A Shot in the Dark

The “Yeahbuts”

Trott reveals that when he approaches a broker/dealer with the firm’s statistics the B/D will invariably reply “Yeah, but my guys are making it up on the other business they do!” Trott says he hasn’t found that to be the case. Reps have their own set of ‘Yeahbuts’ to address: “Don’t manage me, I know my job, I know my clients–leave me alone. Yeah, but you can’t compare me to the firm because I’m not the firm. [You] can’t compare me to those other reps because my clients are different. Can’t compare me to that rep because he’s transactional and I’m fee.” Trott tells reps: “Let’s compare you to reps like you, that have clients like yours, with a style of business just like yours,” and then they “start running out of ‘yeah, buts.’”

When PriceMetrix associates meet with an individual rep about higher revenue potential in their book, “the first thing [reps] say is ‘That’s wrong.’ It’s the normal response from any rep,” Trott asserts, “‘the data’s wrong, you are wrong.’” But, he says, “this isn’t criticism, it’s just showing them where there’s opportunity in the book.” PriceMetrix associates show reps what has worked for other reps with similar books of business. Some of the statistics that Trott has gathered from the 6,000 reps on the PriceMetrix platform reveal surprises. Of the mainly captive reps currently on the platform, some 40% of their book consists of households with $50,000 or less in investable assets with that rep, on average only $14,000 per household with the rep, but potentially a lot more elsewhere. These accounts generate about $20 per year in revenue, according to Trott, who argues that for independent B/Ds the statistics would be much worse.

The average rep on the PriceMetrix platform generates $342 gross per hour, so “that [smaller] client is buying about four minutes of your time a year; we (and you) are pretty sure that they’re consuming more than four minutes of your time a year. It doesn’t mean you have to fire them, but it means you’ll probably have to re-explain your proposition to them.”

Some reps are afraid to discuss price with clients, Trott concedes, but “the highest-performing reps discuss how they’re getting paid with their client.” He tells an anecdote about a mixed foursome coming off the golf course. “One says: ‘I fired my broker because he charged me what he said he was going to charge me!’ [laughing]–Affluent people never do that,” according to Trott. “If you’ve told them what you’re going to charge them, and they agree, they don’t fire you for charging them, they fire you if you don’t do your job, or you didn’t communicate with them.” Trott advises reps to “price with pride,” not guilt.

E-mail Senior Editor Kathleen M. McBride at [email protected].