Three Financial Advisers and a Headhunter walk into a bar…..I know, I know, it sounds like the beginning of a bad joke. This series is not an exact transcript but was based on a real dinner and hopefully illuminates some of the typical concerns that Advisers in different models of brokerage firms have in this post-financial meltdown, post-Madoff world.
What they have in common:
1. They all care passionately about their clients and how the decisions that they make in their career will impact those clients.
I truly cannot overstate this. As the cynical headhunter, I see all types. There is no doubt that there are bad “brokers” still calling up Mrs. Jones selling questionable investments to naïve and vulnerable customers. But as a group, the overwhelming majority of Advisers who have lasting, long-term success in this industry truly care about their clients' futures and are passionate about this obligation and responsibility.
2. They are deeply skeptical of the motives, the value, and the values of senior management within their own firms and, indeed, throughout the entire industry.
How can you not be cynical considering how often the rank and file has been lied to over the years? Some examples brought up during the conversation:
“I was told that we would never be for sale, and then we were sold the next month. Did you see all those business cards I had on the table before?”
“If the sales credit is too big, then the investment just cannot be right for your client. There is no magic to investing and I resent that I keep being told of the latest wonderful manufactured financial wizardry which will somehow erase all risk.”
“They pushed me for years to be a team player, to keep the stock that is built into my compensation plan. And when I moved in the past, I was the disloyal guy who took a check when their mistakes threatened my retirement. If I treated my clients the same way that I was forced to treat my own portfolio [by holding so much of my own company's stock], I would have a few hundred complaints on my U4!”
What else should be learned?
1. Independence is not for everyone. Indeed, no single model is right for everyone.
Though they all think of themselves as entrepreneurial, it is still unusual, though no longer rare, for a successful wirehouse trained Adviser to open up his or her own shop. I met with a founder of one of the better run independent shops recently: “They [wirehouse Adviser] talk about it, learn about it, get to the precipice, and look over the edge of the cliff. But few of them have the [guts] to really do it all the way.”
The silver lining here, however, is that desire for some greater measure of independence without all the responsibility is fueling the entrepreneurial wave of new models that the industry is seeing right now.
2. The firms that these Advisers are with right now have done a poor job of articulating and presenting the value that they provide to the Advisers on a day to day basis.
I will examine the statistics in great detail in January, but I believe that this is the first year that each of the wirehouses will be net negative in their Adviser head count for a calendar year. Platform innovations have become commoditized and ruthlessly imitated from one firm to another. Advisers want to be part of a winning team, a firm that is wind at their backs and not in their faces.
Who will be the innovators at the way that they run their companies and create the Wealth Management Company with true sizzle, innovation, and leadership? I think we will find out in the next few years.
