During the past 10 years, perhaps no role in the wealth management industry has changed more than that of the branch manager. Usually a former advisor, a branch manager was typically in charge of just one facility, serving many roles within the branch. To the advisor, the branch manager was the boss, a confidant, friend and protector who understood what the advisor did every day. To the firm, he or she was an entrepreneur in charge of a profit center and responsible for delivering a consistent profit to the parent company.

The wirehouses also had extensive “benches”; managers in waiting who were being trained to effectively lead a branch. When the manager position at a large branch opened because a manager retired or was forced out, it created a chain of openings within the system. The manager of a midsize branch would apply to head the large branch, the manager of a small branch would apply to lead the midsize branch, and one of the managers in waiting would get off the “bench” to take his or her first shot at running a branch, usually in a smaller community.

Relocation was a given because branch managers knew they’d need to move to keep their careers advancing. Occasionally, the manager of a big branch would get an opportunity to run a region, a regional director would get a chance to run a division, while a division chief presumably would get the opportunity to take over the wealth management division. Becoming a branch manager was desirable because of the money, the career path and the prestige.

Facing pressure to cut costs following the financial crisis, all the major firms have shifted to a structure in which one branch manager runs multiple locations. This “complex manager” oversees lieutenant branch managers in each location outside of the hub where he or she sits. A large satellite branch will still have a non-producing manager in charge, but in smaller branches, the leader is a producing manager. There are still some larger locations, where the complex manager is the branch manager and runs just one facility, but these are becoming few and far between.


As a group, advisors hate this structure. Where the old system had a clear leader responsible for making decisions, the new structure diffuses authority and often leaves advisors unclear about where to go to get a firm decision. One Morgan Stanley advisor described it this way: “The local branch manager is well-intentioned and hard-working, but is afraid to make a decision without the explicit approval of the complex manager. When I go directly to the complex manager, I’m asked whether I first talked to the branch manager.” 

It is harder and sometimes impossible for complex managers in charge of multiple locations to be involved in the nuances of an individual advisor’s practice. At the old Smith Barney, a branch manager was in charge of 50 to 100 advisors. Now, complex managers oversee more than 300 advisors. Even the most talented and well-meaning of them can’t spend time with their advisors on a day-to-day basis. For their part, advisors feel less attachment to the management structure at their firms because the “value add” is no longer apparent.

In the years since Morgan Stanley bought Smith Barney from Citigroup, the combined wealth management structure has gone from 19 regions to eight regions after the latest reorganization in April. In the maelstrom of restructuring, it is easy to see why an advisor might be cynical about the latest regional leader who spends five minutes in his or her office trying to make a connection. One advisor’s take: “They are well-intentioned, I give them that. But how can I feel that I can connect with this person who covers four states and is likely not to be here a year from now, just like his predecessors?”

So, paradoxically, while the big firms appear leaner, with fewer layers, for the advisor they have become more bureaucratic because branch managers can’t effectively respond to the large number of advisors for whom they’re responsible.

Prior to the financial crisis, new branch managers would be former advisors who gave up their books to embark on the managerial career path. Smith Barney had a training center where former advisors trained rookies to be effective advisors, while simultaneously being trained to be effective branch managers. However, as advisors have seen the careers of their own branch managers derailed by consolidation and complexing, the mantra “never give up your book” has never resonated more. One senior wirehouse leader acknowledged to me last week: “Considering what the industry has gone through in the last few years, today any advisor who is anxious to give up his or her book to begin a management career is going to have his sanity questioned.” Only three of the 20 current participants in Merrill Lynch’s Leaders in Development training program for new branch managers have ever been a financial advisor.

I spoke with a wirehouse advisor who had given up his book to become a manager and is now rebuilding his business after losing his position during a restructuring: “Branch managers today are paid less for doing more. When I started as a manager, I made as much money as I did in my last year as a manager, when I was running a complex twice as big.” Meanwhile, he added, the risks are greater. “The regulatory environment for branch managers has become more and more difficult. A compliance problem will cost you your job, but if you are too overbearing with your advisors you can lose your job too.” If you knew 13 years ago what you know now about the career path, would you ever have given up your book?  His response: “No [expletive] way.”


Fewer advisors want to become branch managers than ever before. As the problem of the aging advisor population becomes more acute, this shortage will only become worse. At the same time, there are more unemployed branch managers than ever before. Will the industry be farsighted enough to take advantage of the many former branch managers to mitigate the coming shortage of branch managers who have production experience?

Advisors have long accepted that their leaders do not have to be superstar advisors to become effective branch managers. But every advisor I spoke with feels that something is lost when branch and firm leaders have never been advisors.

Merrill Lynch advisor: “In the old days, our CEOs had all been advisors. Schreyer, Regan, Komansky all wrote tickets to make a living. Since Stan O’Neal was CEO, we have not had that.”

Sarch: “Give me an example of something that is lost when leadership has never walked in your shoes?”

Advisor: “OK, take the new small account policy. While I understand the need to encourage us to open larger accounts, leaders who were never advisors don’t understand that big accounts are usually opened initially as smaller accounts. Why not institute a policy that retroactively pays us for fees forfeited when the account was small if and when the account becomes large?”

Another Merrill advisor feels strongly that branch managers who have never spent significant time in a branch won’t be able to make crucial calls: “I don’t need my manager often, but when I do, it’s important. Sometimes a client needs to hear from ‘the Boss,’ who has the gravitas to defuse a problem. Clients can get irrational. I need a manager who has institutional memory and knows which advisors in his office or complex are worth going to bat for. I fear that if my manager has never been in my seat, little problems that could have stayed local will become big problems for everyone.”

As the wirehouses awaken to the problem of an aging sales force, they must realize their best branch managers are aging too. The next wave of branch managers will still need to be effective problem solvers, recruiters and business builders. But will they be able to develop those skills without ever having dealt directly with clients? And what are the long-term consequences of a field leadership that has never spent time in the field?

A possible result will be the further fraying of loyalties, fueling the diaspora of wirehouse advisors to other types of firms. Do you have warm feelings about that former branch manager who made a difference to your business, helped you avoid regulatory potholes and added value to the work you do every day? Perhaps you’ll be able to work for that individual at his or her newly created firm down the street. Entrepreneurialism will win out after all.

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