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The Best of All Possible Deals

By Danny Sarch
April 1, 2007
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Let's get something out in the open right away: The best deal isn't only about the money. I'm talking in terms of a career move--a win-win proposition that lands you at a place where you can live happily ever after. If all you're after is the money, this column doesn't really concern you. But if you're looking for the total package, read on.

First, check out what one million-dollar producer told me: "I'm selling my house and want to get as much as I can for it. They are buying my house and want to buy it for as little as they can get away with. That's the dynamic, so just get used to it and deal with it."

As talented as this advisor is, he's also dead wrong. He has moved four times and rebuilt his book at least twice. Unlike the seller of a house, the seller of a retail brokerage book has to live with his buyer--the new firm--for years. The sooner you realize you're in business together and the deal has to be a win-win, the easier the process is going to be.

That said, the hiring branch manager is under an enormous amount of pressure to recruit. Those who are successful at this get bigger bonuses, louder accolades and faster promotions. Branch managers who can't recruit are only keeping their seats warm until their bosses find others who can grow their franchises. And a branch manager who's under the gun is more likely to make a bad hire than one who isn't--just like how an advisor with personal financial problems is seen as being more prone to scam his clients than an advisor who can balance his checkbook. Even worse, a struggling branch manager is more likely to overpromise and underdeliver.

That means the wise advisor must be suspicious of deals that seem too good to be true. Yes, you may get the over-the-top package and support in writing--thereby protecting you. But the branch manager who gives away the store to you won't have the same offering next year. Your book and your business are part of a marketplace. Don't let greed blind the business sense that got you to this stage of your career.

We, therefore, have what I call Sarch's Recruiting Paradox: The Great Branch Manager (GBM), who is tops in recruiting and maintaining a first-class franchise, but needs you much less than the Weak Branch Manager (WBM).

Case in point: A few years ago, Prudential Securities was offering deals that were dramatically better than the average on the Street. But to attract quality advisors, it had to offer the most, due to the problems the firm was having. Advisors who were seduced by the dollars and joined the firm, watched it fold and get sold.

The same is true at the branch level. Find a branch manager who wants you but doesn't need you.

Remember: The branch manager is regarding you with the same amount of skepticism. GBMs want to know everything they can about the advisors they recruit. And these branch managers back away from individuals whom they believe aren't 100% open about their business.

In addition, branch managers aren't keen on advisors who are trying to fool them into overpaying. The recruiting marketplace is full of malcontents and miscreants. When bad advisors hear about amazing deals that provide three or four times their W-2 earnings, they dress up their business to make it look appetizing to prospective buyers.

What a wonderful picture I'm painting, huh? How in the world can a solid, ethical advisor find the best possible deal, when desperate branch managers are promising the moon and more unscrupulous advisors are looking to make a killing? Well, there are ways to do it. Here are the keys to getting the best deal.

* Show the branch manager that you care about your clients (i.e., describing why the prospective new firm would be better for your clients than your old one).

Sure, the deal may be a lot of money, but it'll be spent awfully quickly if you can't service your clients at the new firm the way you're accustomed to doing. If you don't ask probing questions about your prospective new employer's platform, the branch manager won't take you seriously. GBMs only want to be in business with advisors who are passionate about doing the right thing for clients.

* Give your prospective employer as much data as you can about the makeup of your business.

Make your business transparent. Your prospective employer is buying your book and then paying you to run it. Your current employer has reams of reports available to you that slice your book up in 20 different ways. During the interview process, make sure that the prospective new firm understands what your book is--and isn't. The more data you give, the more ammunition the hiring manager will have to get you the best deal possible.