Client demand and turmoil in the financial markets triggers more recruiting. Wobbly markets and a weak economy have done little to stem the flow of job creation in the multifamily office space. If anything, recruiting is up this year as boutique wealth-management firms move to fill out vacancies created by increased client demand, according to industry participants.

"We're seeing our best year ever," says David Zier, executive v.p. of Convergent Wealth Advisors (CWA), a Rockville, Md.-based multifamily office with about $9 billion in assets under advisory. "A down market is generally good for our business because it makes people re-evaluate what they're doing."

Mindy Diamond of Chester N.J.-based Diamond Consultants, a recruiting firm that places big-firm financial advisors, agrees with Zier's assessment. "When market conditions are turbulent, customers rely more on their trusted advisor than in good times," she says.

Freak out

And a quick survey of this publication's archive confirms that the economic slowdown hasn't crimped hiring by high-touch wealth managers. In recent weeks FWR has reported on senior-staff hires by firms like CWA, Bessemer, GenSpring, Glenmede, Hirtle Callaghan, Threshold and Wells Fargo 's family-wealth group -- with some of them adding several staffers at once or in quick succession, and nearly all of them seeing additional hires in the near future.

Recruiting is also up in the broader independent RIA arena, according to Alison Wertheim, a spokeswoman for San Francisco-based Schwab Institutional.

Although the wirehouses and bank brokerages Diamond recruits for may be downsizing in some areas, big-book advisors aren't among those threatened. But they're feeling restless all the same, and their sense of insecurity has sent of them to new firms.

"The Bear Stearns thing really freaked people out," says Diamond, referring to JPMorgan Chase's Federal Reserve-sanctioned bid to buy a big chunk of the Wall Street stalwart for pennies on the dollar.

And the reaction to Bear Stearns' apparently impending demise is giving impetus to a trend that has been building since the sub-prime-mortgage debacle started to make itself felt in financial markets last summer.

"Advisors are feeling disenfranchised because of a whole host of things: write downs, CEO terminations, firms having to raise money from [sovereign wealth funds] overseas; all these things," says Diamond. "And [advisors are] seeing higher transition incentives and -- because market conditions help them position a move as better for their clients -- they're seeing the largest producers making 90%, 100% asset recovery in a short time. Altogether, this has led to a frenzy of movement."

But brokers don't tend to move to multifamily offices -- though brokerage managers some times do. The main thing keeping big-time brokers away is the lack of fat signing bonuses.

"Most brokers want big payouts up front," says Zier. "That said, we speak with brokers with a consulting model -- the ones who really are dedicated to open architecture; we're attractive to them and they're attractive to us. The bottom line is that we're looking for people who love this business and want to be a part of what we're building."

But even if multifamily offices aren't destinations of choice for successful fee-based brokers, "movement engenders movement," says Diamond.

Clients first

Jeffrey Rankin, chairman of the Rankin Group, a Lake Geneva, Wisc.-based search firm for commercial and non-commercial family offices, agrees that hiring by high-end independent advisories is up, but he thinks it's more a product of client demand than a result of Wall Street advisors' discontent.

Hiring is up at multifamily offices because those with at least $10 million in investable assets are increasingly inclined to the view that banks, let alone brokerages, "can't provide the services they need anymore," says Rankin.

And those in the $30-million-plus bracket -- the target for most multifamily offices these days, according to Rankin -- have a commensurately greater need for unbiased counsel that cuts across aspects of wealth from investing to tax and estate planning and family governance -- and are that much likelier to view depositary, lending and trust services as commodities.

"Most banks don't have it in them to serve families with assets like that, and that's why this is a great market for multifamily offices," says Rankin. "It helps these firms that clients don't mind paying the fees -- provided they're getting good advice that's truly tailored to their requirements."

And the need for additional talent is particularly acute at mid-size shops. "An awful lot of multifamily offices hit the wall at $1.5 billion to $2 billion," says Rankin. "This raises questions like 'How do we grow this?' and 'How do we get the managerial talent to take this to a new level?'"

But increased demand client demand for multifamily-office services hasn't made the task of finding suitable candidates for high-end advisor slots any easier.

"It's tough to hire for a multifamily office because the skills that are required are so specialized -- and at the same time very broad," says CWA's Zier. "It's really a unique combination."

It helps though, that "the awareness level of the multifamily-office model is up" among financial-service professionals -- particularly private bankers and trust officers -- and estate attorneys, says Rankin.

And it helps that multifamily offices are used to taking in professionals from other financial-service channels.

"We hire people from other industries and provide very robust training," says Zier. "That goes for people in operations as well as people on the front lines -- our view is that everyone should understand the issues clients face." -FWR

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