Does size really matter when it comes to the banks that financial advisors work with? More specifically, do large banks actually help advisors grow at a faster rate? Do they offer better technology? Will you get more support at a small bank? Do they really have a warmer and more welcoming environment? And what about the medium-size banks, do they encompass the best qualities of the institutions at either end of the spectrum?

While the easy answer may be that size does not matter, it’s really a  more nuanced issue. Take for example the experience of an advisor I know—I’ll call him Randy—who worked for small, medium and large banks.

Randy had a better experience at medium and large banks. In fact, he had a horrible experience at a small bank. They promised him the best of everything, but when he arrived he found an old-school service-driven model that provided him with no referrals. On top of that, he was not even allowed to reach out to the clients on his own.

He quickly moved on and has found much more success at a large bank.

He realizes that his experience may not speak to a larger trend. He may have just landed at the wrong small bank that did not keep its promises.

“It’s more of a function of great management, and a sales-driven bank, than it is about size,” he says.

However, one thing big banks tend to do better is having their advisors covering fewer branches.

An advisor should never have to cover more than five branches. The ideal number should be based on total deposits and branch demographics. This allows them to focus more on their client base and ultimately increase their annual production levels.

I knew one advisor reaching out to us for help when the medium-sized bank she worked for had her covering 26 branches. This advisor was a $350,000 producer who spent most of her time in her car traveling to branches.

A simple reduction in branches would have helped her increase production, but the bank refused. Instead, we helped her move to a bank that gave her three branches, a move that saw her production increase 35% the first year alone.

Consider the infrastructure of the bank channel. Is the bank self-clearing and does it have its own broker-dealer?

These are expensive endeavors, so most banks use an outside firm such as Pershing, Raymond James, LPL or First Clearing, just to name a few, for one or both of these processes. These firms will usually charge the bank a percentage of the advisors’ production, usually 10% to 20%, but it can vary higher or lower.

In these situations, the advisor is really reporting to two firms, but it’s the bank that’s usually calling the shots. And it has to be asked: What do bankers know about managing financial advisors? In my experience with the industry, the answer is: usually very little.

This is where the big disconnect comes in. Banks are good at taking in deposits and making loans in a conservative way. If they take too much risk, they’ll squander their profits in bad loans.

However, financial advisors are risk-takers; they have to be to be able to survive on commission. So when you have conservative bankers managing risk-taking advisors, problems can arise. And those problems very often affect production levels, which in the long run does nothing to enhance advisors’ growth in the banking space.

I see all too often banks that have bankers from the top down running the brokerage division. Obviously they are licensed, but that does not give them experience. And when bankers aren’t able to relate to the advisors, it can easily cause the advisors to get frustrated and look for opportunities elsewhere. So the bank ends up with high turnover.

Having unqualified bankers running the brokerage division can, and does, happen at banks of any size. But it’s a bigger problem as small banks.

It’s as if the bank president one day said, “We really need a brokerage division… I know, let’s have Bob run it, he’s been really successful at running the retail bank division.” Here at the Rummage Group, we encounter this often.

So what makes a great bank brokerage division? It starts with a division head who has five-plus years of success as a producer and has worked his or her way up through management ranks.

It’s even better if the manager has seen successful programs at a few other models (wirehouse, regional, independent, etc.) and firms. Experienced management is the most important part to a great program. This is because they decide on the important issues: incentive program, referral program, sales culture, product offering, technology and sales support.

The next important attribute a strong bank program should have is a strong culture of sales, from the tellers up to the president. Old-school banks are still service driven instead of sales driven.

To survive long term and compete with the big boys, a bank needs to have every employee thinking of sales.

There must be a strong incentive program for the employees to send referrals to the advisors– including all the partners. Again, big banks tend to do a better job than their small and medium counterparts, but not always.

Although there are good and bad bank programs of all sizes, the bigger banks do tend to have more capital to invest in their programs.

Please understand, I’m not saying all large banks have good programs. What I am saying is, of the best programs, most of them tend to be large banks.

Unless an advisor does a thorough research on available employment options, they might find themselves in a nightmare situation. But on average, they will tend to be safer the bigger they go.

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