Watch Out for the Recruiting "Hard Close" at the end of the year!

The retail brokerage world still does a lot of transactional business. One of the things that the industry is not proud of is how much transactional business is generated at the end of each month. Advisors get to a certain date near the end of each month in order to get credit on trades for their next paycheck. Short on your mortgage for December 1? You’ll figure out how to sell something to somebody before November 30th ! Branch Managers, while being the “end of the month transaction police”, are guilty of a similar phenomenon at the end of the calendar year. In almost every firm, Branch Managers are given a target number for the number of recruits that they are to bring in. Sometimes they are given a number for trainees as well. So here we are, it’s mid-November, and we all can see the end of year around the corner with Thanksgiving, Christmas, and New Year’s. If we count the last two weeks of the year as wasted, and nothing happens next week, Thanksgiving week, then there are only three real business weeks left in the year. Managers who are not hitting their quota for recruits are getting desperate; their 2009 bonuses might ride on some Advisors joining their branch before the end of the year. Jordan Schultz, my Executive VP and Partner, suggests the following: “If the Manager who is recruiting you is pushing for you to start before the end of the year, ask him or her why that is important to him or her. Hopefully, the Manager will come clean with you about why. If they can’t explain it adequately, maybe you’re picking the wrong place to join.” Now, many managers did get screwed on their bonuses for 2008, even while hitting their numbers. They do not want to give their firm any justification to do it again. Throw in dozens of managers who are without jobs, and it’s easy to see how so many of these guys are feeling insecure. However, that does not excuse a hard close and messing with an Advisor’s career: It’s just as unethical as the Transactional Advisor making trades to make his or her month.