers," he said.