FA Hiring Amid Pandemic: More of a Pause than a Standstill
April 2, 2020
By Mrinalini Krishna, Financial Advisor IQ
The coronavirus pandemic and market volatility are taking their toll on FA recruitment. Despite firms such as Raymond James deferring “numerous advisor transitions, recruiters don’t expect a complete standstill, though.
Instead, firms are adjusting the way they hire, and some advisors may already be on their way to making a switch.
“I think that those who had already begun the interviewing process before the world turn[ed], and are determined to leave for whatever reason, I think are still looking for ways to do it,” says Danny Sarch, president of New York-based-based recruitment firm Leitner Sarch.
Sarch is seeing more of a pause than a halt in recruiting activities. “It’s certainly slowed because if you had 1,000 people in the country that were interviewing, a certain very large percentage of them just stopped,” he says.
Advisors are still interested in conducting due diligence on firms, but waiting until maybe May to further engage with broker-dealers, says Jon Henschen, founder of St. Croix, Minn.-based recruitment firm Henschen & Associates.
“Some of them are just gathering information right now on which broker-dealers to focus on,” he says.
Casey Knight, Houston-based executive vice president and managing director at recruitment firm ESP Financial Search, says advisors may favor firms that stayed financially healthy amid the pandemic and volatility. He says he witnessed that after the 2007-2008 global financial crisis.
“Once the dust kind of settles with whatever is going on, then advisors reflect on how their firms handled it, or what position their broker-dealers are in, and you just see a lot of movement,” he says.
A lucrative transition deal could motivate some FAs to move even with the current pandemic and capital markets turmoil, which could potentially impact the bottom lines of broker-dealers and advisory practices, recruiters say.
It’s not the best reason to move, according to Sarch, but he says some advisors could be seeking a “cash infusion” to shore up their own income.
What’s happening now
With parts of the U.S. in some degree of a lockdown, firms must get creative with hiring, recruiters say. Raymond James, for example, has halted in-person advisor recruiting meetings in addition to deferring certain FA transitions.
Henschen suggests firms create an online home office visit experience where the potential recruits could talk to key stakeholders they would have met face-to-face under normal circumstances.
“I often encourage reps to do home office visits, but if you can make a similar experience online, why not?” he says.
ESP’s Knight, who recruits for LPL Financial, Raymond James and Cetera, among other broker-dealers, underscores the role of technology in recruitment.
“LPL, when they make transitions, they’re already doing it 95% digital[ly],” he says. LPL uses the DocuSign e-signature agreement tool to onboard advisors faster, for example, he adds.
“Raymond James is absolutely still recruiting. Ameriprise, absolutely still recruiting. They’re just moving to virtual as well,” he says. “But the problem that I see them having is that [the] transition process itself is so dependent on people.”
Recruiters say the hiring adjustments firms are making amid the pandemic could encourage more of a shift to automated and digital processes. After all, meetings that can be conducted without involving flights or hotel bookings would lead to cost savings for broker-dealer firms, Henschen says. But the human element won’t completely be taken out the equation, recruiters say.
