SAN FRANCISCO — In a world of broker-dealers that are out to poach financial advisers with large books of business, Scott Householder takes a different tack that feels like tough love to his representatives.
The president of Scottsdale, Ariz.-based The Householder Group — himself a rep with the
AIG Advisors Group Inc. network — hires veteran wholesalers, institutional brokers and district managers from the financial industry, and some of them arrive with no retail clients whatsoever.
Mr. Householder said that he can get his reps — with the right degree of experience, smarts and personality — to annual production of $500,000 within 18 months. The Householder Group has 56 broker reps in 22 states with a combined $2 billion in assets under management.
The total production of his sub-reps was $17 million last year.
“Who in the independent broker-dealer world says, ‘Come on over with no book of business, and we’re going to put a rocket booster to get you into orbit?’” Mr. Householder asked.
“He has a model people haven’t caught on to; he offers training, and it just never stops,” said G.B. Bose, a Householder rep based in Bethesda, Md. “At broker-dealers, it’s a few weeks of training and ‘Good luck.’”
Although Mr. Householder delivers the rocket booster, it comes at a high price, as it requires investing about $80,000, said Judith Dolle, a Householder rep in Palm Springs, Calif., who started last year.
In addition, the training is intensive, she added. “Not everybody wants to be coached that way,” Ms. Dolle said.
There is high stress during the first years, Mr. Bose said. “You have to stay with it, and you start questioning yourself.”
Recruitment is accelerating. Mr. Householder brought six brokers on board in the first quarter this year, which compares with just six during all of 2006. Householder Group’s methodology involves targeting a geographical area and throwing a series of typically three dinners over the course of two weeks.
The “top, top” restaurants in the area are chosen to entertain about 35 prospects at a time, Mr. Householder said. “We would not utilize a Holiday Inn,” he said.
The prospects — those with more than $1 million to invest and an average age of 65 — hear a presentation about bringing all their wealth management and
estate planning needs under one roof.
According to Mr. Householder, 75% of the dinner attendees request to meet with a Householder adviser.
The model, with sales pitches that have a retirement slant, hits the mark, said Mark Tibergien, managing partner of Moss Adams LLP in Seattle. “I think it’s spot on,” he said.
One reason the approach works so well is because older people are particularly open to switching advisers. “If you’re over 55, you have a high likelihood of listening to an adviser,” Mr. Tibergien said. “Many clients say, ‘My adviser was great during the accumulation phase’” but suspect the adviser isn’t equipped to handle the complexities of
estate planning and distribution.
Yet the Householder Group’s model still needs to evolve to win the most desirable clients, Mr. Bose said.
“We’re targeting middle America,” he said. “We don’t have the sophistication to go after the $10 million accounts.”
But Mr. Householder’s success has been a boon to
AIG’s business, said James R. Cannon, chief executive of
AIG Advisor Group, which has 2,000 reps with $40 billion under management.
He gladly defers to Mr. Householder if an adviser is weighing a direct affiliation with
AIG, versus working as a sub-representative.
“Our preference is that they go with an existing adviser,” Mr. Cannon said. “There’s a greater opportunity the more advisers work together.”
