Boomerang Brokers: The New Culture Killer
I’m starting to feel like a crotchety old man when it comes to recruiting. I want to start every thought on recruiting topics with, “In my day we never…” That was my first reaction, again, as I read a series of our recent stories on so-called boomerang advisors—those who return to former firms after a few years away.
Back in the day, big firms cultivated cultures of loyalty. They were paternalistic in the best and worst senses. If you were loyal you got a lot in return. If you left, you were rarely invited back.
The few who made the boomerang cut were more vigorously vetted and were certainly not offered top-dollar bonuses.
On Tuesday Merrill Lynch said it landed John Campanello, who was returning after eight years at Morgan Stanley and, according to a source, had a book of $200 million. On May 2, x3mdot broke the return-to-Merrill tale of Andrew Zimmerman, the Boston broker who had built a book of $1.2 billion at Morgan Stanley over 18 years.
“They knew that the best place for them was here,” Merrill’s Boston market executive Chris Bettencourt, said in a press release when the firm confirmed Zimmerman’s arrivals.
I’m all for changing with the times, and you can make the case that the firms that these brokers are coming back to aren’t the same ones they left in ‘08 and ‘09. Far be it from us to argue that you can’t take the money and still be a strong, client-caring citizen.
But both current and former wirehouse brokers I know still describe boomerangs as “culture killers.” It’s tough for those who stay to see someone who left, who was treated with the usual adversarial disdain, and received a large multiple from a rival across the street, now come back to the same firm or even the same office a few years later (after the signing bonus repayment options have worn off).
It’s a living reminder that breaking away pays and an acknowledgement that money talks (no hard feelings, we’d leave for the 300% too!).
But it’s not a long-term strategy. The new comfort with hiring returnees seems to be based on a quarterly outlook, beholden to impressing shareholders, analysts and executives who want to see growth in headcount. There is now a near-umbilical tie between executive/management compensation and those quarterly report cards on net new assets and new recruits. Culture, as we have witnessed, is the first casualty of such an arrangement.
And in the end, there is the customer. Like it or not, there is an impact on clients when any broker moves, as regulators have been drumming home. And lest we forget, nothing so exposes us to client scrutiny as those times when we beg them to follow us to the next firm. It can only be more stressful when that firm is the very one that years ago we marketed as a bad place for them to reside in.