One branch manager, after a decade of work at a major wirehouse, decided that he had seen his fair share of changes and felt he had done a good job guiding his advisors through them. So when he got the latest memo from headquarters announcing that the management structure was going to be overhauled (naming a complex manager at a main branch to oversee a number of 'satellite' branches in each region), the manager, who talked to On Wall Street on the condition of anonymity, felt he had a good shot at the top job.

After an intense full-day interview, however, he had a call from his boss. He didn't get the job. He felt he was basically left with two choices: retire or become a producing branch manager. After years as a full-time manager, he was faced with the challenge of prospecting for clients once again. He says he could've followed the route of many of the other managers in his position and join one of the existing teams in his branches, but says he didn't want to take a split of their production, particularly in these lean times. Being a high-profile member of the community, he found prospects fairly easy to come by, but says this would have a negative impact on his advisors. "Those (prospects) are the type of people I used to refer to the advisors in my branch," he says. "Now I'm keeping them myself, so it's really the advisors who are losing out, especially the rookies."

The New Structure

So what has happened, exactly? Over the past few months, both UBS and Morgan Stanley Smith Barney (MSSB) have completed their transition to the 'complex' management structure. It's a system that has been long used by Merrill Lynch, where one non-producing complex manager oversees one or more 'satellite' branches in a region. The manager of each satellite branch is then usually required to also service a book of clients. Of course, the manager is compensated for performing his management tasks, but the salary is less than that of a non-producing manager, as the shortfall is made up by his own production.

Traditionally, at both Morgan Stanley and UBS, each branch was overseen by its own branch manager who had few, if any, clients. Morgan Stanley began the move toward the complex structure before its joint venture with Smith Barney, but fully implemented the changes in September. MSSB created 137 complexes across the country, with each complex manager overseeing an average of seven or eight branches and between 50 to 200 advisors. Approximately 100 previously non-producing MSSB branch managers had to decide whether to go back into production, look for another role or leave the firm.

Meanwhile, UBS recently established a system of 64 complexes and 19 stand-alone branches (not including the private wealth management offices, which cater specifically to ultra-high-net-worth clients). Each stand-alone branch keeps its own non-producing branch manager. But every branch manager whose office was overseen by a complex manager had to go back into production. Nearly 100 branch managers were also affected.

Starting from Scratch

Many of the managers affected haven't had a book of business for years and say it's not an easy thing to conjure up overnight. "Basically they're punishing branch managers who stayed with the firm and were loyal through the whole crisis," says one branch manager who has also had to go back into production.

A branch manager at another firm who faces the same dilemma, says he feels they've actually been made the scapegoats for departing advisors. "Advisors left because their net worth took a hit with the falling stock price. But it looks like [the firms' executives] have said 'they can't keep advisors on board, what can they do for us?'" he says.

And, this manager adds, it's not only the branch managers that have been affected. Brokers are also concerned that they'll not only have to compete with their manager for clients, but vie with clients for their manager's attention. "I have 20-something advisors who all need maybe 10 minutes a day from me," he says. "Now I'm going to have to close my door at a certain time of the day and say, 'I'm working with clients.'" The manager acknowledges that some of his duties will be taken over by the complex manager, but he notes that his firm hasn't told him what he'll be able to hand over and what will remain his responsibility.

On the other hand, brokers may also be concerned that their well-liked managers will leave altogether or take up another position at the firm, says Danny Sarch, a White Plains, N.Y.-based industry recruiter. "A lot of advisors stayed in their seats when they hated the firm, because of loyalty to any given manager. The firms have destroyed corporate loyalty because of the way they crushed the stock [and the advisors' net worth]," he says.