Plus, how RIA firms can tell if they're retaining the right person to find candidates

August 27, 2010 — 2:00 AM UTC by Fred St Laurent, Guest Columnist


When Bernie Madoff was up for sentencing, he said, “I have left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. This is something I will live in for the rest of my life. I’m sorry.” He added, “I know that doesn’t help you.”

One observation I have is that Madoff’s apology was all about himself; he saw the impact of his crimes in terms of the effect on himself and his family.

When I look at ethics, I see this concentration on ‘self’ or ‘others’ to be the core issue that divides recruiters.

With the financial world in turmoil, advisors are receiving a record number of calls from recruiters. Wirehouses, independent broker-deals and RIA firms seem to have an insatiable appetite. Entire recruiting machines have been constructed to gobble up advisors and client assets at an unprecedented pace. There are enormous transition packages being offered, even as high as 300% deals.

The potential recruiting revenue attracts the good, the bad and the ugly to the party. Advisors and firms are experiencing the highest call volumes from recruiters in history.

So how does one tell the difference between the good, the bad and the ugly? This can be as simple as asking a few questions and listening for the subtext of the responses offered.

Four simple ways for an advisor to discern a good recruiter

1) Ask about the Broker Protocol. Most people who have any actual experience in recruiting in this industry have been exposed to Broker Protocol law and if they can’t answer a simple question about the subject, they are wasting your time. The reality is that they can do you harm, and they certainly should not give you advice about transitioning your business. Just ask them: “Can you sum up what basic Broker Protocol law is?” If they can’t, move on. Which firms are joining the Broker Protocol, and how your firm gets on the list

2) Ask them what they know about you. If someone is calling off a sheet, making hundreds of cold calls a day, they will not know whom they are calling. If they have experience in the industry or have been properly trained they should be able to tell you your CRD# and where you have been for the last 10 years. These are the recruiters who make “gold calls” not cold calls. So ask them, “What do you know about me?” and if they have no more than your name and number, move on.

3) Ask them what firms they recruit advisors out of. It is a simple way to figure out which firm is their client. Most callers are not allowed to tell you the client’s name, for whatever reason, but if you ask them which firms are ‘source’ companies, it is a simple process of elimination. What name is missing from the list? That firm is probably the client. Ask them if this is the client. This is really just a method used to get the caller ‘off script’ and see how they handle themselves. Calling scripts are good because they keep the story straight, but a good recruiter doesn’t really show their passion for a client until they are off their script. So ask them “What firms do you recruit out of?” and see what they say.

4) Ask them if they have ever submitted a candidate’s information to a client without that person’s express permission. This is important for many reasons. Most important is that you never know who plays golf with whom. A recruiter who sends over information without a candidate’s permission puts that person’s very livelihood at risk. You are really asking this to make it clear that you expect that anything you share with them is kept confidential and that you want them to get your express permission before bringing your name up with anyone.

Two simple ways for RIA firms to discern a good recruiter

1) As above, ask about the recruiter’s knowledge of the Broker Protocol. This is particularly important if you are recruiting advisors with a low length of service or who have not moved in the past. The last thing you need is an inexperienced, over-eager recruiter to ask an advisor to copy account numbers or other personal client information for whatever reason. Be sure the recruiter you decide to use understands the basics of Broker Protocol law.

2) Ask the recruiter what firms they source advisors from. As above, you can quickly discern which firms are their clients by which names are missing from the list. You can also ask them outright which firms they have recruited for, but I suggest you ask them for the names of the source firms first. Then, later in the conversation, ask them to list their clients. In case you don’t know where I am headed with this, let me lay it out. Some recruiters have one or two really large clients and they are very vocal about their recruiting efforts for those firms. At the same time they will establish a “wink” relationship with other firms, and provide candidates they know may be interested in leaving their client. So in essence they are paid to bring advisors in and take advisors out.

This may seem natural to someone who has a ‘me’ centered ethic. Someone with an ‘other’ centered ethic will cringe at this behavior. If you are interested in working with someone you can trust with the intimate knowledge of the inner workings of your firm, ask this series of questions:

• Which firms are your source companies? (which can we expect to see candidates from?) • Later on; Which firms are your clients? (Which firms can we expectNOTto see people from?) and then, finally, • Once you have identified which the client is, ask them if some method might be arranged to see advisors from one of their clients?

If they say ‘no’ you can feel comfortable that they have an ‘other’ centered ethic. If they say ‘yes’ and lay out a strategy that includes a ‘wink’ list or using partners with no ties to the client, whatever the plan, you can be sure you are dealing with a ‘me’ centered ethic. You can also be certain that if their client is on the menu for you today, then you will be on the menu for someone else down the road.

Fred St Laurent is managing director of SCI Partners, an Atlanta, Ga.-based recruiting firm retained by RIA firms, credit unions, banks and mid-sized financial institutions to recruit brokers and advisors. St Laurent has been recruiting for more than 20 years in the financial services industry. He leads teams on large projects and has developed a strong reputation for training recruiters. He also writes articles and speaks at major industry conferences about staffing and sales-related issues.

Mentioned in this article:

Firstgroup Recruiting Solutions, LLC
Top Executive: Frederic St Laurent Jr

Share your thoughts and opinions with the author or other readers.


Ron said:

August 27, 2010 — 3:00 PM UTC

You make some great points. With so many recruiting firms out there and so many cold callers, it is hard to find a good recruiter. Advisors should take calls from the “good” recruites because that will enable them to keep a pulse on the market place.


Fred St Laurent said:

August 27, 2010 — 10:00 PM UTC

Thanks Ron. I agree with you, not only because I happen to be a recruiter either. A good recruiter speaks to thousands of people in the industry and hears information from many perspectives. If nothing else, speaking to a good recruiter can be informative, within the boundaries of confidentiality. Situations can change rapidly, as we have seen over the last few years, and it is always good to have a good recruiter to call when you need one :-)


Edwina Cowgill said:

August 28, 2010 — 2:59 PM UTC


An excellent, informative article!


Patricia Neely-Dorsey said:

August 28, 2010 — 3:11 PM UTC

Lots of good information!
Thanks for the public service!


Bonnie S. Calhoun said:

August 28, 2010 — 3:18 PM UTC

Fred, I didn’t realize how smart you are…I mean about the financial market! This article is very detailed and precise! Cudos my friend.


Linda Weaver Clarke said:

August 28, 2010 — 5:29 PM UTC

The first three paragraphs drew me in right away. Great introduction to your article! This article should help many people.


Christina Turner said:

August 28, 2010 — 6:40 PM UTC

I learned some things and the article was interesting.


Mark Glamack said:

August 29, 2010 — 2:22 AM UTC

Very informative Fred, with important questions to ask. I might add, trust can only be earned.


Mimi said:

August 31, 2010 — 6:38 AM UTC

There is so much I don’t know about the financial world. Sad, I know. I agree with what you said intially, that Madoff was only concerned about himself, which is why he ended up where he is in the first place.


Mark Glamack said:

November 12, 2010 — 10:41 PM UTC

Fred, you make good sense and offer sound advice for those who have a moral compass. I hope everyone reads this before the system implodes; collapsing in on itself. When greed takes a front seat, dominating the landscape and mindset of people who only think of themselves, everybody eventually becomes the victim of its inequity.

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