HOLLYWOOD, Fla. -- LPL Financial's Rob Comfort, executive vice president of Business Consulting for Institution Services, has coined a new term to describe one of the issues hindering the growth of bank wealth management programs: they're "under-advisored," he says.
Banks and credits unions have only about one-third of the total advisors they need to provide "a really good client experience" and fully leverage the opportunity, he said in an interview at BISA's 2015 annual conference here on Wednesday.
"I believe that we're so under-advisored in our industry," he said, "that we are in danger of not providing the client experience we should be because our advisors just can't work with that many people effectively."
Indeed, he said, wealth management businesses at banks and credit unions are at "a critical juncture," warning that they're not going to be successful if they don't get serious about putting the right number of advisors into their institutions.
His thinking echoes the findings of a report from Kehrer Bielan Research & Consulting released this week. The study urged banks and credit unions to boost the number of advisors they employ as the productivity gains of recent years appear to be reaching their limit. The "next surge in growth," the study contends, will have to come from adding advisors.
But even believers like Comfort are aware of the challenges that entails. Last year, LPL added only 19 net new advisors to its network, "far lower than what it would like it to be," Comfort said.
While many bank investment services leaders were committed to adding advisors, they had difficulty getting the new positions approved by their management, Comfort said. Bank executives were reluctant to increase head count as they struggled to grow revenue.
What banks don't take into account, Comfort explained, is that the initial investment in hiring advisors quickly pays for itself as the new advisors "become profitable in a quick period of time."
Comfort noted that LPL is working on ways to help its institutions gain the approval to add the advisors they want to add.
The other challenge, of course, is finding advisors in a tight and shrinking advisor market. To attack that issue, LPL has developed a program to develop the next generation of advisors internally, Comfort said.
"If institutions don't grow advisors internally and develop them, three to five years from now, it's going to be expensive and tough to recruit new advisors," he said.
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