The Bank Perspective
A growing number of wirehouse advisors are showing more interest in bank brokerage programs today. To clarify, almost all wirehouses are now bank-owned, but the space we are referring to is that which positions advisors directly in a bank branch. The primary appeal, of course, is access to clients and the ability to grow assets under management. However, the culture in a bank is certainly different than your standard wirehouse branch. The question becomes which is best suited for you?
Years ago, bank programs were not held in the highest esteem. They were often seen as places where those who were less than successful at mainstream firms went to finish their careers. During this era, bank brokerage programs were usually all about annuity and mutual fund sales. Platforms were often limited, and advisor/client relationships tended not to run deep.
But in the last decade, many bank programs have evolved into powerhouses that appeal to prominent producers and wealthy clients. Top bank programs now offer advisors and clients the full array of investment choices. Now that products and services have been commoditized, banks and their clearing firms are able to offer the same lineup as their wirehouse cousins. This allows bank brokers to focus on more than just CD alternatives.
Fully armed, they are encouraged to offer planning and holistic fee-based solutions. These are not your father's bank programs. They now compete for and appeal to successful wirehouse advisors.
While having the right tools is essential, access to a client base is a game changer. Successful bank programs help their financial advisors to grow assets at warp speed. Building a book of business is essentially a two-step process. Advisors must constantly wage marketing campaigns to connect with qualified prospects and work to convert prospects to clients.
Trust and the Marketing Advantage
Most advisors I have worked with over the years find the marketing process challenging. In fact, many of their businesses have stopped growing because advisors de-emphasize marketing at some point and rely exclusively on referrals. It is understandable.
Marketing is time consuming, expensive and, for many, simply unpleasant. On the other hand, most advisors enjoy working with qualified prospects and are generally confident they can close their fair share. If associated with the right bank situation, marketing is built in, and advisors have a steady flow of qualified prospects. The bank becomes their marketing machine.
Successful bank advisors are referred prospects by a variety of their bank partners such as mortgage specialists, tellers, commercial lenders and private bankers. These referrals are truly more than prospects because they are already clients of the institution. As such, most of them trust and rely on the bank for advice, and the advisor is inheriting this set of emotions.
This is quite the opposite of typical wirehouse prospecting. Most of the time, building trust with a prospective client is the most daunting and formidable task. Bank advisors, to a great extent, are handed client trust, but they must work hard to establish trust with their banking teammates to ensure referral flow.
Successful bank advisors have taken the proper steps to become trusted members of their bank team. They treat their colleagues with respect regardless of pay grade. They participate in all branch activities. They not only receive referrals, but refer their clients when appropriate.
From tellers to branch mangers, bank employees tend to care deeply about their clients. They are reluctant to make a referral to an advisor they don't trust. Bankers might be encouraged by management to refer the advisor to their clients, but without trust those introductions will be few and far between. Generally speaking, advisors with big egos and "Type A" personalities fail, whereas down-to-earth, team players succeed. Often, it is just the opposite in the wirehouse world.
Banks tend to be more structured environments than wirehouses. Bank-based advisors are usually expected to be on the job for specific hours each day. You are required to be present to help clients as needed. Banks have relatively heavy client foot traffic, and advisors need to be ready to receive a referral or client on demand. If you like to prospect on the golf course or only like to be at the office during market hours, the bank is probably not for you.
Those who run a largely transactional business are probably not a good fit either. The bank culture is more conservative and less open to the perceived risk of individual stocks. Being labeled a stock picker will probably not enhance your image with teammates, thus hurting lead flow.
Furthermore, the arrangement is typically one advisor per branch, which does not lend itself to the type of backup most traders require. In some time zones, branches are closed for the first portion of the market day.
It is important to be more conservative if you wish to thrive in a bank environment. Fancy cars and high fashion might be popular at your wirehouse, but such extravagances tend to be a turn-off at the bank. Your potential referral pipeline will be in the hands of those who have less earning power.
Burning out of the bank parking lot in your Porsche is a reminder of that—and of how little you really need their help. Those who succeed dial it back and are considerate of their marketing team. They remember names, send thank-you notes and show respect for all.
A Path to Growth
If you are considering a move to a bank program, please know that the best transitional packages are around half the size of the top wirehouse deals. If your primary goal is to make more money immediately, banks are probably not for you.
However, if you are more interested in growing your business, then affiliating with a quality bank program might be a good path. Most financial advisors who move to a bank program find that their business is often up in the first year and almost always in the second. If you can bring most of your book and then be referred a steady flow of qualified prospects, growth is inevitable.
If you transfer to another wirehouse, you should not expect the firm to help you grow. In fact, most wirehouses do not expect you to grow in the first years. A number of firms pay bonuses to recruited advisors whose businesses return to their original onboard numbers at the end of year three. If growth is not an issue, you may be best served to stay at a wirehouse, but those who need help growing should consider a bank program.
As you can imagine, advisors who leave bank programs generally transfer a lower percentage of clients. Bank clients, who might have three or four different relationships with the firm, tend to be sticky. Clients with lending relationship are particularly loyal to the institution. The reality is that you will receive a lot of clients that will be relatively easy to get, but harder to take with you.
If you are conservative, and a team player who does not mind a more structured environment, then your personality could be right for the bank brokerage culture. If growing your business is more important than receiving the largest transitional package, then I encourage you to explore the bank brokerage space.
William P. (Bill) Willis is founder and president of
Willis Consulting, a financial services recruiting firm
based in Palos Verdes Estates, Calif.