A New Shift In Recruiting Deals

  • The Rise of Fee-based Business
  • A Closer Look at Advisory Assets
  • The Importance of AUM 

We’ve seen a shift happening recently in broker-dealer recruitment deals. It started with LPL Financial and now Commonwealth Financial Network is following suit and changing from production rates to asset levels when calculating transition assistance for recruited advisors. This shift comes as advisor books are seeing an increased percentage of advisory assets.

As the composition of advisors’ books of businesses continue to evolve, it’s only natural for broker-dealer transition money to evolve alongside it. Moving forward, it’s likely that more broker-dealers will make the change to calculating transition money on basis points rather than a percentage of gross dealer concession. This shift is designed to help broker-dealers compete against RIAs and other broker-dealers for top advisor talent — and it’s good news for advisors that are looking for a better home for their business.  

The increasing amount of fee-based business in the industry is a big driving factor for the shift in how transition money is calculated. Broker-dealers who adopt this method will find themselves paying more for an advisory business versus other business; meaning, transition money is based more on profitability for the broker-dealer than anything else. The more AUM an advisor has, the more transition money that they’ll find themselves being offered.

These days, many broker-dealers are charging advisors an administrative or platform fee based on basis points on assets. With this shift, it only makes sense that firms change their recruitment deals to align with the way advisors are charged. It allows for great consistency across the board, especially in the language used in the recruitment deals which is often confusing and riddled with nuance language. As a result, the deals keep evolving and the terms being offered are sweeter, but for an advisor to navigate these deals effectively, they look to a transition consultant, like 3xEquity.

As this shift continues to make its way across the industry, it’ll become more important to have a transition consultant by your side as you look to make a move. In just a few days, 3xEquity will secure you offers form leading national and regional broker-dealers — all while you stay anonymous. We help you come to understand all aspects of your recruitment deal. From the nuance contract language to the way your transition assistance is being calculated, we ensure that you’re getting the best deal possible. As industry experts, we’ll help you navigate all the challenges and potential pitfalls of a transition to get the best outcome possible.

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