Since George Keith was hired away from Fidelity Investments nine months ago, he had one primary mission in his new job at an RIA – hire more people.

The president of Westport [Conn.] Resources is pouncing on what he views as a killer opportunity to stockpile talent for his broker-dealer and RIA.

“I can get unbelievable talent at incredible prices and I can cite 100 examples of that,” he says. “It’s the lowest prices we’ve seen in decades.” Keith has already brought aboard nine people to his firm – most of them as financial advisors and he adds that the market is particularly fruitful in Greenwich, Conn. where hedge funds and other boutiques have scaled back or shut down in droves.

Hiring spree

Westport Resources is on a hiring spree that brought its total employees from 16 to 25 in nine months.

But in many ways the company captures the hiring mood of the whole RIA industry, according to the top management consulting executives at Schwab Advisor Services and Fidelity Institutional Wealth Services, industry researchers, consultants and other RIAs.

The root of all the hiring by RIAs can be traced largely to the burgeoning supply of raw talent, according to Michael Kim, senior vice president at Fidelity Institutional Wealth Services and head of Fidelity’s practice management program.

“There were 28,000 Wall Street employees displaced since the downturn and lots of these people are talented individuals,” he says. “There’s a huge supply of qualified labor out here.” He defines Wall Street workers as people who work for national brokerage firms, large asset management firms, banks and consulting firms that provide services to these companies.

Advisors are acting on that supply across the country, ” says John Furey, Phoenix, Ariz.-based Advisor Growth Strategies, which helps firms transition advisors into their practices

Never been higher

“The interest in bringing on new advisors has never been higher – either as a successor or a producer,” he says. “I’m getting more RIA business than I’ve ever seen. I think it’s confidence in the business model [as a competitive advantage against transaction-based firms] more than anything.”

There’s a reason that RIAs are feeling such an urgency to make hires right now despite subdued market conditions, “There’s a huge momentum that’s behind them [as RIAs],” says Kim of Fidelity. “Making a good business means hiring the right people. They see it as an investment in human capital.”

The importance of RIAs making good hires is paramount because “people cost” represents 75% of an advisor’s expenses and the personal interactions between an advisory practice and its customer base largely determine its success, according to Scott Slater, managing director, practice management for Schwab.

“Don’t wait until you’re at the breaking point by stretching your capacity by putting too many relationships on advisors,” he adds.

Jeff Roush, managing partner of Argos Wealth Advisors, which manages $500 million and keeps $1 billion of assets under administration from Napa, Calif. says his firm has a proactive hiring philosophy.

“If we find the right individual we do everything we can to bring them on given that it takes so very long to do so,” he says.

Answering phones

Keith is helping his advisors with capacity issues by hiring assistants and receptionists in addition to advisors. Talent in this other pool has become plentiful because the new norm is for principals of many financial services companies to answer their own phones, he says.

Keith, 54, himself joined Westport Resources from where he was executive vice president of National Financial Services, the clearing arm of Fidelity Investments. This week, he announced the hire of William Webster from Morgan Stanley Smith Barney. [An additional windfall of the economic turmoil, Keith adds, is that high-end office space in Southern Connecticut was $75 a square foot but it’s plummeted to closer to $30 in his area. It makes adding people less expensive as his space needs increase.]

Westport’s hunger to hire is indicative of advisors studied by FA Insight, the Seattle-based research firm. The typical advisory firm expects to increase from five to six full-time-equivalent employees in 2010, the largest increase since the median firm size grew 25% in 2007, according to the company’s 2010 FA Insight Study of Advisory Firms: Growth By Design.

“This signals that firm owners are regaining confidence in their ability to generate growth over the coming years,” says Eliza De Pardo, principal and director of consulting for FA Insight. Though market observers say that some of the hiring confidence by RIAs can be traced to improving market conditions, the reasons run deeper than that, Slater says.“I remember even a year ago at our conferences that the large and stable firms were being opportunistic,” he says. “They were saying: there’s some excellent talent out there.”

The bonus of hiring from this labor pool is not only the value but the attitude and approach these fresh hires bring to their new firm, according to Keith.

People are doing real work

“People know it’s tough out there so productivity has skyrocketed,” he says. “Before, people were in at 9:30 and out at 4:30. Now people don’t want to lose their jobs,” so they’re working harder and for longer hours.

Though RIAs have an edge in making hires in this tough job market, they’re still going to get what they pay for, according to Slater.

“The smarter [RIAs] are clear to say: don’t try to do this on the cheap,” he says. “[The hires] will just find a place to plug in to, then when things pick up, they’ll leave. Create an opportunity for them to grow.”