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Why I’m Mortified by the Traditional Sales Training and Compensation Structures in the Financial Industry

The 'sales coach' mentality still thrives in the advisory world, to everyone’s detriment. There is a better way.

Over the weekend I was scrolling through my LinkedIn account and was rudely awakened by some posts that I personally considered embarrassing for any financial advisors to read. 

Or at least any financial advisors who consider and call themselves fiduciaries in charge of people’s hard-earned wealth and legacy.

Some of these posts were created by “coaches,” some with hundreds of thousands of followers, creating video selfies on their iPhone talking at 5,000 miles an hour, about sales. Looking through their profile background, I wasn’t surprised that most of them were in software or insurance sales prior to becoming self-proclaimed “trainers to financial advisors.”

Do the following terms make you cringe too?

  • "Setting” appointments (as if we’re a dental practice)
  • Your “reps” (talking about people within an organization as if they are ants)
  • “Crushing numbers” (we’re not on a football field here)
  • Getting a deal “booked” (almost feels like we’re talking about catching fish)
  • Getting more customers (who even uses that term anymore in the investment arena?)

Even beyond traditional sales rants on LinkedIn or at conferences, as I travel the nation meeting with advisory firms about their teams, I get uncomfortable when I hear compensation structures that seem completely contradictory to the “consultative” nature the firm prides itself on.

It worries me when I see advisory firms, many of whom keep saying they’re modern and forward-thinking, structure their compensation structures like things worked back in the ’80s or ’90s, when it was as simple as cold calling your way down the leads list, getting a meeting, selling a stock and collecting a commission.

Frustrated management teams are so proud to tell me they will happily give their team 50% of revenue for any new high-net-worth investors their team brings in and are shocked to find that isn’t enough motivation.

And advisors with so many other things on their plate have bonuses dangling above their heads like carrots, looking impossible to achieve given so much competition and so many uninterested investors.

If you’re just as grossly turned off as I am about some of the terms above, terms used by the former software salespeople, or are concerned about the way some firms’ compensation structures are so backward-thinking, YOU ARE NOT ALONE. 

Unfortunately, these old methods and language, as well as old ways of rewarding a “sale,” are the exact reason why every time I survey a group of wealth managers about how they feel about the word “sales,” 99% of them say “We hate it and think it’s disgusting.”

It’s also probably the reason why advisory firms can’t seem to hire talented and skilled advisors unless they can guarantee their candidates that business development will never be required of them. This is scary!

Let’s first examine why both the approach and the rewards are not reflective of today’s world and discuss how this mixed-messaging epidemic can be resolved for our industry.

For starters, the sales training: Perhaps back in the day, a wealthy individual was not fully aware of the way investments worked. He or she received a call from a “broker,” who “sold” him or her on to the benefits of buying one stock over the other. The investor approved this sale without much thought, and the advisor “crushed” his numbers. In that time, perhaps a sales trainer talking at 5,000 miles an hour about “reps” booking appointments and building a “book of business” may have worked and motivated a team. Now, it’s a gigantic turnoff.

Not only is it a turnoff, but it doesn’t work! With the advent of so much technology and information all around us, as well as investors becoming more savvy than ever before in not falling for “exclusive attitudes” and fake sales methods like those that led to the Bernie Madoff scheme, those traditional sales training methods no longer apply, and in fact can get your team into major trouble with regulators.

Today’s investors want true information on how an investment advisor can make their life simpler in a way that an app at their fingertips cannot. This requires being a true consultant, not a transaction facilitator. Showcasing analytical data and proof that ‘Yes, Mrs. Smith, you can do this all by yourself, but we can reduce your time around it, and here’s why you can trust me with that task.’

Which leads me to my next point about the compensation structure: If trust-building is the main way investors will hand over any of their assets to you going forward, then paying advisors within an organization only upon the “close” of a deal may mean they wait potentially years for their bonus. This can be extremely discouraging as it doesn’t value the trust-building process advisors need to go through to build those relationships with prospects. Or it can rush them through the consultative sales process and in fact ruin the opportunity.

We highly suggest becoming more creative with your compensation structure to reward a different kind of behavior. Encourage more of your advisors to go through the long journey of building trust with investors. Consider all the portions of the journey to getting a new client and find incentive structures that are aligned with that journey.

Why is all of this important?

Because in truth, even with all the sales hype, we are not growing.

Advisory firms are growing on average 2% annually, and the key method for growth continues to be passive referrals. Advisors boast about doubling in size, but when you look under the hood and past the market appreciation, it’s primarily from referrals or M&A.

All of this resentment toward proactive organic growth so they can avoid giving in to the old-fashioned sales methods or waiting for a commission pay.

If you want your firm to grow, but you don’t respond to the type of messaging I read on LinkedIn, nor want to build a boiler-room culture, there is a better solution. 

It’s called Consultative Sales. If you can develop you and your team to become true consultants to your clients, like McKinsey is to large organizations or boards of directors are to a management team—you can align your compensation according to the process of building a relationship, not sales—then, and I really believe only then, can you become a successful wealth manager with strong organic growth. 

Amy Parvaneh is the founder and CEO of Select Advisors Institute, a sales, marketing and compensation consulting firm to advisors and attorneys. Her firm has worked with thousands of advisors on improving their sales and marketing approach in a discerning and fiduciary manner.

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