Sirianni: You know you’re a European Broker when…
You know you’re a European Broker when… Your firm drops out of Protocol. There is only one reason for a firm to pull a Prexit, and that’s to try to hamper an advisor’s ability to move their book of business. One of the cornerstones of the European salary plus bonus model, is the notion that the clients belong to the firm that custodies them, rather than the advisor who finds and manages them.
You know you’re a European Broker when… Your firm hides adverse language in must sign documents, like employee handbooks (read European Broker bibles). If your firm gives you no choice, and short notice, to sign a document that they have created (especially one that has references to “garden leaves” and the like), at the peril of you not being in compliance with firm policies — an offense punishable by termination — it’s time to trade in your morning bagel for a baguette.
You know you’re a European Broker when… Your firm spends more money on advisor lawsuits than broker retention. By employing legal strategies against advisors that are really meant to hamper full time employees from stealing trade secrets, your firm is telling you that you are an employee and you work for them, not an entrepreneur working for yourself.
An aside: The fact that firms can convince a judge, in the internet age of LinkedIn and Facebook, that clients names and addresses are “trade secrets” is a testament to our aging judiciary. The fact that those same firms will, in the same week or same day, hire a new advisor from a competitor, with all of their “trade secrets” in tow, is duplicitous in the extreme.
You know you’re a European Broker when… Your pay begins to morph in unsettling ways. Your commission grid becomes entangled with “bonuses”, and is based on a series of hard to decipher activities and product mixes/referrals. The goal is to lock your clients into the firm, with so many tentacles that they can’t leave with you, and to limit your pay and be sure your activities conform with firm priorities (not client priorities).
You know you’re a European Broker when… You sign a sunset agreement. Once you have a contractual relationship with your firm that spells out your commission/pay for years to come, you are on salary, period. There are very good and fair reasons for this, including paying the departing advisor for her years of service and hard work. This, however, does not change the fact that even though you may generate more commission with the same clients — and serve them well — they belong to the firm, and the firm has a good legal and moral basis for suing you if you leave. Sound like an entrepreneur or an employee?
You know you are a European Broker when… You are on a large team. I know you don’t want to hear it, but firms love huge unwieldly teams, with disparate partners. If you choose to leave your firm, be careful of the team Fredo, who is very susceptible to the firm’s blandishments. They’ll tell him or her that he’s really the “smart one”, the one that did “all the work”, and if he stays behind, he will get a “sweet deal”. Happens all the time, #Too Big To Move — read AdvisorHub.
I could go on. Many firms are laying the groundwork for a European salary and bonus model because they feel they have to. American firm margins are slim, and advisors are leaving full service firms with their assets for the great unknown of independence in increasing numbers. As markets decline, the true scope of advisor defections from large firms will be revealed. I say to those managers left holding the bag: Bonne chance!
Firms are looking everywhere for answers. When European bankers and consultants seeking to cut costs see what American advisors make for a living, their heads explode. They tell firms they are crazy to have a commission system. Firms are nervous, and their wooden headed consultants are telling them Europe has the answer: salaries and bonuses! Lock ‘em down and sue them! Vive le avocat!
Well, maybe. I do a lot of consulting, and at the end of the day my message is the same to every struggling firm big and small. Why not embrace the changes advisors are voting for with their feet, drop the lawsuits, and make your firm such a great place that no one would want to leave? Das ist gut, ja?