Hard landing in today’s brokerage industry
Part Two – Corporate Perspectives
The Corporate View
There has always been a strong sense of obligation in the securities industry to prepare and train a new generation of advisors in order to secure the future for the investing public. That obligation has always depended on the economic times; during particularly bad times the first things to be shelved in retail were marketing and training. With the depth of the large firms of today (read banks) the training element has, for almost all, held fairly steady if not reduced in scope.
The financial commitment between the major firms will vary in the number of rookies per class (10-20) and the number of classes (2-3) per year . The costs are substantial and can easily run north of $50,000 per rookie and invariably the results will be judged by the failure rate after three to perhaps five years. In many cases that failure rate can run as high as 60%+. That being said, here are some reality checks in place in today’s training market:
– In order to beef up the success factor in training, some of the banks are transferring financial planners from the bank branches into the securities side as rookies with several million dollars of assets in tow. The assets are secured and put to better use while the other (real) rookies just drool at the prospect.
– Some firms operate on a low cost as possible basis and put the drop dead success date on a short fuse. The assets gained as the rookie heads out the door are relatively cheap and are passed onto established IA’s or struggling Financial Planners.
– One emerging trend is for the firm to train rookies so that they hit the deck as Associates to senior brokers who are contemplating retirement. Given the aging factor in the business, this methodology ties and secures the assets to the firm quite nicely within it’s succession planning format.
– In that it’s all about assets, there are a number of firms who will devote significant dollars which would normally flow to the training division to competitive recruiting. While the expenditures are large for that endeavour the accumulation of instant assets compare quite favorably with the time frame needed for “rookie assets” to materialize.
Hard work does have its rewards and recognition does follow success..How the rookie traverses the road full of dilemmas and corporate obstacles will tell the tale. They must realize quickly that a wealth management career includes a selling component and while it appears to be a simple concept it is not easy. Just as importantly the firms’ must acknowledge that the consequence of a continuing high rate of failure in rookie training will have a high price. Longer and more meaningful forms of support on their part is very much needed to stem the tide.
The road is rapidly being re-paved by the regulators and those who do succeed will be living and earning in a world far removed from that of twenty years ago. And finally as you fondly remember your rookie days, here’s a quote from the infamous sales meeting scene in the movie ‘Glengarry Glen Ross’ :
“We’re adding a little something to this month’s sales contest. As you all know the first prize is a Cadillac Eldorado. The second prize is a set of steak knives. The third prize is you’re fired.”
Written by: Brian L.Curry, CEO, Curry-Henry Group (Copyright 2014)
“It’s a simple business but, it’s not easy”.