Reasons for failure rate?
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I am curious about some input regarding the high rate of failure of new(ish) reps. If wirehouses are as good as screening and hiring as they claim to be, why is there still such a high turnover rate? Is this just considered ‘business as usual’ or is there something inherently wrong with the means and ways of recruiting, hiring, and training? All sales organizations experience high levels of turnover, most are around or higher than 50%. Most organizations try to remedy this through better identification of those candidates most likely to be successful and improving the training and mentoring process. Personally, as a manager of a sales team, I believe that success and failure hinge on a combination of ‘will’ and ‘skill’. One can be taught, the other cant…its either there or it isnt… So let me open it up, how about some insight about the painfully high levels of turnover in this business…
Thanks!I think that there are some logical reasons for the high failure rate.
Wirehouses, with their high hurdles, are different than some other avenues. Outside of the wirehouse, here are some reasons why people fail. 1) People get hired who simply don't have the ability to succeed. It's the "hire everyone and see who sticks" mentality. This happens mainly when the person being "hired" isn't really being hired because they won't be an employee. Now, let's assume that someone isn't a complete idiot. If they don't succeed, there are only two major reasons. 1) They didn't do what needs to be done on a daily basis to succeed. 2) They didn't have enough capital to survive lean times in the beginning. I am convinced that every non-idiot can succeed in this business if they are willing to do what needs to be done EVERY DAY and they can survive for 6-12 months. The wirehouse is different. If one gets hired, they probably have the ability to succeed in the industry, yet they still may fail at the wirehouse. This is true even if they do what needs to be done every day. The salary solves the cash problem. I think that the wirehouses simply don't care about the high washout rate. They hire 10 people. One makes it through all of the hurdles. 9 leave the firm. Of these 9, 7 leave the industry. When the rep leaves, there is no longer an expense associated with the broker, but there is still revenue from all of the accounts. (The 9 people who leave the firm can all still succeed in the industry if they do what is needed to do everyday.) For the record, I am convinced that in the beginning of my career, I would have failed out at a wirehouse.I agree that for the employer it is a " numbers game " , not that this is the best approach to hiring and retaining employees. That being said , in my personal opinion a percentage of people come in to this business with blinkers on and incorrect assumptions. First thing that annoys me ( personally ) is when employers and applicants start on the " Big Money " job. In my humble opinion …the money ( income ) is the NET result of continued efforts. Which means hard work , struggles and the ability to work through sometimes difficult situations. If there was an easy route…I would have found it and after all these years have still been unable to locate the " Easy Street " map.
Most people do not realize this is a sales job, especially in the first 5 years. In a nutshell, it comes down to a lack of prospecting and inter-personal skills.
This is exactly my problem. I have the skills and have done very well but my book and the revenue I am generating aren't enough to pay my modest lifestyle. Top that with the fact that we're in a very tough economy with no new assets coming in and I have to make a choice about whether I want to stick around despite being on good production terms with my firm.
I guess what I am most curious about is why this sales job is any different than any other sales job. I know and manage sales people that are knocking down huge commissions on a tiny base salary, and they are doing it by sheer hard work. I dont care if you are selling industrial pump washers and limited capacity flow valves, or the highest level of technology out there, it takes hard work and the ability to interact with people and get them to like you that drives success in sales. People always say its a numbers game, but more accurately it is the law of averages in its rawest form. The more people you talk to, the more sales you make. Figure out how to talk to as many people as possible, then rinse and repeat. Its not rocket science and it sure isnt brain surgery. Its not sexy and glamorous either, but it works. Why cant more people get it?
This is an odd insdustry. It is one of the few businesses where you are both the salesperson and the servicing person. So you are effectively building the ship and sailing it at the same time. Now, there are exceptions, with large teams, sophisticated RIA firms (that separate sales and service) and the like, but for the most part, this business is made up of “solos” (either wirehouse or indy) trying to do both. And to be honest, the “service” part is easier and more fun, and what most of us aspire to be doing (basically, being an “advisor”).
Many people coming into this business, despite the warnings, don’t accept the “sales” part. Those people that commit to the “sales” part can do quite well, even if they more or less suck as an advisor.
[quote=anabuhabkuss] 2) They didn’t have enough capital to survive lean times in the beginning.
This is exactly my problem. I have the skills and have done very well but my book and the revenue I am generating aren’t enough to pay my modest lifestyle. Top that with the fact that we’re in a very tough economy with no new assets coming in and I have to make a choice about whether I want to stick around despite being on good production terms with my firm.[/quote]
In addition to my previous comment (and I will NOT get into the “own your own business” argument), whether you are at a wire, and insurance company, indy, whatever, you aqre effectively building a business. It is no different than opening a restaurant, a computer repair shop, or a CPA practice. It is about building a business. It is NOT a wage-earning job (even if you get a W-2 from the firm you work for). You ARE building a revenue-generating business.
The longer I am in this business, the more I see how much this is about building a business, and not just about cold-calling to make some transactions. For those of us at wires or other captive firms, it is more like a “franchise” or whatever, but we are still building a business that will generate income for us over our working life.
So ANA, I guess that’s how you have to look at it - you need to “invest” in your business (often this investment is in the form of “lost wages” or “opportunity costs” versus staying in another “wage paying job”). If you are willing to make that investment for the first several years, it will pay dividends to you forever. It just depends how bad you want it, and how much risk you are willing to take.
…all, thank you for your responses, this is some of the best dialogue I have seen on here. What I am really trying to whittle down to is this…if a rep fails due to lack of concentrated and on going sales activity, how much of the responsibility for that failure falls on the manager? In the interest of honesty and full disclosure, I came at this from a slightly sideways angle with alterior motives at heart. I am having some difficulty getting a level of activity and resulting sales from some of my reps. For some time I have been laying the blame solely at thier feet, but I have had somewhat of a feeling change. It is my responsibility as a manager to guide and drive thier activities, and if I fail to hold them accountable and they fail, who bears the lions share of responsibility, the individual rep or thier manager? Part of me says that a true salesperson doesnt need driving, they just need harnessing and the occassional steering nudge…but at the same time, I am beginning to feel that thier lackluster performance has resulted from my not making thier success (and my own) my number one driving purpose for leaving the house. So who is responsible, management or reps?
[quote=vancheesey]
I guess what I am most curious about is why this sales job is any different than any other sales job. I know and manage sales people that are knocking down huge commissions on a tiny base salary, and they are doing it by sheer hard work. I dont care if you are selling industrial pump washers and limited capacity flow valves, or the highest level of technology out there, it takes hard work and the ability to interact with people and get them to like you that drives success in sales. People always say its a numbers game, but more accurately it is the law of averages in its rawest form. The more people you talk to, the more sales you make. Figure out how to talk to as many people as possible, then rinse and repeat. Its not rocket science and it sure isnt brain surgery. Its not sexy and glamorous either, but it works. Why cant more people get it?
[/quote] I think it's different and tougher than other jobs if you are trying to contact residences. B2B calls are easier, especially if you don't have to deal with the owner to get something sold. The problem for me with calling businesses, is either try to go through the gatekeeper to the owner (which everyone else has his name also), or try to find a corporate directory, which, in my area, is tough to get despite being in a huge MSA. Some of my best clients are the ones who have worked most all their lives at the same company and have built up very nice 401k's and IRA's and are thinking about retiring. I would love to have these types of people in a directory. I've been banging my head against the wall thinking about how I can get their information...no clue.Potentially both. Possibly one or the other. What is the LOS of the reps you manage? The longer the LOS, more content advisors get and their production stays where it is, hopefully. It's tough to get anything done in this market. Many people aren't doing anything and are hesitant to listen. What are you doing as a manager that would motivate your reps? What are you doing to provide them with leads? There is only so much a manager can do...kind of like an efficient frontier. After that, it is on the rep. They have to want it or else they won't be motivated to get it done. Why don't you tell us a little bit about the types of reps you manage?…all, thank you for your responses, this is some of the best dialogue I have seen on here. What I am really trying to whittle down to is this…if a rep fails due to lack of concentrated and on going sales activity, how much of the responsibility for that failure falls on the manager? In the interest of honesty and full disclosure, I came at this from a slightly sideways angle with alterior motives at heart. I am having some difficulty getting a level of activity and resulting sales from some of my reps. For some time I have been laying the blame solely at thier feet, but I have had somewhat of a feeling change. It is my responsibility as a manager to guide and drive thier activities, and if I fail to hold them accountable and they fail, who bears the lions share of responsibility, the individual rep or thier manager? Part of me says that a true salesperson doesnt need driving, they just need harnessing and the occassional steering nudge…but at the same time, I am beginning to feel that thier lackluster performance has resulted from my not making thier success (and my own) my number one driving purpose for leaving the house. So who is responsible, management or reps?
The problem for me with calling businesses, is either try to go through the gatekeeper to the owner
Just call more of them. It's all a #'s game. I went into this week with a very light schedule. Both yesterday and today, I was able to schedule two same day appointments with language similar to this: "James, this is Anonymous from Anonymous Financial. I work primarily with business owners in the area of exit planning. I'm going to be driving past your office at 3:00 and would like to stop in and introduce myself." This has resulted in 2 fact finders, one scheduled fact finder, and one "call me in 2 weeks" to schedule a fact finder. Some of my best clients are the ones who have worked most all their lives at the same company and have built up very nice 401k's and IRA's and are thinking about retiring. I would love to have these types of people in a directory. I've been banging my head against the wall thinking about how I can get their information...no clue. Snags, you are way ahead of the game because you know who you want as a client. Get referrals from these best clients! "Hey, Mr. Client, my best clients are other people just like yourself. I enjoy working with people who have been working in their firm for 15+ years. Let's brainstorm. Who are the people in the firm who have been here longer than you?" One of the keys to getting referrals is to sell to referrals. What I mean by that is that it's harder to get referrals from someone if you got them via cold call instead of referral.The reasons for the high failure rate in my opinion are two fold .
1. bad hiring 2. trainees that just cant grasp what it takes to be successful in our buisness. I think our business IS much different from other sales oriented careers. When you are selling someone on the idea of trusting you and your process with their money, it is a very emotional, scary idea to them and it takes a lot to move them off first base. Thats why we need to have our trainees develop really bursting pipelines and talk to a lot of people every day, tell their story over and over again. As far aas bad hires - i see it in my wirehouse - we hire young people, with little buinsess experience, and pay them dipshit. I sat with my Regional about 2 years ago (he;s not my Regional anymore) and told him i thought it was a flawed model. I told him, and i still believe it, that the best thing we could do is hire less trainees, pay them a lot more for 2-3 years, and make sure they are quality people, who are motivated, have 5-10 years solid business experience and a rolodex to prove it. The answer i got - you are wrong - if you throw enough shit on the wall, something will stick. So there it is - the wire model - i think ML is a little different, but the other wires just dont get it. Vancheesey - i also am responsible for training newbies, if you want to start a dialogue, feel free to PM me.okay, time for a little more disclosure…i am not in the financial field, i am district manager for a company that sells in the commercial and industrial contstruction market. I manage 6 sales reps but i need to be at 10…we average about 10 million in annual sales but needs to be about 30 million…i either lose reps within the first 90 days…or at the one year mark…high turnover kills the relationships with our contractor clients and diminishes our capabilities to consistently deliver quality product…my reasons for being on this site and posting are two fold…first, I am in the interview process with several wirehouses right now…but secondly, when researching how to increase and improve sales, from the prospecting level down to customer service, the financial industry kept coming up and again…so I started digging more, looking for more info and insight…I am amazed at the activity level required to be successful in this business…I think that sales people in all industries could really learn alot from successful FA’s/brokers…as for managers, I have a hard time believing 100% in the poop on the wall approach…it is a financially and emotionally draining process…it can become like viet nam, you know, when nobody wants to talk to the FNG’s because they are just going to be gone soon…plus it just wastes resources and ultimately loses, rather than gains clients…sales is about relationships, and you cant build those with a steady stream of changing faces…
I second that emotion....twice…as for managers, I have a hard time believing 100% in the poop on the wall approach…it is a financially and emotionally draining process…it can become like viet nam, you know, when nobody wants to talk to the FNG’s because they are just going to be gone soon…plus it just wastes resources and ultimately loses, rather than gains clients…sales is about relationships, and you cant build those with a steady stream of changing faces…
As far as the guy that is managing salesmen for construction I don’t really know what to tell you, as far as our industry goes the fault starts in the hiring process.
If you hire someone with business experience, they have maturity, and most importantly business contacts. Unfortunately, inexperienced young trainee's are cheap, there is a fine ratio of revenue/expenses to balance, it's much harder to get the numerator higher than it is to lower the denominator. I think all of this; you have to work hard 12 hours a day, contact at least 150 people a day, get at least 2 appointments a day for 500 days crap is cute, unfortunately in the real world it's just not the way it works. In the "wire house model" you honestly don't have enough hours in the day for a 25 year old kid to prospect cold/new relationships and turn them into $15 million in 24 months. On the other hand, if you come into this business as a 30+ year old with prior business experience and contacts it is much easier to build an asset base in a 24 month time frame. Our office is a great dichotomy of this exact subject, we have a 40 year old guy who just moved to town from all the way across the country to help his wife take care of her mother. Comes in already licensed and is immediately put into production, knows absolutely no one in town and has no contacts but his wife's mother who has spent all her money on medical bills. So, this guy is trying to build a business from scratch and is working his butt off. He'll be in the office by 7:30a and out by 8:30a and cold walks businesses literally all day long, comes back to the office around 6:00p and proceeds to cold call residences til 7:30p. He then works on his list for the next day, and plans the businesses he will walk into, till 8:30p, then goes home to his wife and kids. He does this 5 days a week and puts in 6 hours of the same on Saturday, and has been doing this for 10 months. He currently has less than $1 Million in assets and has already missed 3 straight hurdles, the BM can't find it in himself to fire this guy because he is busting his ass, but the Regional manager is going to force this guy out. On the flip side we have a 25 year old guy who's father is a Big Wig at a law firm who has been in production about 10 months also. The guy puts in maybe 30 hours a week, might make 2 phone calls a week, goes to father and ask who to talk to and is raking it in. He's well over $7 Million in Assets and will cruise the entire time. The moral being that it's much more about who you know than how much time and effort you put in. We would all like to see the first guy make it and be rewarded for his efforts, unfortunatley this is an industry were the hardest working and smartest are not always going to be the most successful. This has been the toughest thing I have had to deal with, and there is really nothing you can do about it, all you can do is play the cards that have been dealt you. If the industry would wise up and not hire the hard working unconnected youth and hire more of the "well-connected" the turnover ratio would plummet, but I wouldn't hold my breath waiting for it to change.Bullbroker, If that 40 year old took that same work ethic and went to an insurance company and did everything on a joint basis, he'd be making 10K a month right now. At the wirehouse, he would figure out the buisness and do better than the lazy 25 year old, but at a wirehouse, one isn't given the necessary time.
One difference here is what we’re selling is intangible. Someone touched on it, it’s trust. And once we climb over that wall, and only then, can we really begin the sales process. Doing that, we have to create the touch, feel, smell that sales people in other industries can do simply by showing the product. Many times we have to take the client into the future and create the dream. Is it a little more complicated than selling someone an iphone? On most days, yes. Not only do we have to lead the horse to water, we have to make it drink.
The high drop out rate is a sales failure. Many getting in don't realize the level of work involved, or the level of sales. Others,like Bull Broker's cohort, just can't do it. And in that case it is also a mangerial failure as well. Which is very common in our biz. When I interview trainee candidates one of the things I do is from the old school. After they tell me they understand that its a sales job and they've got that handled I pick up a pen from my desk, hand it to them, and then ask them to sell it to me. I figure since I already own that pen and like it I should be a pushover sale. Yet, trip stumble, fall, we've cancelled a lot of trainee dream tickets using that exercise. Lots of blank stares. Most don't even know where to begin. If you can't sell a guy a pen he already owns, you can't sell an intangible. Like I said old school, but effective.