Bank brokerages

A couple comments…

    The major problem I see with bank and Credit Union reps is two fold.  -First, they typically failed at a wirehouse, and were then subsequently hired because they have a license at a bank/credit union/discount broker.  Rather than "earning" business from loyal clients by prospecting, they sit back and have the leads handed to them.  Although gathering assets using this model is easier, the assets tend to be significantly less "sticky" because the clients are more loyal to the bank than to the advisor. -Second, there tends to be higher turnover at the banks.  I just brought over a U.S. Bank account of over 1.8 million last week in part because my new client had 3 brokers in the last 4 years.  Washington Mutual advisors are leaving in droves, and I have had 2 major walk-ins because of the turmoil lately.   I personally don't think there has been any more movement in this area than normal lately.  The bank model fits well for some, but I don't see many brokers there that are overly ambitious.  The banks/Credit Unions definitely have a steady client stream, but the job security and payouts are significantly lower.

Not surprisingly, I have a significantly different take than Rankstocks, mostly taking issue with his generalizations regarding quality and ambition of bank advisors.

  First of all, not one of the bank advisors I worked with (there were nine of us) failed out of a wirehouse or any other program we were involved with.  There was one former Jones rep, a former trust officer (me), a former Schwabbie, a former insurance agent, a former superregional broker, a CPA and part-time entrepreneur, a transfer from another bank program in another state, a bank employee, and an absolute newbie.  None of us left our former jobs because we were failing at anything and none of us were lazy.  Only one has since left the industry, and it wasn't because he had to.   As far as having things handed to us, it varied significantly by branch.  While I received several nice leads during me years at the bank, most of the A clients I got were from my own work and efforts.  When it came time to leave the bank, those clients came over with ease, although I will acknowledge that some of the referral clients did end up staying behind, but very few of those were actually clients I hoped would move over.  Most of those left behind were smaller clients and rate shoppers.   Turnover is definitely a product of environment.  I've spoken with many bank brokers who are very satisfied with their situation and have no intention of leaving.  Generally, these advisors are in smaller bank programs where management is smart enough to understand that they don't understand the business as well as they should, so they pretty much leave things alone.  Other programs where bankers don't understand the business, and tinker with compensation and offerings, do experience heavier turnover.   Without question, payout is usually quite a bit lower at banks than with other models (low to mid-30% range).  Bank management justifies this by saying that business is easier with the referral network, and thus, payout is less.  As far as job security goes, I'd guess that it's at least as high as in a wirehouse.  Most advisors who leave banks, are doing it on their own accord (or maxima, corrolla or other model).   ...and finally, it's not an absolute that an indy wouldn't take a bank job.  I know several independents that operate inside of banks, and share a percentage of referral income back to the bank in exchange for space and equipment.  The bank gets to offer the service and share in the revenues, and the for the most part, these brokers are very much independents in almost any sense of the word, even getting 1099 forms rather than W-2s.   Probably the biggest thing, aside from the potential pay cut, that would keep a wirehouse broker from going to a bank is the lack of technology and offerings, although I know for a fact that I had better technology and wider offerings at the bank than my friends at Edward Jones did.  That's for you, RS.

Indy,

  I think you summed it up about as well as anyone could...as usual. I would just add that the payouts in my plateform are a little bit better than was expressed. My payouts usually hover right around 41% depending on my product mix.   And yes, I do have leads handed to me usually about 10-15 per week and I'm darned proud of that fact!!! It beats hosting a seminar at the local steakhouse at 7pm on a week night or knocking on doors in the middle of January.   My average account size is 75k, so many of these are not huge accounts but they sure are not garbage accounts either.   that's my .02

Indy, I think that your situation is not necessarily the norm.  My experience, and I know many of the bank brokers in my area (we have several majors, plus a LOT of credit unions and small regional banks), is that their product selection and experience is VERY limited.  Many of them (outside the majors) can only do funds and annuities, and some are limited to only a small list of fund families (as in, like 2 or 3 that they are ALLOWED to use).  They cannot sell stocks or individual bonds (actually, some can SELL stocks, but only UN-solicited).  Most of them are either wirehouse dropouts or promoted tellers.

  Now, this is not the rule.  There are a few that are CFP's, that have better platforms or whatever.  But even some of them, like BAC, simply put EVERYONE in managed accounts with high fees, and then NEVER call them.  They are basically MFD wraps without ANY service.  No risk assesments, no advice, no planning, no reviews, just "here's your new portfolio.  Pay me 1.5%.  Goodbye".  I know this, because I am getting a lot of these clients.

[quote=Indyone]

  Probably the biggest thing, aside from the potential pay cut, that would keep a wirehouse broker from going to a bank is the lack of technology and offerings, although I know for a fact that I had better technology and wider offerings at the bank than my friends at Edward Jones did.  That's for you, RS.[/quote]   Indy, this is absolutely NOT the case anymore.  I can now say, with certainty, that our tech platform is now better than Merrill's.  I've seen both.  Our service/product offerings are still a notch down, but not far.  And honestly, most of my friends that work at Merrill don't use most of the "added" products and services that Merrill has above and beyond Jones.  They basically use stocks, bonds, funds, and a MFD wrap program (I forget what they call it).  The other Merrill office near me is all about annuities.  I am told (3rd party) that 65% of their business is just straight up annuiities.

[quote=B24][quote=Indyone]

  Probably the biggest thing, aside from the potential pay cut, that would keep a wirehouse broker from going to a bank is the lack of technology and offerings, although I know for a fact that I had better technology and wider offerings at the bank than my friends at Edward Jones did.  That's for you, RS.[/quote]   Indy, this is absolutely NOT the case anymore.  I can now say, with certainty, that our tech platform is now better than Merrill's.  I've seen both.  Our service/product offerings are still a notch down, but not far.  And honestly, most of my friends that work at Merrill don't use most of the "added" products and services that Merrill has above and beyond Jones.  They basically use stocks, bonds, funds, and a MFD wrap program (I forget what they call it).  The other Merrill office near me is all about annuities.  I am told (3rd party) that 65% of their business is just straight up annuiities. [/quote]   And they're looking like geniuses right now, aren't they?

  It is not possible to put bank programs in a box & say "they all suck". Just as there is wide variation between let's say Jones and Merrill...there is also wide variation between different bank plateforms. As someone said earlier (Indy) LPL now has a bank based plateform where the rep is actually situated in a bank or credit union environment. He has full & unlimited access to the LPL menu of products & services to provide to bank clients & in return he gives up a portion of payout for this access plus desk, equipment & supplies. This program works if the FA goes in with a "partnership" mindset. At the same time I have friends who are in miserable bank programs their broker/dealer only provides a limited list of funds and annuities with payouts that range from 25%-30%. There is constant bank bs they have to deal with & their compliance only allows them to sell fixed annuities. So again I think it just depends on which b/d the bank is affiliated with. My personal experience says that the better opportunities are with small banks or community banks vs. national or regional banks.