John Pierce is Head of Business Development at Cetera Financial Group, driving Cetera’s financial professional recruiting strategy.
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In financial services, like many industries, there are ebbs and flows of competitiveness for talent. In our current environment, we are seeing transition packages (compensation to move to a new firm) at heights that at times make limited economic sense. Many financial professionals are represented by third parties to help place them at a new firm. In today’s environment, it may make sense to consider that third party’s motivation. Here are three tips to ensure you are being represented properly.
1. How Much Are They Being Paid?
This is a fundamental question most people fail to ask. Don't be afraid to ask this question; the answer may shed light on motivations, which will allow you to question if the third party is more aligned with your best interest or their compensation potential.
For example, right now many competitors are plying third parties with a "bonus" to send candidates to their firm. If third parties have a contract for 8% of the revenue you produce and there is a "bonus" of another 3%, that is now 11%. As a $1 million producer, you are now a potential source of $110,000 for the third party. Are you okay with that? Did they disclose that to you?
Today, I am seeing third parties collect up to 14% of what we call "trailing-12"—this is what the financial professional produced over the last 12 months. If your third party is chasing the highest compensation package for themselves, are they actually representing your best interest? The answer, intuitively, is no.
2. Do They Understand You?
Work with credible third parties that actively listen to your wants, needs, goals, dreams and aspirations—not only for yourself but for your team. When third parties understand you, they become a partner to you and your future team.
If they don’t understand you, how do they know where to place you? If they want to place you without understanding your core motivations and objectives, is that really beneficial to you? My firm has stopped working with many third parties when they violate their contracts by, for example, trying to solicit our financial professionals.
The third parties that bounce from firm to firm for the highest check need to be questioned about their knowledge of your best interests. I acknowledge that these are difficult questions to ask—but why not if you are their client, and they are getting paid off of your productivity?
3. How Many Firms Are They Showing You?
How many top-tier firms are in your industry? If you were to move, you would want to see all top-tier firms, correct? So if your third party is only showing you two or three, ask them why. If the answer is they don’t have a contract with a certain firm, call the firm yourself. If they do what a few check chasers do, they may only be showing you the firms that are paying them 12% or above. That is not in your best interest. They may say it does not impact your transition compensation because your new firm is paying the fee, but trust me, you will pay one way or another.
Final Thoughts
There are some amazing third parties my company works with that are consultative partners. The ones that turn out to be vendors we part ways with in a friendly manner, wishing them well. Don’t be swayed by a third party that is all about being paid. Find a true partner that treats you as a valuable client. In addition, identify the firms you are interested in and contact them yourself. You should control your destiny. Own your future!
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