Death & Resurrection of the Branch Manager
A job as a branch manager at a wirehouse used to be a pretty big deal. Getting those jobs was no picnic. All the major firms had some form of “assessment,” a senior executive training program that was very competitive, with a very high failure rate. I know, having gone through Legg Masons’ and then participating in the Smith Barney program as a trainer.
You had to be “invited” to be assessed, and the rigorous culling sent enough shaken veteran producers back to the ranks with their tails between their legs so that an invite was both craved and feared.
A manager who passed the test then had to work their way up through the system to oversee a top branch. Each stop from Albany to Biloxi involved moving with your family to a new town with new advisors. Each move was another chance to be assessed and moved to a bigger branch, or asked to leave the firm.
Along the way, you became a good soldier, believed in the company, held onto the culture and passed that belief on to the field force.The big branches in Washington, New York, Chicago, and San Francisco paid more than a million dollars a year to their managers, who were former producers who had proved themselves every step of the way.
A manager who made it to the big branch had no problem looking top producers in the eyes and laying down the law or sticking up for them against the firm. The assessment process and subsequent manager track was respected by producers and senior managers alike, giving managers both authority and gravitas.
Since the financial crisis and mergers of the major brokerage firms, wirehouses have deliberately moved away from the assessment program and focused more on saving millions by reducing management layers. In turn, much of the branch manager’s authority has been centralized with the home office. Local managers act more like bank branch managers: pushing product, dealing with HR stuff, and being the all important compliance buffer between the branch and the firm. Many seasoned veterans who have survived the consolidation have had to go back into producing roles. And as the career track has lost some of its luster and demand, former compliance officers, or bankers who have never been brokers, have been called to lead branches.
A constant refrain I hear from producers today is that a good manager is one who leaves them alone. Indeed. Many could hardly do anything else.They lack the gravitas and experience of the old-guard managers, and find it hard to get involved in practice management conversations with senior advisors when they haven’t ever practiced. They make much less money. And thanks to consolidation, they manage dozens more advisors than before and have fewer close relationships. Those I know in the field complain they see their advisors once a quarter rather than every day.
This is no accident. The smart folks from the big consultancies and elsewhere have counseled senior wire execs that multiple layers of management are inefficient — and the concept has been reinforced by bottom line-focused big banks that have bought three of the four wirehouses.
As a result, there’s an oversupply of former branch and complex managers, many of whom are still looking for a new home.
But we’ve also seen a dramatic growth in the independent space that has become a second home for many of the former wirehouse devotees. The Ancien Régime has shifted into ownership mode, getting equity in smaller companies, helping to build out new offices and hoping for a windfall by cashing out or a public offering.
Others have gone to regional firms, trying in some cases to build a national footprint largely by recruiting former colleagues yearning to recreate the environment in which they grew up.
Million-dollar salaries are gone, management-chain assessments have gone the way of the high-buttoned shoe and the jury is still out on how many, if any, of the new boutiques will ever realize the exit-strategy windfalls. But at least the old guard has something to believe in again.
Old soldiers never die.