5 Things to Keep in Mind at the Negotiation Table

5 things you can do to ensure you’re not giving off the wrong vibes and getting an inferior deal because of it

Most firms adhere to what we call a “No Jerk” policy—that is, the prevailing notion that one’s behavior can make or break culture and community. So it always astounds me when I come across an advisor who is hoping to be recruited, yet seems to forget this. I think the assumption is that it is a seller’s market, where the advisor is in the driver’s seat and therefore has a free pass to act any way he chooses—without concern for how he may come across to the hiring manager on the other side of the table.

My interaction with “Matt” is a solid example of this in play: Matt – who manages more than $1B in assets – spent months talking with me about ongoing frustrations with his firm, the waterfall of possibilities elsewhere, and the likely value of his business. He came to the table ready to explore several different options—from other wirehouses to forming his own RIA. To say that Matt had a chip on his shoulder, though, is an understatement.

He approached every intro meeting he took with the same posture: “We all know that there will be a bidding war for me, so let’s cut to the chase. How is your firm different from your competitors? What kind of deal will you write me?”

“Abrasive” was the first word that every representative of every firm who met Matt used to describe him.

It is indeed a seller’s market where advisors who have growing multi-million dollar, predominantly fee-based businesses can command top dollar, but that definitively does not mean that firms are willing to recruit a jerk—even if he manages billions in assets. To be sure, two firms declined to pursue recruitment of Matt right out of the gate and two others came to that conclusion over time. While there were a few firms willing to play ball and ignore Matt’s bombastic presence, when it came time to negotiating the transition package, all came to the same conclusion: This is not a guy we want to expend political capital on, so the deal we offer him will be shy of the best it could be and less than what we’ve offered other like-sized recruits.

While, thankfully, we don’t come across many advisors who behave this way, it still makes sense to share these 5 things to keep in mind when exploring options and while at the negotiation table:

The Likeability Index – For sure, there are somewhat formulaic standards that most firms use to determine the size of a transition package. While much is determined by the metrics of the recruit’s business – his trailing 12 months revenue, assets under management, growth rate, percentage of fee-based business, number of client relationships, and the like – there is definitively a percentage that is determined by subjective factors. That is, how much the hiring manager likes you.

Never lead with the deal – We all know how important the deal is and that you wouldn’t move without feeling comfortable with the numbers, but trust that discussions around money will happen in due time. Nothing is a bigger turn-off to a hiring manager than a recruit who is super-focused on the money and his own financial gain.

Make every firm you meet feel as though they are your first choice – No hiring manager will want to expend the political capital on a candidate unless he believes he is doing so for someone who will accept if an offer is extended. So ensure you are continually building that relationship in a positive way.

Culture is critical – This is especially important as you look at firms away from the wirehouse world. With much smaller advisor forces, these firms are hyper-protective of their communities, and they would have absolutely no compunction about walking away from even the biggest team of advisors if the fit didn’t seem right.

Treat every hiring manager as though he or she is your best friend – That is, with respect, honesty, kindness, and gratitude. He has the power to be your best advocate or the one thing that stands between you and a very aggressive deal. The reality is that no one wants to hire a jerk, just as much as no one wants to work for one. Behaving as a flexible and willing partner will create a more positive impression than posturing and rigidity.

So here’s the best advice I can leave you with: Begin with the end in mind. If you have sincere interest in a particular firm, display it from start to finish. And by all means, don’t act like a jerk.