The Rookie Dilemma (Part One)

Hard landing in today’s brokerage industry

Part One – I.A. Perspectives

Selling is the first step to success in the brokerage industry and the inability to do so means that you should never have left your day job. Building a clientele in this business has always been tough and for the rookie class of today that toughness is counted in an ever-rising rate of failure. The wealth management industry’s advisor force is rapidly aging and the answer to succession is being called into question. Let’s take a quick look at a few of the realities that the rookie faces in today’s changing environment and also how the corporate view is positioned.

The IA Dilemmas

Pay Structure –

Amongst the larger firms the methodology does not greatly differ; a base salary for twelve to eighteen months with a small payout on generated revenue. The former will decrease while the latter increases if targets are achieved over varying periods of time.

The problem with the formula is that the support/time ratio does not always align itself with a rookie’s ability to raise enough assets-under-management needed to survive the long haul. That means the new advisor better have separate financial resources to support himself/herself for a three to five year stint.

Credibility and the product shelf space –

Whether the rookie is a second-career type or a fresh faced college graduate, the proposition of presenting six months of credentials to the investing public can be a daunting challenge. In addition most major firms are shuffling off accounts under $50,000 down the hall to a small asset group or out the door. But, the biggest problem/challenge for the newbie is the product space they will face which today is way, way beyond stocks, bonds and mutual funds. Gathering assets is one thing, but managing to clients’ expectations is quite another.

Prospecting or, oh hell, buy a book! –

The new advisor’s oldest nightmare is the “no” factor and how often it presents itself. The psychology of that reality is only out paced by the different methodologies of prospecting, some of which are badly outdated. Making the right choice is important because that time factor mentioned earlier is critical in achieving success.

Facing the smile and dialer of tomorrow is the
added challenge of CRM2 and the anti-spam legislation which along with other factors has led many rookies to expanding their efforts in search of a “book” to buy. Well, you don’t inherit the wind by spitting into it and the chances of a senior broker who is about to retire choosing a rookie for his/her succession plan is less than remote. And, that doesn’t even take into the costs and financing that would face a buyer living on a short term guarantee.

The Disappearing Branch Manager –

I have met a goodly number of brokers in the past whose opinion on the worthiness of and the need for a branch manager is hardly printable. As we emerge into a new set of economics in this business the role of the branch manager will be diminished a/o phased out entirely in favour of a regional executive model which will service the management needs of a cluster of branch offices. How the veteran feels about that turn of events is one thing but, it is the rookie upon whom it will have the greatest effect. While the training, monitoring and guiding skills may vary between managers they at least represent a door he/she can walk through to receive some encouragement to stay a very difficult course. Without a leader’s voice and presence to calm the frustrations in building a clientele the rookie’s chances of survival are lessened considerably.

Written by: Brian L.Curry, CEO, Curry-Henry Group (Copyright 2014)

“It’s a simple business but, it’s not easy”.