Anyone remember the recruiting pause about five years ago associated with the possible move to a fiduciary standard industry wide? Feels like ancient history, doesn’t it? Yes, yes it does.
Fast forward a half decade or so and what does the landscape look like now. Client assets have more than doubled over that timeframe; meaning that books are beefy and positioned as revenue generating machines. Big teams have annuitized nearly 100% of their revenue over the past decade and maximized their ‘recruiting value’.
That means that the multipliers that firms are willing to pay for beefy books ripe with properly annuitized revenue is, of course, as high as it has ever been. Sky high.
The most compelling development has been that wirehouses in particular are willing to pay huge amounts of a total deal (sometimes more than half) in the upfront payment. What used to be eye popping numbers like 150% upfront no longer causes even an eye twitch. Properly positioned teams expect at least 200% upfront on any meaningful deal and that number can often go higher. One could make the claim that advisors are living in a ‘Renaissance Era’ of recruiting and recruiting deals.
Is there a potential end in sight for these deals and the scale of teams that are making moves? The simple answer is No. There haven’t been any meaningful disruptions reminiscent of 08/09 that caused mass industry lock ups via retention deals. Those have long been sunset and nothing of the like is on the horizon. The current makeup of the industry is flush with free agents, big books, and aging advisors looking for the final exit liquidity deal.
Firms, advisors, recruiters and transition lawyers are making more money than they have ever made. Get while the getting is good as they say – and it’s never been better.