Cetera paying top dollar in 2025 fight for advisors

In what has been called the most competitive recruiting environment for financial advisors in recent memory, Cetera Financial Group, the brokerage and registered investment advisor giant, has stepped into the fray and is paying up for talent, offering select financial advisors recruiting bonuses that outstrip competitors like LPL Financial and Osaic.

Giant wealth management firms like Cetera, with about 12,000 financial advisors across its branded firms and $590 billion in assets, are fighting for scale, pushing companies to increase their recruiting bonuses for new advisors. And LPL’s acquisition this year of Commonwealth Financial Network, with 3,000 highly regarded advisors, was a jolt to the industry, creating a unique opportunity for firms to recruit advisors.

“We have certainly heard that Cetera is back in the recruiting business with an aim to be competitive,” said one senior industry executive who spoke privately to InvestmentNews about the matter.

Recruiting bonuses are typically called "forgivable loans" in the brokerage industry; while they are structured as loans, the advisors do not pay the firm back out of pocket.

Rather, they work the loan off over time by meeting certain productivity goals and in exchange, the firm "forgives" the loan over a multi-year period.

Broker-dealers also have a phrase for recruiting bonuses: “transition assistance.”

“We view the transition assistance Cetera is offering to advisors, including those at Commonwealth, as extremely competitive,” Todd Mackay, pictured above, president, Cetera Wealth Management, wrote in an email Wednesday to InvestmentNews.

“But advisors and firms ultimately are choosing Cetera because of our advisor-centric culture, our personalized growth consulting through our dedicated regional growth teams, our channels and communities that align advisors with those most similar to their business model, and our multiple affiliation options,” Mackay added.

Recruiting financial advisors is an art as well as a business transaction. Firms are currently offering bonuses in the forms of forgivable loans and notes that account for a multiple of factors – most notably assets under management - and are not one-sized for all.

For years, the independent broker-dealer industry, think LPL, Cetera and Osaic, paid recruits in one way, based on a small percentage, 20 basis points or 0.2%, for example, of an advisor’s previous years fees and commissions, called trailing 12 in the industry. The independent broker-dealer industry left huge recruiting payments up to the wirehouses, where advisors work as employees and not independent contractors.

That changed in 2018 when LPL Financial, near the time its current CEO and former head of recruiting Rich Steinmeier joined the firm, started paying some recruiting bonuses based on advisors’ assets and not their trailing 12. That was potentially far more lucrative than the traditional recruiting deal structure. 

Other firms, including Cetera, have followed that formula and right now even bettering LPL in some instances, according to industry executives who spoke privately to InvestmentNews about Cetera’s recruiting efforts.

For example, Cetera is offering to pay some advisors as much as 150 basis points, or 1.5%, based on their assets if 60% or more are in advisory accounts, according to industry executives.

That means if an advisor manages $1 billion in client assets, the Cetera recruiting bonus would total $15 million and be worked off over nine to 10 years as a forgivable loan.

“And that’s not just for Commonwealth Financial advisors Cetera wants to recruit,” said one senior industry executive, who spoke confidentially to InvestmentNews about the Cetera recruiting effort. “In the old days, it was 20 to 30 basis points.”

“All the firms are racing for scale,” the executive added. “Advisors always tell you it’s not about the money when it comes to recruiting, but when you see money like that, it’s about the money.”