Small advisory firms and large wirehouses, banks, andbroker-dealers may find that the Department of Labor’s fiduciary rulewill affect how advisors are currently recruited—through sizeablebonuses that woo them to leave their current firms and move wherethe grass is greener.

Read: How advisors can pass the Mom Test under DOLfiduciary rule

One of the concerns specifically addressed within the pages ofthe fiduciary rule is recruitment compensation.

And according to Capitol Securities Management Inc., thosebonuses have presented not just the DOL but also the FinancialIndustry Regulatory Authority (FINRA) with areas of concern.

Read: SEC sets release date for its own fiduciaryrule

In fact, said Capitol, FINRA “has recently made efforts torequire disclosure of said incentives to customers as part of thetransfer process, but to date, those efforts have not made theirway through the rule-making authority board.” But that doesn’t meanthat the DOL rule won’t affect them—and the results could changethe way recruiting is done.

For one thing, according to Capitol, it could level the playingfield for smaller firms, which don’t have the deep pockets formassive recruitment bonuses that the wirehouses do.

In addition, those bonuses often come with strings attached;production levels and quotas for proprietary products.

Capitol, a Virginia-based regional broker-dealer with a presencein 14 states and Washington, D.C., $4 billion in assets undermanagement and about 18,000 accounts, said that under the new rule,both traditional and independent advisors might have to justify anyrecruitment bonuses as they apply to retirement accounts—showing,for instance, how the advisor’s move to a new firm would benefitthe advisor’s clients.

This could be one of the unforeseen effects of the fiduciaryrule, and it could result in as yet unquantified but perhapssubstantial compliance costs for broker-dealers.

Larger BDs and wirehouses have been thought to have theadvantage, since they have the financial wherewithal to foot thebill for any increased compliance costs.

Smaller independent BDs were expected to be the ones to struggleunder the new requirements.

However, according to Capitol’s president Mark Hamby, that maynot necessarily be the case.

In a statement, Hamby said, “When it comes to recruitingadvisors, the new fiduciary ruling has the potential to be agame-changer between large and small firms. As a privately ownedadvisory firm and broker dealer, we don’t compete with the bigchecks large wirehouses issue as recruitment incentives.”

Instead, other attractions bring new talent, and the firm’spayout grid is “dollar-neutral,” not favoring any one product overanother. Firms that rely on “the big check” as a recruiting tool,said Hamby, “will be left scrambling.”

It remains to be seen which firms emerge the winners and whichthe losers.