Branch managers say they sometimes get the feeling they are wearing bull’s-eyes on their backs. Perhaps they are. And it’s not just because as a branch office’s supervisor they are often held accountable for anything that goes wrong there (no matter how clever the fraud). Rather, there are a few other trends that seem to be reducing the number of branch managers per registered rep (despite a need for strong supervisory oversight).
The trends blamed for culling the herd of BOMs: mergers and restructurings of large Wall Street firms; an ever-growing number of regulatory and compliance demands; and an increase in the number of registered reps who are moving toward independence (where they are overseen by an OSJ).
Accurate industrywide numbers of BOM attrition are hard to come by. One reason: OSJs and BOMs are typically counted as one group. “The numbers also get skewed,” says Chip Roame, president of Tiburon Strategic Advisors, a Tiburon, Calif.-based consulting firm specializing in the financial-services industry. “When brokers go independent, they become OSJs—so it can look like the number of managers is going up when it’s actually falling.”
Still, by all accounts, the number of branch-management positions has fallen steadily over the last few years, a trend that may continue. “Some are going back into production,” says Roame, “Others are looking for management jobs in related fields.”
BOMs and OSJs have different responsibilities, says Philip Palaveev, a senior manager with Moss Adams, a consulting and accounting firm specializing in financial-advisory practices. “The industry requires that all advisors have OSJs—or field supervision,” he says. “But, if we define branch office managers as folks whose job is to recruit, retain and train advisors, then that is the role that has indeed evolved and diminished over time. I see fewer and fewer people in the industry whose job it is to do that.”
The Securities Industry Association said it had numbers for some Wall Street firms, but it was incomplete and, anyway, the SIA said it wouldn’t release the figures. Nevertheless, few dispute that a substantial number of branch office managers are out of work. A variety of reasons can be cited.
One, certainly, is industry consolidation. For example, in December, Smith Barney purchased Legg Mason’s brokerage business, and Merrill Lynch acquired Advest Group. Four months later, UBS announced plans to buy Piper Jaffray’s private client branch network. Piper Jaffray expects a reduction of about 350 corporate-level staffers, according to the Wall Street Journal, though a UBS spokesperson said the firm wouldn’t comment on personnel matters related to the deal. Change in management numbers for the first two firms were not available at press time—but you get the idea. (A former Merrill executive says that BOM ranks are lower than they were years ago, with fewer BOMs supervising more reps.)
Morgan Stanley, with James Gorman at the helm, has been cutting back the unit’s management structure. The firm fired 15 percent of the senior managers in New York City and Westchester County in March, and stripped 30-area branch managers of their posts in late April, according to some published reports, though some were reportedly given the option of staying on as financial advisors. No one at Morgan Stanley was available for comment.
“As they acquire smaller firms, the larger Wall Street firms are consolidating offices, and stand-alone branch office managers are getting left out in the cold,” says Rick Peterson, president of Rick Peterson Associates, a Houston-based recruiting firm. “Again, I don’t know where you’d get exact numbers. But, ever since 9/11, it’s been a buyer’s market for BOMs. And, the consolidation isn’t over yet. I’d say, optimistically, we can expect to see things level off sometime this fall.”
Another issue: The once coveted job of BOM has lost much of its luster. With an ever-growing number of time-consuming compliance and administrative tasks now in their laps, the BOMs’ job has moved from being “a motivator or cheerleader to being a father scolding his kids, or a cop,” says Roame. “It’s a far less attractive job today.” Back in the day, “It used to be prestigious to move from advisor to BOM,” Roame adds. “But, it’s gotten much easier for successful reps to go independent, become business owners and, de facto, their own branch manager. That’s prestigious.”
“Some BOMs lost their jobs due to compliance issues,” Peterson says, “and that’s scared a lot of others out of wanting the job.”
“If you’re a talented advisor with a well-established book of business, I’d have a hard time making the case that you should become a branch manager,” Palaveev concurs. Advisors, he points out (and we’re all well aware), are highly compensated for what they do. And, in theory, the same appears to be true for BOMs: In 2004, branch managers earned an average of $283,000 to $431,000, depending upon the size of the firm and whether or not they dealt with clients, the SIA reports. But much of their income comes from the production.
And in order to be a true BOM, Palaveev asserts, one cannot really produce. “It just seems not to work in terms of the time and focus both managing and producing require. And people tend to gravitate to the more financially rewarding position.”
Another factor hindering the growth of BOM roles: The number of independent reps continues to grow, says Roame, while those at the wirehouses and national firms have remained static (at around an average of 70,000 for the last six to seven years). Meanwhile, the number of independent reps has risen by 25,000 to 30,000 over that time span, to a current total of 82,000, according to Tiburon research. “If these newer folks went to wirehouses, they might comprise 500 more branches that would need 500 more BOMs,” he says. “But that isn’t happening.”