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Retaining Your Best Advisors

The dizzying industry turmoil of the last few years has induced wirehouses to offer their top producers some of the largest retention packages ever. It was bound to happen, industry insiders say, as these folks had many more questions than answers about their futures—and those of their firms. Still, the deals aren’t necessarily buying advisor loyalty.

“What they’ve really done is bought the firms some time,” says Barbara Herman, senior consultant for Diamond Consultants, a Chester, NJ-based industry recruiting and consulting firm. “They’re encouraging reps to stay put while their firms deal with their respective issues and changes.” Top reps, in effect, are able to “watch how things play out” while they determine if their firms are still the best place for them.

With their shares off of pre-crisis highs, the proverbial golden handcuffs of deferred comp plans and company stock were no longer ways to keep reps tied to their firms. “Retention packages are tied to forgivable loans,” Herman says. “So, an advisor must repay the unforgiven amount if he leaves. But, most advisors tell us they’re purposely keeping the funds available so they have the flexibility to leave if they choose, which highlights the uncertainty many still feel.”

This could ultimately be another boost to the recruiting environment. Top wirehouse reps are not only being aggressively courted by direct competitors, they are increasingly—and very successfully—being “lifted out” of the wirehouse world altogether by RIAs. As a result, branch managers have had to become as innovative about retention strategies as they have been with their recruiting efforts.

Herman says many top reps—folks with $1 million or more in production—are currently under either a retention or recruitment package. “But, the latter is outpacing the former,” she says. What’s more, recruiting packages can last eight to ten years, and many advisors didn’t even qualify for the large retention deals.

The bottom line: Retention is not just about bonuses anymore. “Managers who are effective coaches—bringing in resources and creative ideas to help advisors bring in new clients and do more business with the clients they already have—stand the best chance of retaining their advisors,” Herman says. “Now more than ever, retention depends on providing real value to the advisor at every production level and at any tenure in the industry.”

Don Patrick is sole branch manager for Atlanta-based Integrated Financial Group—a nationwide consortium of 55 independent FAs that uses Securities America as its broker/dealer. He has four more advisor deals currently pending, one of whom is coming from a wirehouse.

Like Herman, he feels retaining top advisors is an issue of showing FAs that you, the branch manager, can continually add value to their businesses. The indie world has been very successful recruiting by touting its well known virtues, the greatest of which are significantly higher payouts and owning one’s own clients. “But, we must demonstrate added value, not just to our recruits, but to our existing advisors,” Patrick says. “We sit down on a regular basis to discuss their vision, and where they want to go. And, we offer them top notch coaching. It’s one of our core competencies.” Securities America also offers advisors various forums wherein they can share their best practices—as Herman recommends, from internal company blogs and webinars to in-person study groups.

In 2007, Securities America lauched AskSamX—an internal blog site where FAs can discuss everything from practice management and planning strategies to financial products and services. A statement released by the firm earlier this year indicated that the site averages 15 to 20 conversations per day, and that “nearly 50 percent of its advisors are benefiting from the experience and expertise of their colleagues.”

Rich Franchella, Sr. oversees 50 advisors—and an additional support staff of 50—in four offices for RBC Wealth Management, including one in Midtown Manhattan. Over the last 18 months he has not lost a single. Here are some of his strategies:

BE AVAILABLE AND RESPONSIVE: Franchella says his reps know he’s just a BlackBerry away 7 days a week—even on when he’s vacation. And, he always gets back to them “within a few hours—at the very latest.” He’s designated a ‘call-in’ time at his home weekday mornings between 6:30 and 7:00 a.m., when reps can call about something they may not have resolved the day before, or something need guidance on for the day ahead. At, 7:00, it’s time for an “un-interrupted” breakfast with the family, after which he heads to the office.

TREAT DIFFERENT ADVISORS DIFFERENTLY: “They’re not created equal, but rather have very different affinities and goals,” he says. “It’s important to know them very well, sit down with them independently, and help them customize their growth strategies.”

HOST ADVISOR APPECIATION EVENTS AND MEETINGS: “We hold at least one big advisor event each quarter,” Franchella says, things like wine-tastings at exclusive hotels and other social outings. Not only can advisors enjoy themselves and mingle, “they’re encouraged to invite clients and prospects so they, too, feel important.” There is a quarterly “Pacesetter” meeting wherein notable industry experts give advisors informative keynote speeches. Regular “Bond and Blog” meetings each acknowledge a different individual for his/her contributions to the branch’s success, after which the honoree gives a “lecture-ette” on his/her area of expertise. And, quarterly ‘Roundtable Club’ meetings allow advisors and support staff to offer up their up input on anything about the branch or the business. “This can be as simple as a discussion on whether the bathrooms need painting to create a better environment and a better experience for clients,” Franchella says. A quarterly “State of the Complex” meeting, wherein financial results are divulged and goals moving forward are discussed is the only meeting for which attendance is mandatory.

INVEST IN YOUR ADVISORS: “If someone comes to me with a prospecting idea that I feel is viable, I become his partner, getting the firm to absorb half the cost of what he wants to do, generally up to $10,000. If the initiative succeeds in bringing in notable new clients or assets, the firm will reimburse the advisor the half he put out in the beginning.”

He adds that the firm often makes modest donations to his reps’ pet charities in an effort to “keep in step with their personal values

GET TO REALLY KNOW YOUR FIRM: In the five years he’s been managing his RBC complex, Franchella says he’s made a concerted effort to get to know the workings and people of his firm--from top to bottom. “I’ve built relationships with the heads of all the firm’s departments. So, when advisors come to me with ideas or problems, I can be very ‘prescriptive.’I know precisely where to send them for the best results.”

HELP ADVISORS PLAN FOR THEIR FINANCIAL FUTURES: Advisors can be so busy tending to their clients needs, they many not be addressing their own needs, Franchella says. “We have experts offer them a seminar called, ‘Preserving Your Wealth and Protecting Your Family’ wherein their own retirement and succession planning needs take center stage. For example, if an advisor passes away without an adequate succession plan, his accounts will be dispersed among various others in the firm. His family reaps no rewards from the business he worked so hard to build. We teach them how to prevent that from happening, and they’ve been extremely appreciative.”

DON’T UNDERESTIMATE THE APPEAL OF YOUR ADVISORS TO OTHER FIRMS. “I know other firms are always looking at my people. And, I tell them, ‘If you can find a place that cares more about you, let me know and I’ll go with you.’” If they’re offered more money, Franchella insists they can speak candidly about it without any fear of negative repercussions. “In these offices, we are always looking-- as the Baltimore Ravens say, to ‘protect our house.’ But advisors know it also means we look to keep the clients of anyone who might leave. So that can be a deterrent to them leaving, too.”

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