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Attracting High-End Advisors: Top Seven Recruiting Channels

by Jonathan Henschen, CFS and featured in Broker/Dealer Journal
August, 2008:

How firms present themselves is crucial if they want to attract higher-end reps. While a wide variety of recruiting channels are available to broker/dealers—and some firms get by with one or two while others rely on several–the recruiting results achieved by any given firm at any given time are all too often decidedly mixed.
In most cases, we find what’s missing is knowing how to do the right things the right way.

Top Seven Recruiting Channels

Because of that, I’ve narrowed my list of top broker/dealer recruiting channels to these seven:

• Internal Recruiters
• Wholesaler Referrals
• Print Ads and Mailers
• Internet Search Leads
• Website Leads
• Advisor Referrals
• Third-Party Recruiters

In the following, I suggest how best to use each of those top seven recruiting channels: How to avoid the common mistakes we see being made every day, and how to produce the consistently good results you seek.

Internal Recruiters

The biggest issue we see with many small broker/dealers (and even some larger firms) is when the president or someone in upper management decides to multi-task. That is, doing all the recruiting and all the managing. That works just fine…until it succeeds! Then, watch out! As the firm grows, the manager naturally must spend more and more time managing, which inevitably shortchanges the time that still needs to be spent recruiting advisors.

The solution? Get a recruiter! But keep upper management active in the recruiting process—especially with big new producers who tend to feel underappreciated unless they’re in direct contact with the boss. In-house recruiters can handle all the follow-up calls, In fact, they should! It makes prospects feel wanted, helps boost your closing ratio, and frees you up to do what you do best: Running the firm.

Wholesaler Referrals

All the wholesalers I know have the same hang-up about referring advisors to broker/dealers: “If I refer them, and they’re unhappy with their new firm, they blame me and stop selling my products.” That’s why wholesalers need to feel confident that your firm won’t disappoint. It’s also why broker/dealers must establish two things to work effectively with wholesalers:

1. Build solid relationships with them.
2. Be sure your reps are happy and satisfied.

And while you’re at it: Don’t forget to ask them for referrals. Often. In fact, I’m surprised at how few broker/dealers remember to take that simple step. Be direct. Tell wholesalers when they come across advisors who are upset with their broker/dealer, that you know a firm that’s a great alternative. That firm would be yours!

Print Ads and Mailers

• Print Ads are Expensive, But They are a Good Source of Advisor Leads. They’re also a great way of building brand recognition. But, as with any other form of marketing, the key is knowing how to reach the highest-possible “read” rate.
• Skip the Clutter. Ads filled with clutter tend to be invisible, while a simple message with a single image that attracts readers will not only be read, it will be remembered. Though it may seem counterintuitive, the best way of creating simple, yet consistently effective advertising is by hiring a high-end marketing firm.

Mailers Can Be a Cost-Effective Way of Generating Interest in Your Firm. In fact, the same basic rules used with a broker/dealer’s print ads also apply to mailers:

Less is more

• Keep your message simple
• Use eye-catching images
• Hire a high-end marketing company
• Target your firm’s message

For example, if you know a broker/dealer that has little to offer accredited investors, use the lure of alternative investments or private equity, or both, to reach the firm’s high-end advisors. Understand going in, however, that a response rate of one or two leads per 100 mailers sent is considered good! In other words, you’ll be ahead of the game if a mailer you send to 10,000 reps lands you just a couple of advisors or one large producer.

• Target Your Mailers. The return rate of a broker/dealer’s mailers can be increased by targeting them to such specialized needs as:
• Advisory expertise and value pricing
• Alternative investments
• Web-based technology
• Private equity
• Equity participation

Specialty mailers can be a complement to generalized mailers for targeting broker/dealers when the firm is having problems with issues such as poor service, outmoded technology, or excessive compliance pressure from over-bearing company policies. The goal of target mailers is to get the mailer into the hands of an advisor who isn’t satisfied or happy with his or her current broker/dealer situation. The mailer needs to show you can fix the problem or give them something they don’t currently have.

Internet Search Leads

Increasingly, sophisticated high-end producers are using internet searches to find new broker/
dealers. Why? The more successful they are, the less time they have for hunting through industry publications.
If you intend to be found when these high-tech searches are being made, you’ll need a “Search Engine Optimization Specialist” whose job is ensuring that you have effective “Meta Tags.” These are HTML or XHTML elements used to provide structured metadata about a web page, which assures preferential placement when key words are entered on Google and other search engines.

Why Not Blog?

And if you really serious about getting ahead of the competition and staying there, consider creating a personal publishing platform — or blog! What makes blogs unique and of greater interest than other publishing platforms is that blogs are connected, tracked, indexed, and spread around.

Your blog can have three uses:

1. To Hear Yourself. A blog brings out the narcissist in us all!
2. To Be Heard By Others. Your blog can rank higher in a Google search than the same topic on your company’s website.
3. To Hear What Others are Thinking. You’ll be gathering input from sources all over the internet, and who knows where all that will take you, or how far?

However, you should only consider blogging if: You have something interesting to say; your content is the truth, not sales hype; you’ll stick with it for months, or even years. Otherwise, don’t bother!

Website Leads

Besides using a paper-and-ink marketing kit to tell your story, another essential recruiting ingredient is having a top-quality website. Why? Because I’ve seen too many firms settle for mediocrity in their marketing materials and websites, and that can backfire big time. For example, when we’re speaking with our advisor clients about a particular broker/dealer, it’s not unusual for them to be Googling the name, and scanning the firm’s website while we’re talking. And I can tell you that conclusions — good and bad — will be going through advisors’ minds as they’re scanning your site.

Broker/Dealer Website Turnoffs

Broker/dealers will often tell us that they’re “all about relationships with advisors.” Yet, when we check out their websites, there’s not one picture of staff or management. Here are the things you need to avoid:

1. Static sites with no visual appeal
2. Sites filled with meaningless stock photos
3. Sites with no information of interest to prospective advisors
4. Sites with no meaningful stories to tell
5. Site content filled with generalities and clichés

If you’re spending $15,000-$30,000 with a high-end marketing company, you should count on your marketing kit and website appealing to your target audience, and drawing them in so they’ll want to take a closer look at you and your firm.

Advisor Referrals

By far the best and easiest way to grow your firm is through referrals from your own well-satisfied advisors. And we’ve learned that broker/dealers with the best rep referral track records offer their advisors financial incentives for advisors placed through referrals. While a one percent override on the first-year production of referred advisors is commonplace, firms offering two percent rewards for two years, and even two percent rewards for three years seem to bring in the most referrals from their own people.

So the question is, if you’re not attracting in-house advisor referrals, why not?

Third-Party Recruiters

If your firm clicks with an outside recruiter (like me!), the result can be millions of dollars in top-quality advisor leads.  Outside recruiters tend to be a bit paranoid about broker/dealers, always having their radar up looking for service problems, excessive compliance issues, unnecessary bureaucracy, or eroding relationships among advisors and management. But then, we have good reason to be guarded. Our compensation goes forward for a couple years; if the reps we place become unhappy and leave, there goes our income.

Personally, the most production I’ve placed with a single broker/dealer in a year is $8 million of gross dealer concessions. But because we contract with many firms, third-party recruiters tend to spread out their lead flow. So getting $1 million to $3 million of business placed by an outside recruiter is a more realistic expectation. Ultimately, we need to know that whoever we give leads to will deliver for us on a long-term basis.

Avoiding the Dreaded: “We’ve Gotten This Far Without It” Mentality

A recent lead referral to a broker/dealer brought that counter-productive way of thinking into the open. We had a promising new relationship with a broker/dealer, but the firm had no marketing kit for prospective advisors. In spite of that, we sent them a first-rate lead: a group doing more than $1 million of production. The firm sent the group a pre-registration kit and followed up with a phone call. The feedback we received from the group’s manager was all-too predictable: “Sorry. I just can’t consider joining a broker/dealer that won’t spend money on a simple marketing kit!”

That broker/dealer had grown to a good size without a marketing kit, and the broker/dealer’s in-house recruiter believed a marketing kit was something they needed. But management was adamant: “We’ve gotten this far without it, why change now?” Indeed. What they should have been asking themselves is: “Imagine where we could be today if we had an effective marketing kit?” Or, a website!
The average production per rep at this firm was rather low. That came as no surprise to me, because of the way they marketed themselves, or I should say their lack of marketing.

Doing it Right: Aggressive and Proactive

As we said at the outset, how firms present themselves is crucial if they want to attract higher-end reps. Why not spend what it takes to do it right? There’s no coasting in our industry. You can bet that your competition is always fine-tuning their marketing kits, websites, ads, and mailers. If you’re not moving forward, you’re falling behind. With competition getting more and more fierce, you need to be aggressive and proactive. If you’re successfully growing your firm by asking for rep and wholesaler referrals, good job! You should be commended! But why not take it a step further and improve on your success? Consider branching out to include additional channels in your recruiting mix. The more baited hooks you have in the water, the better chance you’ll have at catching a “big fish,” especially if placed in the very best locations.