Legacy Advest and Legg Mason Advisors, once they experienced the onus of Merrill Lynch and Smith Barney respectively, have fled in droves to firms like
Raymond James, Janney Montgomery Scott, Stifel, and Robert W.
Baird. These are Advisors who became frustrated with Big and chose Small. I spoke with many of them to understand why. Senior Executives at the Big Firms should pay attention:
1. Platform and technology advantages are not as important as the ability to get problems cleared up.
“Platform” is an all encompassing word meant to describe the offerings to Advisors and their clients. It includes all the tools and products that Advisors use to manage their business and their clients’ holdings on a daily basis. However, if the Advisor cannot get a person on the phone to take ownership of a problem, like a missing
dividend, or to figure out why a check did not go out to a client, then the platform advantages do not matter. One Advisor put it this way: “I can’t tell my client about the great Alternative Investment idea when I can’t tell him why the check I promised him would go out two weeks ago has not arrived yet.”
2. Personnel changes matter to the field.
Advisors like to know that people at their firm, who do not produce, have a stake in their success. Of course, a Branch Manager should care about the success of the Advisors who report to him or her. Big Firm Advisor: “I always felt that my manager was looking for another job. How can I truly believe that my manager is interested in my long-term success when I know he is always interviewing for other positions?” In addition, the best Advisors form wonderful, symbiotic partnerships with the product liaisons who are crucial to their practice. When those people are laid off, another crucial tie to the “mother ship” is severed.
3. Make as many decisions as possible as close to the local branch as possible.
Advisors who have experienced both Big and Small tell me that the Branch Managers and their bosses at the Small Firm are able to take responsibility and make decisions faster than their Big Firm competitors. “At my old firm, everybody was scared to take responsibility for some of the most basic day to day decisions. They would pass the buck, discuss and e-mail to death and hope that the problem goes away. It was everyone’s fault and nobody’s fault because nobody knew who had the true authority to make a decision.” Lesson to Big Firms: If you have taken the time to hire skilled business people, empower them to make decisions. Your best assets leave the office every day; what are you doing every day to make them want to return?
