In downturn, demand for big producers likely to remain firm

The stock market has caught a cold — will recruiting packages also catch a chill?

If the market spins into a  severe and prolonged downturn, that would change a few things.

Firms will continue to  recruit  aggressively in a bear market. They’ll  view a market downturn as a buying opportunity to attract advisors from rival firms. Brokerage firms will be gunning both for advisors  who are looking for an upfront check and for those who are seeking to join a firm with a better platform. The offers are likely to differ in one key aspect: The back end payment will edge higher and the front end will get a little lighter.

The farther down the production chain one goes, the more that the upfront component of recruiting  packages will be shaved. Advisors bringing in commissions under $500,000 will find wirehouses paring their bids, in part because during a downturn Wall Street will become less profitable. That means the pool of money for recruiting will shrink. And whatever is left will be primarily for the big enchiladas.

On the bright side,  the aging and shrinking pool of advisors will keep recruiting packages up in the stratosphere — especially for large producers, but recruiting firms will opt for more of a show-me format.