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Branch Managers Will Need To Start Producing Again
By Bill Willis
OnWall Street, November 1, 2009

When I became a stockbroker in the 1970s, most of the branch managers also had a book of business. Producing managers were the norm and many were favorably viewed as player-coaches. They often were role models to their teams.

Now, in the wake of the financial meltdown, firms are choosing to reorganize their retail divisions, and all the majors are aligning their branches into complexes.

Over the years, the demands on managers have increased. The business has evolved to include many more products and services. In the past, good managers took the time stay current about all the new disciplines.

But, as a result of this expansion of responsibilities, the job of overseeing advisors became more complex and time consuming. With the increasing importance of recruiting-and all the energy that it requires-producing mangers began to feel overwhelmed. Firms, regulators and managers began to see the virtue of having branch managers focus on management and leave production behind.

By the 1990s, most of the major firms wanted non-producing managers in all but their smallest branches. Managers were either told not to produce, or had their production maximum capped. Many chose to distribute their accounts to top producers in their branches to maintain the business and enhance loyalty. By that point, the branch manager was positioned to focus on his primary objectives: coaching, recruiting and supervising financial consultants.

Now, the plan is to create complexes, which often consist of several branches, overseen by one senior, non-producing manager or complex manger, who usually resides in the largest office. The other offices in the complex are most often led by producing managers who report directly to the complex chief.

Industry wide, managers who have not produced in recent years are being told to build a book of business and fulfill the production side of the equation. Most will find that the lion’s share of their future compensation will rely on reestablishing themselves as successful financial consultants.

To many, this is a daunting task.

There is intense pressure on these newly anointed producing managers. They must rapidly build a practice in order to maintain their previous compensation levels. I understand that one major firm is imposing minimum performance requirements to further “motivate” this group. One manager facing these standards says that he feels like a rookie advisor who must exceed certain asset and production levels to survive.

So where does the new producing manager start? Since building and servicing a book of business is time consuming, it is essential for the complex manager to assume significant aspects of management responsibilities.

Perhaps primary supervision and recruiting can be handled by the complex manager, leaving coaching and emergency compliance as a local responsibility. Hopefully, this will give the new producing manager adequate time for prospecting and building a book of business.

Once the heavy lifting is done and the seeds of a new business are sown, producing managers will begin to notice the many advantages of the position. If adequate production develops, they will be in a more financially stable environment. Compensation will be less dependent on the performance of others and the subjective appraisal of senior management.

Unlike their non-producing colleagues, competent producing managers are almost never fired. They are indeed successful advisors, thus always in demand. Now that they practice what they preach, they may also notice a newfound credibility among those they manage. They will be perceived to espouse what they believe, rather than dole out the firm’s playbook.

Much like a professional athlete who often has more respect for a coach that has played the game, many financial advisors may be more willing to follow a successful producing manager.

While there are advantages in shifting from a non-producing to a producing role, most will find the change very challenging. And, I suspect many will fail.

The majority of managers now being asked to produce find themselves years behind and miles away from their former client bases. Frankly, some of these individuals opted for management because they were never successful as financial advisors. Others who were strong producers in their past might not have the energy or inclination to do it again.

The percentage that succeed in reestablishing themselves as producers will face new challenges. They will have to delicately balance their priorities between the two disciplines. They must work with clients and prospects, while serving the needs of their brokers. Some advisors reporting to a producing manager assume that they are in competition with their manager for leads, account distributions, sales support, etc.

As such, it is particularly important that a producing manager run a totally transparent office.

Branch complexes, complete with producing managers, have been successfully employed by Merrill Lynch for years. So the system does work. Indeed, it helps the firm operate more efficiently today and affords a career path for future leadership.

Successful Merrill advisors who want to pursue management usually become producing managers. Some stay in this role for a long time, enjoying the best of both worlds, while others use it as a springboard to more senior management posts. All are successful producers who volunteered for management.

The vast majority of today’s new producing managers do not have meaningful client bases and they are being forced back into production.

Merrill has built its system by elevating established producers, rather than asking experienced managers to grow a book on the job. Clearly, reestablishing a book is a higher stakes proposition.

Firms must give this group time, resources and financial support if they desire a high percentage of success.

It is going to take an enormous effort for most of the new producing managers to rebuild a client base. Frankly, most in this group must produce now or leave the industry, as the market for non-producing managers has never been weaker.

The stakes are high, but the rewards are great. Those who succeed may find themselves in the most enviable role in the industry.