Many advisors dont understand the variety they have in possible employers. And without that understanding, they often fail to grasp the importance of finding the right fit for their skills and their personality.
When my team analyzes the industry, we identify firms by model and type. There are many models to choose from: wirehouses, banks, regional firms, independents, RIAs, hybrids, insurance companies, boutique firms and discount firms.
We then break up these various models into three types: hunter, gatherers and skinner firms.
Just as the hunters, gatherers and skinners in our ancestry had different roles in the village, success in our modern industry depends on recognizing that each type of firm requires a different skill set.
So what firms make up these three types? Hunter firms are made up of wirehouses, regional firms, independents, RIAs, hybrids, insurance companies and boutique firms. At these firms the advisors are not given any clients, referrals and seldom any leads unless a manager buys them a list. Success lies in their ability to hunt for new prospects and turn them into clients. At hunter firms, an advisors success is determined 100% by their ability to hunt.
Gatherer firms are made up of mostly banks, with a handful of one-off firms, like Ric Edelman. Gatherer firms provide something the hunter firms dont referrals and leads. Both hunter and gatherer firms provide advisors with products and technology, but the gatherer firms give them someone to close. But not all gatherer firms are made equal. At some, there are simply more leads, as well as access to existing clients. Others make success more difficult by offering fewer referrals and restricting client access.
Skinner firms are mostly the discount firms. These firms take it to the next level and provide the advisors with clients. Since skinner firms usually do a lot of advertising, client acquisition is provided by the firm. These firms just need advisors who can up-sell, cross-sell and service the existing client base. Of course some of them do financial planning as well, but acquiring clients is provided by the firms.
There are many misconceptions in the industry about all three types. Here are a few common ones:
- Banks only sell annuities, have few products, poor technology and cater to tiny clients. Not truethe best banks have almost everything the wirehouses offer. Yes, some banks are still stuck in the Dark Ages, but the good ones have great technology and deep product offering. In addition, some banks have average production of $600,000 to $700,000.
- Wirehouses push advisors to sell proprietary products. Not truemany years ago this sometimes happened, but not anymore. The fear of law suits is too prevalent.
- Independent firms dont have the product and technological capabilities of the big firms. Not truethe best independent firms have better technology than many of the biggest firms. They also provide as many, and sometimes more, products than wirehouses.
- If you go independent, your payout will be about the same after you pay all of your expenses. Not truethe average advisor at an independent firm keeps about 70% of their revenue in take home pay.
All of these misunderstandings float around the brokerage industry like a virus. They prevent advisors from investigating the type of firms that would best suit their skill set.
Here at the Rummage Group, we meet advisors all the time who should be working at a different model or type. We often find advisors at hunter firms who have been in the industry for seven years or more and are producing under $150,000. Even worse are the advisors with 15 years of experience who are producing less than $300,000.
Clearly these advisors are not hunters (or maybe just lazy.) Its also possible they have never truly learned how to hunt. In any case, they would have more success at a gatherer or skinner firm. But their misinformation and biases often hold them back.
There are some hunter firms filled with small producers who hang on year after year. These advisors would increase their take home pay by walking across the street to a gatherer firms. Many simply are too stubborn and may feel they are giving up if they go to a gatherer firm.
Its important to understand your strengths and weaknesses. If an advisor isnt getting the level of success he or she wants, maybe its time to investigate a new type of firm. After all, some football players became great wide receivers after spending much of their time, on the bench, as the back-up quarterbacks.
All advisors should assess their skill set, book, growth rate and happiness factor to determine the best firm. Life is too short to stay seated on the bench and not utilize your best skills. If youre a hunter, hunt. But if not, dont waste your reality on a misconception.