Top BD firms Raising Recruiting Fees to 16%: Progress for Wealth Management… But Not for Banks and Credit Unions

A recent WealthManagement.com article highlighted some broker-dealers increasing recruiter compensation to as much as 16% for advisor recruiting. The move is being celebrated by many as a progressive step forward in the recruiting landscape.

And to be clear, it is progress.

But for those of you running bank and credit union wealth management programs, the real question is:

Progress for who?

As consultants who work with leaders running bank / CU wealth management programs aligned with “top firms,” we’ve spent years battling one of the industry’s most outdated and frustrating double standards: advisor recruiting compensation in the bank and credit union channel.

Here’s the reality.

If a recruiter places a wirehouse advisor into an employee or independent channel, they may now receive compensation approaching 16% of the advisor’s GDC. But if that same recruiter places a comparable producer from a bank or credit union into a bank or credit union program, the economics suddenly change dramatically.

In many cases, bank and credit union advisor recruiting fees are still compensated at levels far below industry standards, often nowhere near the percentages now being celebrated publicly.

This has been a longstanding point of contention between Compass Consulting and the major broker-dealers. Frankly, it’s time for the industry to have an honest conversation about it.

The False Narrative Around Bank Advisors

For decades, top firms have justified lower recruiting economics for bank and credit union advisors using the same argument:

“Bank advisors only bring 35% of their book. Wirehouse advisors bring 90%.”

On the surface, that sounds logical. But it ignores the data that actually matters.

At Compass Consulting, we’ve spent years analyzing advisor retention and productivity, client retention, and long-term program performance across wealth channels. The data consistently tells a very different story.

If the average tenure of a bank advisor is 9.2 years, and the average tenure of wealth clients in banks exceeds 11 years, why is the industry still obsessing over Year One portability metrics while ignoring Years Three, Four, and Five+?

That’s where the real value creation happens.

A $700K producer from JPMorgan Chase, Wells Fargo, or another bank-supported wealth program that goes to another bank or CU is every bit as valuable to a broker-dealer as a $700K wirehouse advisor entering the same firm’s employee or independent channel.

The long-term productivity, client stickiness, and enterprise value are there. The data supports it.

But the compensation structures have failed to evolve alongside the facts.

This Is Bigger Than Recruiting Fees

This issue isn’t simply about recruiter payouts. It’s about how the industry fundamentally values the bank and credit union wealth channel.

Banks and credit unions have become increasingly important drivers of advisor and AUM growth, client acquisition, and, more recently, investment banking opportunities through their commercial banking relationships. Yet the recruiting frameworks applied to bank / CU programs still reflect assumptions from decades ago.

That disconnect hurts:

• Program managers
• Recruiters
• Banks and credit unions
• And ultimately, advisor mobility within the channel

The good news is that we are finally seeing movement. Compass is in active conversations with executive leadership from most BDs that support financial institutions, and change is imminent.

Now is not the time to ease up on the conversation. If anything, now is the time for bank CEOs, credit union executives, and wealth program leaders to become louder and more active in pushing for change.

The Ask Is Simple

Compass Consulting has been advocating for this issue for more than five years because we believe the solution is straightforward:

If a broker-dealer is willing to pay a recruiter a certain percentage for talent in its employee or independent channels, then it should apply the same economics to talent in its bank and credit union supported channels – regardless of the advisors’ firm of origin!

Equal production should match equal value.

The bank and credit union wealth space is no longer a secondary recruiting market. It is a mature, data-supported, high-retention advisory channel that deserves to be treated accordingly. Additionally, bank / CU wealth programs are far more planning-centered than before, creating even more value for their affiliated BD.

The firms that recognize this first will have a significant competitive advantage in attracting both advisors and institutional partners.

The rest of the industry will eventually have to catch up.