Every Broker Dealer that I speak with has a very similar game plan: Step 1) Establish a Broker Dealer. Step 2) Hire top producers that have a quality client base. Step 3) Buy a big house and a boat. Great plan! The only problem is how to get top producers to come to your firm.
Broker Dealers have many answers to this question such as: 1. I know everybody (top answer) 2. Everybody knows me (tied for first) 3. I have hired tons of brokers and trained them. As soon as they find out that I have my own place they are going to come. There are many variations, but you get the point.
Top producers DO NOT join simply by virtue of your firm being in existence and while relationships are great to have in the long term, try not to rely on them to get you going. Most top producers like to see that you have established yourself before they make a commitment to switch to your Broker Dealer.
There is a saying that the only way you can get all day flavor is by all day cooking! NO SHORTCUTS. What inevitably winds up happening with new Broker Dealers is that they were not prepared to go the distance. They think that because they have been in business for the past year or 2 or even 3, that somehow the top producers should want to join their firm. When the firm is unsuccessful in attracting quality producers they start looking for shortcuts.
Shortcut number one: Hire anybody with a story. This is the most common shortcut that firms take. It goes like this:
Broker: Hi I saw that you are a Broker Dealer and I would like to join your firm.
Firm: Great. What type of business to do have and what are you looking for from us.
Broker: I have about $400,000 under management, 200 accounts, and I produce over $5,000 a month. I am looking for a 90% payout and a check for $10,000 to join your firm.
Firm: You’re HIRED!
Sound crazy? This happens every day when firms can’t attract the top producers that they want.
Ken’s rules for attracting top producers:
1) Make requirements and STICK to them. The firm should make a list of qualifications for the PRODUCERS that they are looking for:
A: Minimum assets under management. ($10,000,000)
B: Minimum trailing 12 months production ($100,000)
C: U-4 Status (Clean U- 4 for the past 2 years)
D: Years at current firm and number of previous firms. (2 years current not more than 3 in the past 10 years)
The above will be tailored to your firm. Once these rules are established DO NOT HIRE ANYBODY THAT DOES NOT FIT THESE RULES!
Rule number 2:
Don’t break rule number 1. The firm will get calls from Brokers that go something like this:
Broker: I left the business 23 months ago and my licenses are about to expire. I need to join a firm quickly.
Firm: Do you have a book of business?
Broker: Not right now. However, I was a top producer when I was in the business and my family has a lot of contacts and money that I feel I can bring right away. And of course I am willing to come to your firm for free and a lower payout until I prove what I say.
Firm: YOU’RE HIRED!
Rule number 3:
Be patient. Attracting top producers takes patience. The quality producers will take their time and investigate the firm that they are thinking about going to. You will have to be relaxed and build a strong sense of trust in your firm.
Rule number 4:
Invest money. The firm must INVEST MONEY (you read correctly, INVEST MONEY) in a business development platform as follows:
A: Buy a quality list of broker names in a geographic area that you wish to recruit.
B: Design and print marketing material to send to these prospects.
C: Follow with phone calls to those that you sent material to.
D: Keep a detailed data base of the calls and what was said to them.
E: Follow up on a schedule depending on how close you are to closing.
Weekly/monthly/semi annually/annually, etc.
Rule number 5:
Offer financial incentives. (I mean MONEY) when you have found a prospect that fits the criteria that you are looking for, GIVE THEM MONEY! A general rule of thumb in the independent Broker Dealer market is anywhere from 5-10% of trailing 12 months production, make sure that the terms of how and when they get the money are spelled out.
Rule number 6:
Don’t reinvent the wheel: Firms that are starting out will find a site on the internet that claims they have “Top Producers who are waiting for your call” (this reminds me of the magazine ad that proclaims HOT GIRLS are waiting for your call (both ads are probably written by the same person.) There are no quality producers waiting for your call. Let me repeat. There ARE NO QUALITY PRODUCERS THAT ARE WAITING FOR YOUR CALL! Quality producers do not need to wait for your call when they want to leave. They take their time, do their homework then they leave. (Hopefully you have been calling and sending them information and they will come to your firm.)
If you follow the program and develop a long list of relationships over an extended period of time, these top producers will come to your firm when the time is right for them.
Rule number 7:
Referrals: Once you have started to attract top producers, ASK THEM for a referral. Top producers travel in the same crowds (in the Hamptons or wherever they go) if they have come to your firm their friends will come as well. Have them put in a good word for your firm and also INCENTIVISE them (pay them money!) to refer people to you.