Sarch: Full disclosure on recruiting incentives? Bring it on!

Dan Jamieson of Investment News reported on Wednesday that Finra was considering a rule whereby advisers and their firms would be required to disclose to clients the transition packages that advisers receive when they change firms.
I’ve been predicting this for at least six years, maybe longer, and have been wrong every year, at least up until now. Transparency is the trend with clients. Hidden charges, points in bonds, conflicts of interest: The best firms and the best advisers should and do welcome full disclosure to their clients.
Similarly, we routinely advise the advisers with whom we work to be forthcoming about the deals they receive. Why? Because advisers at the jilted firm — advisers, who upon a former colleague’s departure see dollar signs in front of them and who call their “friend’s” book — will use the recruitment deal against the departed adviser. “Mr. Client, I know you have worked with Dave for years but the only possible reason that Dave could have rationally decided to leave This Venerable Institution to go to That Lesser Institution is because Dave could not manage his own finances effectively and needed the money. Did you know that Dave got a million bucks to move? Ask him about it when he calls you!”
Advisers who move need to address this head on. Can you explain to your client why the new firm is better for THEM than the old firm? And when asked about the deal, there is no reason to be ashamed of a business transaction that protects income and makes up for the loss of golden handcuffs upon departure. One adviser whom I met socially a few years ago put it to me this way: “I tell my client that I got paid a lot of money for someone to buy my business but I get to keep my business. What would you do?”
From the comments section of Mr. Jamieson’s article and from a few emails I have received today, there are some who clearly see this as THE END OF RECRUITING, or a “headhunting Apocalypse.” Some thoughts:
Firms give recruiting bonuses to attract talent. If they could attract the talent more cheaply, they would. The recruiting environment is driven by the laws of supply and demand. With no firm having the secret sauce of training, there has been a dwindling number of advisers entering the industry for the last twelve years. At the same time, this industry is subject to the same demographic forces facing the entire country. That is, there are fewer adults born between 1964 and 1980 (“Baby Bust”) than were born between 1947 and 1964 (“Baby Boom”). Reduced supply and constant if not growing demand equals higher prices, reflected in higher recruiting deals.
There are some in the RIA world and elsewhere who snub their noses at these recruiting packages as being unseemly, or inappropriate. Well, I agree that it is naïve to deny that many adviser moves are done “just for the money.” But when an RIA sells his or her practice, isn’t that to make money as well?
The best advisers are not and should not be ashamed of the money that they earn or that the service they provide is valuable to both their employers and their clients. Transparency and disclosure are good.
Bring it on!