Big name on money management poaching run

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Like big banks, life insurers are allocating greater resources to their wealth management units as they look to tap relatively risk-free sources of revenue. Prudential, one of the nation’s biggest firms, appears particularly aggressive.

The firm has already poached some impressive names with equally impressive pedigrees. Within the last handful of months, Prudential has made two big-name hires from Morgan Stanley, one from Goldman, and another from Blackrock, according to Bloomberg. The investment management unit has made more than 40 middle- and senior-management hires since last year alone.

And Prudential is showing no signs of letting off the pedal. Unlike newer competitors such as Cantor Fitzgerald, which has been building its wealth management roster via acquisitions, Prudential appears happy to grow more organically. David Hunt, chief executive officer of Prudential Investment Management, told investors last week that the firm’s preferred growth mode is through individual and team hires.

There’s “a much lower risk, and much higher-probability chance of success” with team and individual hires compared to acquisitions, Hunt said, according to Bloomberg.

Of course, poaching in asset and wealth management has a history of being rather costly itself. While we aren’t privy to Prudential’s model, banks and other brokerage companies have historically paid money managers six- and even seven-figure signing bonuses (in the form of forgivable loans) to recruit them away from their current employer.

The war over talent may be slowing, though, at least when it comes to sign-on bonuses. Representatives from a number of major firms came out last month and said that exorbitantremuneration costs are no longer sustainable, and will be reined in. There’s also a new rule pending that will require advisers to disclose their signing bonuses to clients, which should further slow the game of musical chairs.

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Quote of the Day: “If you're not failing every now and again, it's a sign you're not doing anything very innovative.” – Woody Allen

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