Roy Klecha, president and CEO of Seaway Community Bank, a three-branch institution with $175 million in assets in St. Clair, Mich., had a problem last year. His bank had started an investment program a year earlier, but the results had been disappointing.
The broker-dealer's marketing campaign was not bringing in clients and the advisor was leaving. So Klecha turned to Investment Professionals Inc., a San Antonio-based investment and insurance brokerage and asset management firm that specializes in providing turnkey financial advisory services to community banks.
"We had considered IPI earlier, but ended up going with a different broker-dealer," Klecha says. "So we knew about them when we decided to change broker-dealers."
IPI dispatched one of its two recruiters, Kristen Pruitt, vice president of business development, to St. Clair. Pruitt, who is also still a financial advisor at Security Bank in Odessa, Texas, where she manages a book of about 75 clients and about $10 million in assets, spends most of her time linking financial advisors with community banks.
After meeting with Klecha and other bank personnel to learn what Seaway was looking for, Pruitt sent out recruiting letters to brokers and financial advisors working in the area. She met with many of those who responded and, after a review with the people at Seaway, narrowed the list of candidates to three.
After checking their U4s, Pruitt and IPI then brought them in to meet with the bankers. In the end, last January, they hired Jonathan Meldrum as the bank's new advisor. "I had three candidates, but I was pretty sure it was going to be Jonathan," Pruitt says. "He had energy and enthusiasm, and he had a production level that meant he was successful. He had a non-solicitation agreement with Chase, but if you're in a community and you advertise, many of your old clients will find you."
Meldrum, who had been a Chase Bank advisor in Port Huron, Mich., says he gave up a job where he had 600 clients and $85 million in assets under management-and where he was "on pace to produce $320,000 in commissions"-to join a smaller bank where he would essentially be starting from scratch. "My production goal is $200,000 here," he says, "and at the rate I'm going, I should get to $140,000 to $160,000 this year."
That's quite a financial hit, but he says he wanted to be the kind of advisor he'd want looking after his own finances if he were the client. "The money was better at Chase, but I was looking to do more advisory business and long-term planning for my clients."
He adds, "As long as I always put my clients first, IPI allows me to do what I want to do my way."
Pruitt says what she did for Seaway in recruiting Meldrum and in setting up an investment program at the bank is fairly typical of her game. "Each recruiting assignment is unique," she notes. "We do something that is very customized to the specific bank.
"Depending upon the community, sometimes I'll try to recruit locally and sometimes I'll bring in someone from outside. I visit the bank, learn who they are and what they are looking for. I develop an idea of the kind of person they need and then I go out and find that person."
Pruitt's boss, IPI President and CEO Jay McAnelly, agrees. "You can take a person and put them into a program, but it will fail if the culture doesn't work. We try to really understand the bankers and the community before we start recruiting advisors."
Pruitt, who has been recruiting for IPI's programs for four years, says she has found that while advisors are different, there are several key attributes that make for a good one in the bank channel. "First of all, they need to have a passion for the business of advising," she says.
"Second, they need to want a partnership-a relationship with the bank." She explains, "Some advisors want to be off by themselves, and that can work sometimes. You can be a very successful advisor [in a business model like] Edward Jones. But that's not who we want. To be a good bank-based advisor, the relationship has to be the most important thing."
Third, a successful candidate should be "goal oriented," Pruitt says. "It doesn't have to be a particularly high goal, but you have to at least have a goal."
Also important, she says, is having a track record. "The people I'm interested in don't have to have a big book of business, but they need a resume of success, whether as an advisor or in a prior profession. We do like to see a couple of years of experience advising, though I have recruited people who have had only one year of advising experience who have worked out well."
Also important, she says, is that a successful recruit needs to be well rounded. "The best financial advisors have a lot of solutions," she says. "They need to understand estate planning, tax planning and how to work with small business people."
Finally, there's community service. "I look for people who are involved in their community-whether it's their church or the Rotary Club or whatever-because that's how community banks work."
When she's recruiting, Pruitt also uses her gut feeling in a sort of "parent" test. "I often find myself thinking, 'Would I put my parents in front of this person?' And if the answer is no, then even if the person looks good on paper, I drop them from my list. That happened twice just this week," she says.
Pruitt started out at Edward Jones in 2000. She worked there for a year. Then, her boss left for Raymond James and invited her to move there too, which she did.
"We built up a wealth management team with $750 million in assets under management in Midland, Texas," she recalls. "Then, a recruiter from IPI called me. He was looking for an advisor in the area and had called a friend of mine who wasn't interested. The friend suggested me. He knew I was interested in going out on my own."
What appealed to her about the job, she says, was that IPI was a small company and the opening was as an advisor at a community bank, Security Bank in Odessa. "I loved Raymond James," she says, "but I was a small fish in a large pond." (Security was the first bank to sign with IPI to set up an investment program, two decades ago.)
She concedes that her own qualifications at the time would not meet her current recruiting guidelines. "When I came to Security Bank, I had no book and had not been a bank advisor before," she says. "But IPI's recruiter saw in me someone who could work out. Jay said he couldn't see on paper why they would want me, but the recruiter told him he 'had a feeling' I'd work out. He's still patting himself on the back about that," she jokes.
About four years ago, McAnelly took over as IPI's CEO. Pruitt says she liked the direction he was taking the company and asked if there was a way she could become a part of the team. "He called me back and said, 'I have the perfect spot for you. Have you thought about recruiting advisors?'"
Pruitt says she had never done recruiting before. "It's not something anyone grows up wanting to do," she laughs. "But the idea attracted me. We're talent scouts, and we negotiate between the advisors and the bankers to make a match happen."
Four years later, McAnelly calls her a "star recruiter."
Meldrum, one of her most recent recruits, agrees. "In the position she's in, she has to weigh the fact that she's helping the bank and the advisor," he says. "The bank doesn't want to show all its cards, and at the same time, the advisor needs to be happy with the deal. I think Kristen did a good job of making it work out for both sides."