Updated Thursday, August 27, 2015 as of 10:13 PM ET

Branch Managers: A Disappearing Breed?

Prior to the financial crisis, new branch managers would be former advisors who gave up their books to embark on the managerial career path. Smith Barney had a training center where former advisors trained rookies to be effective advisors, while simultaneously being trained to be effective branch managers. However, as advisors have seen the careers of their own branch managers derailed by consolidation and complexing, the mantra “never give up your book” has never resonated more. One senior wirehouse leader acknowledged to me last week: “Considering what the industry has gone through in the last few years, today any advisor who is anxious to give up his or her book to begin a management career is going to have his sanity questioned.” Only three of the 20 current participants in Merrill Lynch’s Leaders in Development training program for new branch managers have ever been a financial advisor.

I spoke with a wirehouse advisor who had given up his book to become a manager and is now rebuilding his business after losing his position during a restructuring: “Branch managers today are paid less for doing more. When I started as a manager, I made as much money as I did in my last year as a manager, when I was running a complex twice as big.” Meanwhile, he added, the risks are greater. “The regulatory environment for branch managers has become more and more difficult. A compliance problem will cost you your job, but if you are too overbearing with your advisors you can lose your job too.” If you knew 13 years ago what you know now about the career path, would you ever have given up your book?  His response: “No [expletive] way.”


Fewer advisors want to become branch managers than ever before. As the problem of the aging advisor population becomes more acute, this shortage will only become worse. At the same time, there are more unemployed branch managers than ever before. Will the industry be farsighted enough to take advantage of the many former branch managers to mitigate the coming shortage of branch managers who have production experience?

Advisors have long accepted that their leaders do not have to be superstar advisors to become effective branch managers. But every advisor I spoke with feels that something is lost when branch and firm leaders have never been advisors.

Merrill Lynch advisor: “In the old days, our CEOs had all been advisors. Schreyer, Regan, Komansky all wrote tickets to make a living. Since Stan O’Neal was CEO, we have not had that.”

Sarch: “Give me an example of something that is lost when leadership has never walked in your shoes?”

Advisor: “OK, take the new small account policy. While I understand the need to encourage us to open larger accounts, leaders who were never advisors don’t understand that big accounts are usually opened initially as smaller accounts. Why not institute a policy that retroactively pays us for fees forfeited when the account was small if and when the account becomes large?”

Another Merrill advisor feels strongly that branch managers who have never spent significant time in a branch won’t be able to make crucial calls: “I don’t need my manager often, but when I do, it’s important. Sometimes a client needs to hear from ‘the Boss,’ who has the gravitas to defuse a problem. Clients can get irrational. I need a manager who has institutional memory and knows which advisors in his office or complex are worth going to bat for. I fear that if my manager has never been in my seat, little problems that could have stayed local will become big problems for everyone.”

As the wirehouses awaken to the problem of an aging sales force, they must realize their best branch managers are aging too. The next wave of branch managers will still need to be effective problem solvers, recruiters and business builders. But will they be able to develop those skills without ever having dealt directly with clients? And what are the long-term consequences of a field leadership that has never spent time in the field?

A possible result will be the further fraying of loyalties, fueling the diaspora of wirehouse advisors to other types of firms. Do you have warm feelings about that former branch manager who made a difference to your business, helped you avoid regulatory potholes and added value to the work you do every day? Perhaps you’ll be able to work for that individual at his or her newly created firm down the street. Entrepreneurialism will win out after all.

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Comments (1)
Danny, this is a great overview of one of the industry's biggest problems. Risk decisions are now being made by risk adverse people in HR and Compliance. Input from the business side is muted. In the next financial upheaval (and you know that there will be one), there will be an almost automatic "failure to supervise" violation. There can't be a producing manager with responsibility for 50 advisors that was doing a proper job of supervision. So, underpaid and unappreciated producing managers will get dinged on their CRD. After the loss of untold millions, the pendulum will start swinging back toward more local supervision empowered with more authority.
Posted by WILLIAM S | Monday, June 02 2014 at 10:53AM ET
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