Here's a scenario that will sound familiar to a lot of bank brokers: You move to a new bank, but you realize within a few months that you're miserable. You debate on what you should do because you don't want to compound the problems and make a second mistake. You're not making enough money and you've talked to your spouse about it but you also don't want to constantly complain when you arrive home each evening.
Your previous bank was bad, but you feel like you've jumped out of the frying pan and into the fire. You really did not think things could get worse, but they have. At your previous bank you would occasionally make individual stock recommendations but now you're not allowed to solicit individual stocks, so your clients have to call a call center if they want to buy a stock.
You have recently found out that your payout has gotten a significant haircut on many of the products that you sell. You have done the math and it works out to about 25% less to your bottom line. Referrals? Forget it. You were told referrals would be abundant, but what you did not know was that the branch employees don't even have referrals in their incentive plan. They are very service oriented and not very motivated to help you.
The last straw is you are not allowed to call customers of the bank unless they are referred to you. You remember being told you would have more warm leads than you could handle.
You are a motivated advisor and usually work about 60 hours a week. You always do the right thing for the client and take a lot of pride in your financial planning skills.
So now you ask yourself: Where did it all go wrong? How did you end up in this situation? And what could you have done differently?
It never ceases to amaze me that financial advisors will make such big decisions with so little information. Ironically, it's the opposite of what they expect from their clients. There are several steps and questions an advisor should use when changing firms.
Know your long-term goal. Do you eventually want to own your own firm? Do you want to stay in the bank-based model or eventually move to a wirehouse, regional or independent firm?
Know your skill set. What is realistic when it comes to prospecting? Have you ever cold-called? Have you done seminars or public speaking? Or are bank referrals your best bet?
Why are you thinking about leaving? Is it something that can be fixed or might change for the better? Have you talked to your manager to come up with a solution? What are they doing to help you grow your business? Is your move logical or purely emotional?
Do extensive research on all the other firms available and the benefits they offer. There are so many options available today it is very overwhelming. There are many models: banks, wirehouses, regionals, independents, hybrids, insurance companies, RIAs and discount firms.
And there are several different things an advisor should look at before making the move: culture, product offering, support for the advisor, technology, compliance, management team, territory, average production, transition bonus, leads and benefits.
One of the biggest mistakes is to believe everything that another advisor tells you. Remember, everyone has an agenda. Is the advisor a friend and possibly painting a rosy picture because he thinks it would be fun to have you work with him. Is it someone who just left the firm and feels so hurt that they bash everything about the institution? You really do need to have good reliable answers and ask a lot of questions.
The average advisor that we consult has very little information. In many cases, he or she was ready to sign on with a new firm and could not answer the most basic questions. When we come across an advisor that has just made a move, we are always shocked to learn how little they knew about the new firm. In many cases they only learned about one or two options. With such an important decision, you owe it to yourself to get a lot of questions answered. Know who the players are in your market and the benefits of each. No institution has everything you want, but at least you should know what you are signing up for.
Here is a short list of important considerations and specific questions you should get answered.
• Support for the retail brokerage. Does the firm make the brokerage division a priority or is it an afterthought?
• Is it a sales culture where everyone has goals to refer and sell or is it more of a service company?
• Technology: Do they have contact manager and financial planning software? Can you take a demonstration? How simple is it to set up a new account? Do the different systems talk to each other or do you have to do duplicate data entry?
• Ask to see a complete list of products offered—do they offer everything you sell?
• What is the process for running orders for mutual funds, annuities, stocks and bonds?
• If it's a bank program, what is the number of branches, locations, deposits, assets and the previous advisor's production?
• Can you call customers of the bank without a referral?
• At what size does a client have to be passed to wealth management?
• Who owns a client straddling two territories and what is the compensation to each?
• Are there any haircuts on products—how much and which ones?
• What kind of marketing budget will you receive?
• What non-investment products do you get paid on, commercial loans, mortgages etc.
• Do you get a sales assistant? Can you meet him or her before you accept an offer?
This is not a full list but meant to jog your memory. It is very important to be prepared and ask good questions when making a move. Don't find yourself in a bad situation that you easily could have avoided due to a lack of information.
Rick Rummage is the founder and CEO of the Rummage Group.