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Valuable Lessons

Better to coach than to manage

Sam and Judy are a North Carolina wirehouse team looking for something more. They've already been a highly successful duo for over a decade, having built a model practice with $2 million in production and $220 million in assets under management. The natural step-up would be management, but that's not for them. Instead, they'd rather become coaches for their younger and less successful colleagues.

They are not alone in their thinking, either. Successful brokers are noticing that when their peers give up their books of business to go into management, they become overhead and potential candidates for the chopping block when times get rough. Hanging on to a book of business is insurance that a firm will keep them, while allowing them to shop themselves around.

At the same time, the job of branch manager has become less attractive because of the increase in compliance requirements. Not only are there growing stacks of regulatory paperwork to deal with, but they wind up spending less time helping brokers build their businesses and more time having to fire brokers for infractions that previously would have been considered inconsequential. Given this shift in focus, advisors feel that the job of branch manager is not going to provide their career any personal fulfillment the way teaching, coaching and mentoring other brokers will.

Coaches' Corner

Mike, a wirehouse broker in Michigan, is an example of someone getting the charge he wants. A $1 million producer with $125 million in assets under management, he was recently hired by Raymond James & Associates as a financial advisor and trainer in their suburban Detroit branch.

He will create “Club 45,” a program designed to mentor fourth- and fifth-quintile producers. If the brokers under his guidance improve, Mike gets to share in their financial success by being paid a percentage of any increase in business his students rack up. This potential compensation comes on top of the hefty transition package and the increase in payout Mike received for bringing his book of business to Raymond James.

Beth, a million-dollar wirehouse producer, doesn't have quite the same deal as Mike, but she has been training brokers for some time now and enjoys the work. She regularly participates in her firm's speakers' forum and is paid the equivalent of her daily production rate to travel around the country and make presentations to groups of advisors on topics like increasing referrals, preparing financial plans, conducting seminars and building a book from cold calling. Although not easily quantified, Beth knows from the positive feedback she receives that her knowledge has helped her junior colleagues increase their production. What can be measured is the amount of money she receives: $1,000 a day.

For their part, firms are beginning to express interest in hiring great coaches. Still, they are concerned about the integrity of their training programs and they won't just unleash any top producer on their struggling brokers. A teaching, coaching or mentoring broker candidate needs to bring to the table skills that are equal to or better than the caliber of training the hiring firm is already providing to its low-end producers.

Although it is difficult to quantify the correlation between mentoring and increased revenues, firms are often willing to take the risk. A broker in mid-career doldrums with a desire to teach, coach or mentor should let prospective employers know of this interest. It may provide an enriching experience for a whole class of brokers.

Writer's BIO: Mindy Diamond founded Chester, N.J.-based Diamond Consultants, which specializes in retail brokerage and banking recruiting

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