I started thinking about the recruiting market today and it struck me as awfully familiar.

First there's the latest scandal on Wall Street. Thankfully, this one affects very few retail advisors and their clients directly. Nevertheless, it is embarrassing to the industry and something that advisors have to talk to their clients about every day.

Advisors tell me that in certain ways this scandal is tougher than those in the past. When the tech bubble burst, for example, and the tainted research was exposed, advisors were able to point to a few bad eggs that had spoiled the party for everyone. This time, however, investment firms are losing billions of their own money in bad investments, which speaks to the core competencies of the industry.

One big producer put it to me this way: "Let's say that you heard that the local hardware store fell down because of shoddy construction and bad lumber. It became the laughing stock of the neighborhood. Then, when they reopened, they actually expected people to buy their lumber and take their advice on how to fix things. Well, our firm lost billions of our own money, and now we expect our clients to take our firm's advice? It's pretty sad."

So, here we are again, with an overheated recruiting market on top of a scandal. I see three lessons we can glean from 2000 to 2002 that can help us now.

First, it is highly unlikely that recruiting will slow down or that deals will go away. In the OWS Recruiting Roundtable in early 2002, many predicted that deals would dry up. I disagreed then and I do not think that will happen now. There are still too few quality advisors in the industry to satisfy the desire by these firms to grow. Top advisors are profit centers and revenue generators.

Second, more advisors are out there interviewing than ever before. My team, which includes Jordan Schultz and Steve Rappaport, is seeing more interviewing activity than we can remember. One of the reasons for this is the palpable anger that advisors are feeling toward their own firms. Blind loyalty to an institution is a thing of the past because of this mess. Advisors are thinking that they need to "cash in" and get out from under the weight of their own firm's stock before yet another scandal erodes that stock's value again. One advisor said to me: "Every five years or so our industry finds some way to screw up. I've got to take care of myself."

And third, it is very likely that individual books will come under greater scrutiny before deals are consummated.

I don't see deals going down, but each hire is an expenditure that has to be justified. Firms are desperate for good businesses but will do extra due diligence to ensure that the books attached to the brokers are truly transferable.

The Street is full of stories of the big bad manager who cut the level of support that a new hire received. The flip side of that story is the branch manager who either did not do enough homework and overpaid, or simply got duped by an advisor desperate to get some extra dollars in his pocket.

Show the Good and the Bad and Remember the Ugly

The dynamic of a negotiation between advisor and branch manager can get very sticky here. Misunderstandings and miscommunications are almost inevitable. Though each side is tempted to beat up the other to get more money or save some money, the fact is that deals must be a win/win because each side will have to live with the other for many years after the initial transaction is completed.

To the advisor interviewing: Make your business transparent. Let your prospective employer see both the bad and the good. Then head off any problems. If you don't think that your book can move, then don't take the deal!

Remember this ugly scenario from the last bear market? Bullmarket Joe finished 1999 at a career peak of $1 million in gross production and decided to cash in. Seduced by the promise of unlimited syndicate at his new firm, Joe took a $1 million check attached to a five-year contract. He successfully moved most of his book and initially did very well in transition.