Growth Problems

If you have a 15,000 person sales force, and your turnover is a mere 8% (a historically very low number), you better be finding 1,200 new Advisors every year just to stay even. Attrition counts retirements, deaths, terminations, as well as Advisors who leave to go to the competition. There are only four ways for a Retail Brokerage Firm to grow its sales force and increase sales: “same store sales” (i.e. increasing the productivity of the existing Advisors), training, acquisition, and recruiting. While the big firms all want their current Advisors to do more business, fiscal realities have made them cut many of the resources that made it easier for Advisors to leverage their time. Specialists and internal wholesalers from virtually every department have been cut. Since the metrics to measure how productive these folks are were never precise, these professionals who were often seen as true partners to the sales force were an easy mark when cost cutting became the latest de facto “bylaw” in the industry. In other words, firms are encouraging their folks to do more, while giving them less help than ever to actually do so. As I’ve written before, acquisitions are a crapshoot. You still have to pay to keep the Advisors in their seats. Many of them leave anyway. And, based on the recent spate of activity in the industry, there are very few targets available. That leaves recruiting and training. The recruiting wars (just the phrase makes me tingly all over!) go on unabated. But while recruiting remains a necessity to stay competitive, it has never been proven to be a true growth strategy by itself. Training Advisors remains as tough as ever with embarrassing success ratios across the industry. All of the firms have aging sales forces, so it strikes me as logical that the firm that can figure out how to partner skilled trainees with older Advisors so that the business can naturally be transitioned over time, will be the firm that is truly able to distinguish itself and grow successfully in the next decade.