Last year, wirehouses were hot. This year, they are not.
At least not with banks trying to recruit additional registered representatives.
That was the consensus of Bank Insurance and Securities Association members attending its Third Party Marketer Forum Monday.
"You have to spend some time re-arranging their brains," said one forum participant.
"I've instituted a new rule" about hiring new reps from a wirehouse, said another. "We're never doing it again."
The problem, too often, is that the wirehouse reps don't try to fit into the team culture of banks, said Vance Richard, senior vice president & manager of Iberia Financial Services in Lafayette, La. They drive up in fancy cars, can be aloof and are hesitant to get, for instance, coffee for customers or cohorts.
It's a big turnabout, he noted, from a year ago, when banks were trying to bring reps on board from the big wirehouse firms, such as Bank of America Merrill Lynch, Morgan Stanley Smith Barney or UBS. Each had been in different forms of financial straits and mergers were making sure that a good number of their performers were on the street, looking for new employment.
But now, the bloom is off the rose, judging by the BISA forum. In the case of one New York bank, the one-time wirehouse reps could not adjust to the fact that bringing in clients is a group effort. A new rep has to trust that other people in the bank can bring in new business, if you trust their knowledge of the bank's customers.
"They skip the part where they have to get staff to trust you,'' said a BISA member from that bank.
Instead, the participants in the BISA forum say they now use these techniques to recruit new registered reps:
- Get newbies. Then train them.
- Talk to wholesalers. Find out who impresses them.
- Promote from within. It's easier to work with someone who already knows the culture, in some other part of the bank. Note: You may have to work out a transitional compensation plan, as the person moves from pay that is largely salary to pay that is largely commissions.
- Don't rule out the exceptions. But check their backgrounds carefully. Use the Financial Industry Regulatory Authority's BrokerCheck service, for starters.
- Get help from a third-party firm. Examples: LPL Financial or Essex Recruiting Group.
Keys: Hiring the right rep, not just any rep. And being "slow to hire, fast to fire,'' if things don't work out.