Industry Leaders’ Top Challenges: Motivating Experienced Advisers While Diversifying
Brokerage firm leaders are struggling with the conundrum of how to motivate their experienced advisors to continue building their books while attracting replacements for them from technologically adept younger people from more diverse backgrounds.
Complex and branch managers from UBS, Merrill, Raymond James and Ameriprise Financial discussed the challenges of their roles in attracting new clients and selling new products and services while placating their 25-year veterans at Sifma’s annual private client conference on Thursday.
Paul Santucci, business development head at UBS Wealth USA, called the managers’ roles “the toughest job in the industry,” while Merrill Lynch Wealth Management head Andy Sieg and Morgan Stanley Wealth Management co-head Shelley O’Connor warned in separate keynote addresses that the failure to embrace change will make recalcitrant advisors and firms redundant.
Prescriptions for motivating aging advisors ranged from rekindling their competitive juices by showing them how using technology can dramatically goose production (machine learning and predictive analytics can “provide financial advisors with more insights and opportunities for their clients infinitely faster than advisors could put together on their own,” O’Connor said) to being transparent and honest about the future if older advisors fail to adapt.
“The average age of the advisor is 60, and I don’t think at 60 you want to work harder,” Kenneth Correa, head of about 140 advisors at UBS’s Metropolitan market in Manhattan and Bergen County, New Jersey, said on the managers’ panel. “Our job is to get them to work smarter.”
By using technology and experts to “deliver the firm” over and above investment ideas, he said, managers can help veteran “raise their W-2s.”
He also advocated having difficult conversations with recalcitrant advisers, warning that they will inevitably lose clients as markets correct and must compensate by selling financial planning and other services. “If you’re not growing, you’re dying,” he said he likes to tell them, quoting the mantra of Notre Dame football coach Lou Holtz.
Deborah Shepherd, a 28-year Merrill veteran who runs the firm’s six-office Short Hills, N.J. market, advocated building teams of younger advisers around the veterans to fill in gaps. It also is “incumbent’’ on managers to work on credentialing smart client associates already adept at engaging with mortgage officers and trust specialists so that they can become advisors, she said.
Sieg noted Merrill’s new goal of seeding its full-service wealth management branches with 300 Merrill Edge low-frill advisers to serve a new generation of clients, according to a copy of his remarks.
Correa said on the manager’s panel that UBS hopes to attract a new breed of younger broker by offering a five-year “high-salary” incentive complemented by a commission payout, in contrast to the production-based income earned by traditional advisors.
Wealth management, however, continues to be a hard sell for managers reaching out to college graduates and young professionals.
“We’re just brokers to them,” Correa said. “When they hear Wall Street they think ‘private equity, hedge funds, investment banking, sales and trading.’…We have to change the narrative.”
Correa, who is Hispanic, also said he is actively reaching out at breakfasts and lunches to minority group lawyers and accountants, focusing on those who are about six years into their careers and possibly uncertain about becoming partners. “More and more of the wealth is going here,” he said of U.S. minority groups, “and people want to work with people who look like them (and) sound like them.”
But persuading potential career-changers with six-figure professional incomes to try wealth management remains challenging, he said.
“We are perceived as a really high-risk profession,” Merrill’s Shepherd said in seconding his comments.
In her keynote address, O’Connor embraced the notion that brokerage firms have to recruit many more women as brokers and managers. “Women now have decision-making control over half of U.S. investable assets, so it’s important that firms are positioned to serve them,” she said.
Dylana Hooper, Ameriprise Financial’s central Florida complex director, who has been with the firm since 2002, said managers have to become smarter about promoting the profession to young women. “They say, ‘I don’t like math, I’m not analytical,’ but we have to talk about being a life coach and problem solving,” she said. “It’s a huge thing.”
Santucci, who began his brokerage career 33 years ago at UBS predecessor Kidder, Peabody, gestured to his fellow panelists comprised of two women, an African-American and Correa.
“Our offices should be like this panel,” he said. “We have to change the narrative, and we have to change it pretty quickly.”