Business mix evaluation. I simply cannot stress enough how this particular category has changed over the last 12 months. The “deep dive” that is occurring on client mix, product mix, compensable revenue etc has gone to a whole new level. This is really the portion of the process that has turned into a “private equity” like deal. An advisors book of business is scrubbed from head to toe looking for not only current revenue producing assets, but also possible future revenue producing assets. What level of asset based lending could be applied to each account? What is the mortgage lending opportunity? What are the insurance possibilities? Accounts are also evaluated based on there level of commitment to the advisor vs. the firm they are coming from. All of this is rolled up into an equation that becomes part of the deal negotiation.

ROI. The entire process has come down to this age-old business acronym. With firms investing millions of dollars on recruits, they have come to terms with applying relatively hard and fast models to the potential success of each team/advisor. For example, one wirehouse has moved its ROI standard from 12% to 14% over the last 18 months. They’ve also increased their scrutiny of client assets, CRD disclosures, staffing and future compensable revenue. The process has become both paperwork and time intensive. The firms simply shrug and claim “look…we are investing millions of dollars and buying a business. The due diligence and dynamic reviews are necessary to justify the multiples that we are paying to shareholders”. Sound familiar?

via Recruiting has Become a Private Equity Game | Careers content from WealthManagement.com.