There are only four ways that a brokerage firm can grow. It can increase "same store sales" (growing revenue from existing practices), recruit from the competition, acquire another firm (which is really just recruiting en masse) or bring on and train new advisors. Of these possibilities, only the last adds to the existing pool of talent.

Virtually every firm faces the same demographic challenge: its sales force is aging. Successfully training new advisors solves the problem of the older advisor, reduces the costs of recruiting (by increasing supply) and has the benefit of having a homogeneously trained pool of advisors.

Yet, as 2014 begins, none of the major firms, with the notable exception of Edward Jones, has a training program in place to reliably resupply their branches. Why are they having so much difficulty on this front?

One significant impediment is the public's perception that finance is no longer an honorable career. To many, "Wall Street" is a monolithic industry, guilty of greed and deception that almost brought another Great Depression to the world. Today's headlines are still full of massive fines, insider trading investigations and Madoff-esque Ponzi schemes.

THE GLAMOUR IS GONE

Where the 1980s glamorized Wall Street and attracted college graduates with the promise of great fortune, the world of 2014 sees Wall Street as a source of the country's problems. That leads me to hypothesize that a smaller number of potential candidates is even considering wealth management as a career.

Meanwhile, training professionals tell me that even when you have managed to hire the perfect candidate, it is harder than ever for him or her to build a successful practice. Yet, the incumbent wirehouse advisors all managed to succeed. What is so different today from 20 years ago that makes it so much more difficult to bring along quality advisors?

For additional perspective, I contacted an old friend, a consummate training professional, Jim Carbonaro. Jim's career began with Merrill Lynch, and he also has worked for Shearson, Paine Webber, Wachovia and Morgan Stanley. With all of these firms, he was involved in training new advisors. In the wirehouse world, I do not believe that there is any single individual who has had more impact on branch management development and advisor development and training in the last 20 years.

According to Carbonaro, the difficulties with recruiting today are both a product of the times and the fault of the industry's leadership. "The most successful candidates seem to be drawn from other professions such as lawyers or other positions related to money management," he says. "Without this kind of background, building a book from scratch is more difficult that it has ever been."

Carbonaro points out that during the 1980s and '90s, the heyday of the big firm training programs, the public was far less sophisticated than it is today, and investing was seen as something that was undertaken only by professionals. This was a world that predated the Internet, before there were Schwab and Fidelity "stores," before CNBC and Yahoo Finance. An advisor with a combination of tenacity, persistence, energy, chutzpah and personality could dial the phone 200 times a day and actually get meetings with strangers to discuss their finances. Today, in a post-Madoff and much more cynical world, caller ID is a regular screening device. Recognizing that advisor trainees cannot build a book by cold calling alone anymore, industry training departments are scrambling to adjust to the changing times.

But just when it seems that the industry might show some patience and allow trainees more time to succeed, its leaders undermine their own training departments. "It feels like the purpose of new FA hiring and training is more about convincing industry analysts that head count is stable than building the work force of the future," Carbonaro says. "I think that this has a subtle impact on the nature of the training and causes managers who are under pressure to meet their hiring goals to settle for candidates they may not have hired otherwise. This clearly has a negative effect on long-term retention."

Carbonaro and I discussed how the wealth management industry stopped training twice in the last 15 years: first after 9/11 and the tech crisis, and again after 2009, during the financial crisis. "Investment in new FA training seems to be dictated by present circumstances versus a longer-term plan to replenish the FA work force," he says. "When times get tough, training is regarded as an expense and not an investment in the future."

In today's wirehouse environment, the branch manager has less discretion over day-to-day decisions than in the past. A 60-year-old wirehouse advisor says: "Today's rookies have some very strict quotas to make in terms of assets brought in and number of accounts opened. We had those when I started too, but my manager at the time was able to make a judgment call when I missed a couple of deadlines because my pipeline was robust. He was able to make a judgment call that was rewarded. I'm not sure that today's senior leadership trusts branch leadership in the same way to make those types of decisions."

BUILDING STRONG TEAMS

With teams more common than ever and the advisor work force aging, partnering rookie advisors with experienced teams is now commonplace. But rather than matching rookies with teams that are eager to teach and nurture, firms may be matching them with the teams that yell the loudest for new blood. "While the use of teams has increased, it is not close to where it needs to be," Carbonaro says. "I would go as far as saying that no one should be hired outside of a stable, mature and professional team that provides daily coaching and has direct input on the hiring decision."

So, one path for improvement is to train the training teams better. Another is to recognize that it hard for a 60-year-old client to trust a 30-year-old trainee with his or her money. "Many new FAs are young and look young," Carbonaro notes. "They have to find a way to counter this first impression with super excellent listening and communication skills. These are taught in the programs, but not to the extent they should be. Product knowledge is easy; interpersonal effectiveness is hard."

Another disconnect between senior leadership and the new advisor work force is the emphasis on bringing in large accounts. A $1 million producer told me how shortsighted this was: "Talk to most big producers about how they developed some of their largest relationships and most of the time the relationship began with a smaller investment. My biggest account, $14 million, started as a $75,000 account. If I started today, I would have been discouraged from ever opening up that account! There are very few advisors who can get a giant commitment from a large account on day one."

Carbonaro and I also discussed Edward Jones, a partnership that grows only by training. How is this firm succeeding where the traditional wirehouses are not? Is there anything that the rest of the industry can learn from Edward Jones? Because it is privately held, the firm can choose to take a longer view on the training cycle without the scrutiny that comes with being a public company.

But EJ's strategy is so different from those of other firms that it is hard to see its model becoming more commonplace. Edward Jones generally places its new offices in smaller communities and staffs them with a single advisor. That advisor is trained to knock on doors and introduce himself or herself to local businesses, building face-to-face rapport from the beginning. The firm's training center emphasizes role playing this behavior.

At present, the average club level advisor is 55 years old and training needs to be seen as neither a cost center nor a luxury, but a matter of survival.

Wall Street analysts criticize corporations for shortsightedness and managing quarter to quarter. Ironically, these analysts work for companies guilty of the same corporate sin when it comes to training their own. A decade from now, they may work elsewhere¬óbecause ony those wealth management firms that resolve the training conundrum will continue to thrive.

Danny Sarch is president of Leitner Sarch Consultants (leitnersarch.com), a boutique search firm specializing in the wealth management industry.

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