Matt Johnston, director of business practice management at Salomon Smith Barney, said at the Institute for Certified Investment Management Consultants Conference in New York June 7 that “over the next three to five years, 70% to 80% of brokers will be part of teams—and those who aren’t won’t be in the business anymore.”
Johnston, who puts together about 150 teams per year, says, “Brokers have to be a general practitioner as well as a surgeon and make sure there’s no blind spots with clients. How can a broker be a wealth manager, a portfolio manager, a sales person, a client service person and an administrator of the business? He can’t. How can a broker do all those things and grow their business? The only way is by building a team.”
Johnston also says that with studies projecting fee-based business from clients with $5 million or more in assets to grow to $45 billion in fees alone in the next few years, brokers “have never been in a better situation than today to grow their business and impact people’s lives.” But he also noted that there is more competition than ever before, hence another reason to build teams.
Some other points Johnston made:
* Less than 20% of the affluent marketplace uses a broker for estate trust services. “Clients are going elsewhere,” he says. “That’s a missing component in the transfer of wealth that brokers need to capitalize on.”
* 35% of wealth today is created in employee programs like stock options, stock plans and 401(k)s. “And wealth transfers are estimated to be at $6 trillion in the next few years,” he says.
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