In some ways, the job of branch manager is hopelessly conflicted. You are responsible for improving revenue, yet you are also charged with playing “Mr. Compliance Guy.” Branch revenue growth is, therefore, “the single greatest potential source of conflicts of interest for branch managers,” says Chip Roame, Managing Principal of Tiburon Strategic Advisors, a consulting firm.
(And that’s what that bulls-eye on your back is for: If there is a problem with a branch rep, you’re first in line as the company scapegoat.)
Herewith are some tips to help you walk that razor’s edge:
Tip # 1: You are even more responsible for policing your branch (if that’s possible).
That new hire of yours? You’re going to have to make sure that the arriving rep didn’t liquidate client accounts (i.e. purging the old firm’s proprietary managers) just to move assets over to your firm. Any manager change must be done for one reason only: Because it’s in the client’s interest—and not just the rep’s (or the recruiting firm’s).
The repeal of the broker/dealer exemption (the one that allowed b/ds to offer fee-based brokerage accounts without being required to register as an investment advisor) and the subsequent SEC Notice to Members 07-06 requires that BOMs take extra measures of supervision over newly hired reps in their first few months, says David Thetford, a former NASD examiner who currently serves as chief compliance analyst at Wolters Kluwer Financial Services in Minneapolis.
“When new hires bring over clients with proprietary investments from their old firms, they’ll often try to get them to liquidate them and move them to the new firm. But that may not be in the client’s best interest. He or she may be better served by [having] accounts at both firms—and branch managers must stay on top of all of this.”
And this creates a sticky dilemma, says a wirehouse BOM in the Northeast who asked not to be identified: “The reality is that many BOMs want those assets moved as well.”
Now examiners will be more carefully scrutinizing the activities of newly hired advisors, as well as the supervisory measures employed by their managers, Thetford says.
Tip # 2: Stick to your values; Neglect not.
Remember that you are being watched—and not just by management. Recruiting is more important than training right now. But recruiting should be used—first and foremost—as a way to fulfill your vision for the branch, says the wirehouse BOM in the Northeast. “Whom you recruit will send a strong message to the branch about what your expectations and standards are,” he says.
In the race for winning that rival big producer, don’t neglect your current team. “Overly aggressive recruiters can be perceived as only interested in climbing the corporate ladder, and not really caring about the branch,” says the wirehouse BOM.
Tip #3: A low stock price is your friend.
Unless you work for, say, Goldman Sachs, your stock took a hit since this past summer. But so has the stock of that potential recruit’s firm; his deferred comp is way down. Try to convince the candidate that your company has more going for it than his current firm. Says Rick Peterson, president of Rick Peterson Associates, a Houston-based recruiting firm, know what your prospect’s concerns are—and how joining your branch can alleviate them
Bear in mind, though, that when looking to increase branch sales, an ounce of prevention is the best strategy. "Super successful reps tend to leave their firms only when they don't like their managers or their firms aren't doing well," says Stephan Mignot, senior manager at The CBM Group, a New York-based industry research and consulting firm. So, if you're recruiting a big producer and these scenarios don’t exist, a red flag should go up.” Mignot says. “It means you need to more carefully scrutinize the rep and his background.”
