Bull Bear Report Nov 09 2009

Slow and Steady Winning the Race for Financial Adviser Firms

By julie steinberg

Finance firms are hiring financial advisers and wealth managers in droves. Several factors have put firms like Edward Jones, Raymond James and others in prime position to do much of that hiring.

Edward Jones didn't make many headlines during the financial crisis. The company caters to long term, conservative investors who don't generally go for exotic financial instruments. The cautious approach of those clients is now paying off -- for both investors and the firm. The company has continued to hire advisers: 850 last year with plans to hire 1,000 more this year.

"We made the decision to grow during recessions and boom times," said Jim Weddle, a managing partner at Edward Jones. "The last year we didn't have growth was 1995. It was the only year over the last 30 that we didn't grow the number of advisers."

Weddle says the firm is concentrating on Toronto, and Phoenix is their next-hot spot, while Los Angeles isn't far behind.

Lack of exposure to toxic debt and solid financials is making Raymond James an appealing partner for both investors and advisers. Hiring is up -- 750 last year, 400 so far this year and the firm intends to maintain the pace in the coming years.

"Last year, highly respected places saw their financial credibility being questioned," said Chet Helck, the RJ's COO. "That put a lot of financial advisers in mode of looking around, looking at their options. We didn't have the exposure to subprime issues. We didn't have to take government assistance."

Even firms that did take government money and may have tarnished brands are getting into the action. JPMorgan's Bear Stearns Private Client Services (a remnant of Bear Stearns) also ramped up hiring this year. It plans to more than double its brokerage force, from 380 to 1,000.

While the numbers speak volumes, hiring managers see a glut of qualified candidates on the market and are being duly selective.

Barry Sommers, CEO of Bear Stearns Private Client Services, says that numbers aren't as important as quality. "We're looking to expand our geographical footprint in South Florida, Houston and mid-Atlantic, but we're looking for the best people -- not the most."

The bet that Sommers, Weddle and others are making is that these top advisers can attract clients who are tired of risky drama with bigger companies and seek refuge in conservative growth options.

"If we don't meet the needs of those individual investors, somebody else will," Weddle said.

For now, adviser shops are doing all they can to meet those needs by hiring armies of advisers. But the salad days of adviser hiring won't last forever. Even though Raymond James's London office grew by 55% this year, Helck doesn't think the massive hiring will last long, as the financial world continues to stabilize.

"The momentum won't last forever," he said, "but so far, we've been a beneficiary of it."

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