Why even bother working at a wirehouse?

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Feb 21, 2016 9:48 am

When you start out at a place like Merrill Lynch PMD or Morgan Stanley, the chance of you making it is less than 10% and more than likely you will be gone within a year. Then you will either go to a Fidelity or a Schwab or become an FA at a bank or a licensed personal banker if you want more security...but more than likely you were probably making more money in your previous career so inevitably you go back to it. Obviously income potential and the potential to earn in excess of $250,000 or more attracts people to it.

Let's look at the landscape today. Back in the 80s and 90s, if you worked hard and were diligent, you could tele-market your way to success. People answered their landline phones and you didn't have do not call lists like today. Witness the FAs who have been around since Jimmy Carter was president sitting around their offices from 11-4 everyday nurturing their books adding the odd referral here and there. Back in the day, you could also call people with an investment or stock tip and people would buy from you over the phone.  Do that today and people will go on E Trade and do it themselves. As a result, if you don't have a natural network, you are reduced to cold walking and calling on businesses, and if not trying to get the business owner to do something trying to get them to do a SEP IRA or 401 K with you. Compliance departments will only let you make a phone call, are archaic, and won't let you incorporate social media and do other forms of marketing like email blasts and so forth utilizing the collection of emails and social media profiles.

Only people I see make it are those who were fortunate enough to to get on a high producing team that is overseeing assets in excess of $200 million or more. If you aren't sperm lucky and related to someone, you have to know someone to break in. It's certainly not by merit or bringing a unique functional skill set to the table. More often than not, a young trainee who was fortunate enough to get on a team starts out as a client service associate, a telemarketer, someone who specializes in marketing and does such tasks as handle the seminars once a month, or do portfolio reviews from the bottom of the team's book of business. They have job security because the team will put revenue under the trainee's name to make sure they hit their hurdles. As they gain experience, they will have more responsibility like doing discovery and delivery meetings with prospects. And the cycle will continue with their kids. But not everyone is fortunate enough to break into a team as nepotism and/or connects are key.

In essence, your only chance of success is knowing rich people. If you don't, you will not make it. Plain and simple. I know the recruiters are selling the dream, and I see a lot of threads here from people starting out asking for advice. 

I really think the wire house training model is broken. If you really want to give a trainee a chance to succeed, make the first 6 months after they get licensed not count toward production hurdles. Give the trainee a chance to build discovery with prospective clients and generate a pipeline before the clock starts running. Now the activity will have to be tracked so as to prevent people from slacking and not showing up for work for several days, but this type of model can be effective if done right. 

I've seen too many people wash out and it never changes. I know it's survival of the fittest and all of that, but with it being 2016 and not 1995, some changes need to be made.

Mar 4, 2016 12:20 pm

The wirehouses are as clueless as anyone else in terms of developing a model to success for new hires. That's why they continue to trot in some lifer "FA" into the conference room to tell trainees how he made it through the program back in 1988.

The only problem is like you said they were cold calling stock tips and muni bonds that paid way more. A guy like that could generate 4-5% in fees on his AUM annually.

Today's environment it's nearly impossible to get traction in the first 5 years. The ramp up for fee based is brutally hard. Most of these new trainees no nothing about investing or risk, they're just spouting off whatever they read in their firm's morning email. That won't compete in today's environment.

Apr 9, 2016 5:13 am

Well said. I'm new in the business, about to complete my second year with a $200 billion dollar national firm. It's obviously very hard to build a contact sphere. My company emphasizes prospecting daily to get qualified suspects. But I think it's a lot better for you and the client if you provide a comprehensive approach to their financial plan rather than only helping the client with wealth accumulation. One of the reasons I chose my firm over Merrill Lynch, who I would have died for to get hired in. I went through 3 rounds of interviews, even met the regional partner out of Michigan. As providence would have it, Merrill was revamping the PMB program and hiring was on hold until the new training program could be rolled out. Enter the company I work for now. I'm into my 3rd year next month and I'm so glad things turned out how they did. If I got into Merrill I know I wouldn't have met their benchmarks and probably would have given up on the industry all together. Now I don't know what I'd do for another 30 years of my life if I weren't doing comprehensive financial planning with the company I'm with now thanks to Merrill not ready to hire me.

Jun 6, 2016 11:20 am
SmokeStackLighting:

Well said. I'm new in the business, about to complete my second year with a $200 billion dollar national firm. It's obviously very hard to build a contact sphere. My company emphasizes prospecting daily to get qualified suspects. But I think it's a lot better for you and the client if you provide a comprehensive approach to their financial plan rather than only helping the client with wealth accumulation. One of the reasons I chose my firm over Merrill Lynch, who I would have died for to get hired in. I went through 3 rounds of interviews, even met the regional partner out of Michigan. As providence would have it, Merrill was revamping the PMB program and hiring was on hold until the new training program could be rolled out. Enter the company I work for now. I'm into my 3rd year next month and I'm so glad things turned out how they did. If I got into Merrill I know I wouldn't have met their benchmarks and probably would have given up on the industry all together. Now I don't know what I'd do for another 30 years of my life if I weren't doing comprehensive financial planning with the company I'm with now thanks to Merrill not ready to hire me.

Which company do you work for?