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DOL Fiduciary Rule Rollout

How is the DOL Fiduciary Rule affecting advisor recruiting

In a recent article in Financial Advisor Magazine and Jodie Papike is quoted talking about the state of the Independent broker dealer space and how the DOL Fiduciary Rule is affecting recruiting. She discusses the current recruiting environment by saying that as a result of all the recent broker dealer acquisition-

“Recruiting is picking up steam at many firms” that aren’t undergoing a change of ownership, says Jodie Papike, executive vice president of Cross-Search, a Jamul, Calif., recruiting firm. “Advisors feel if they have to go through a transition, they might as well know what all their options are.”

She also discusses why stability is crucial in this environment and how firms that offer more resources are having more success.

Recruiting “continues to be difficult for firms that don’t have a lot to offer,” Papike says.

 Another issue top of mind for most advisors considering a broker dealer change is regulation and how prepared a broker dealer is for the DOL rollout.

The DOL’s Fiduciary Rule “really did encourage advisors to take a look at their broker dealer, and at what their firm was doing to protect them against all these changes,” Papike says.

 The days of advisors wanting to be “left alone” are a thing of the past. As uncertain regulatory changes come our way, advisors want to know they are with a firm that is looking to the future with solution to protect them and their clients.

Small broker dealers continue to feel the pressure of mounting regulatory costs, decreasing profitability and trouble growing. These pressures continue to drive consolidation in our industry.

“Smaller B-Ds, the really small ones, with under 100 reps, are really getting serious about whether staying in business makes sense,” says Papike. “Regulation has gotten so difficult, expenses continue to go up, profit margins are shrinking, and it’s difficult to recruit because it’s … hard to do without a really great platform.”

Some of these smallish B-Ds are looking at operating as large OSJs, Papike says, landing a deal with a B-D and monetizing their business somewhat, turning over much of the administration to the dealer, and maintaining control of their advisors. “We see a big trend with that,” she says.

With so much change happening in our industry it’s hard to say what the long term effects the DOL Fiduciary Rule will have on broker dealers and recruiting.


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