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June 01, 2008 at 04:00 AM
When Research magazine made its debut in June 1978, the No. 1 song on the Billboard chart was “Too Much, Too Little, Too Late” performed by Johnny Mathis and Deniece Williams. Just a month earlier I had edged into the financial services industry with a public seminar, “Telephone Prospecting.”
Today, Johnny and Deniece are still performing. Research, of course, is still publishing. I am speaking, writing, have a new book due in August (Hot Prospects) and am in all other respects going strong.
The Team ConceptGil Weinreich, editor of Research, asked me to focus this article on team development because “you are identified with that topic.” Identified is correct, but let me go further. In all modesty, I was the first kid on the block to see the coming decades dominated by teams.
I saw it because I was driven there by forces then (and now) in the marketplace. In the early to mid-eighties, I sold training seminars to firms. We literally trained tens of thousands of rookies to cold-call.
Beginning in 1982, the industry consolidation started. Kemper started buying regional brokerage firms. Shearson took over Hutton. Drexel imploded. Bache bought Thompson. Watching this was far more than a spectator sport. As the bigger fish ate the smaller fish, my marketplace was shrinking, providing a guaranteed income reduction plan for yours truly. I made up a name for the firm I imagined would be the last standing: AGMerrillWebberWitterBros. I will refer to this mythical firm hereafter as AGMWFB. (If I had called it Wachovia, I would now certainly be at the head of the prognosticator class.)
As I researched what I could sell to individuals, I discovered that FAs were worth $1,000 an hour in gross revenue while meeting with and talking to clients and prospects. That figure ultimately led to the “team concept.” That was 1985.
I got it right 20-plus years ago. So I’ll stick my neck out and say: the future landscape will be dominated by large teams, especially partnerships as the boomer advisors move into retirement years. As they fade to black, the new generation will embrace virtual teams.
To understand team evolution going forward, you should understand its origin and the natural laws that govern its successful operation. Sadly, the original version of this article was too long for the space allotted, so I cut this vital material and added it to a white paper, “Surefire Team Development.” It’s available at www.billgood.com/surefire.
Age Wave and Team DominationThe domination of teams and partnerships, and the rise of the virtual team are almost inevitable given three undeniable conditions.
Condition one: The age wave is forcing aging boomer FAs onto teams with younger FAs.
The demographics of this industry are a mirror image of our society. As in society, there is a huge bubble in age distribution of financial advisors; these are the boomer FAs.
When my team and I were teaching rookies, the major firms were sometimes hiring as many as 1,500 brokers a year. Many survived and are now fifty-something FAs. You needed a desk, phone, script and a list of rich people to call.
Frequently, when talking to a boomer advisor, I ask, “When do you plan to retire?” The usual answer is, “No plans. I love what I do. One day, I will just be carried out feet first.”
That may be true, but what I am observing is that many are engaged in thoughtful planning for the survival and eventual buyout of their biggest asset. They are bringing in junior partners, or merging with a younger practice and, yes, planning to keep a few clients. The value of their businesses depends not only on its revenue stream but its survival potential after the founder departs. A team helps ensure continuity.
Those now truly intent on building continuity are also intent on converting to fees, if they haven’t already. This roughly doubles the sale price of the business.
The boomer FAs need the younger generation.
Prospecting DifficultyWhen the “Do Not Call” laws went into effect in 2002, the world changed. No longer could a rookie with no cash make 200 calls to people at home and create a decent business in two or three years.
Consider the plight of the rookie today. How does he or she prospect? Referrals? From which clients?
Seminars? Big bucks required.
Direct mail? More big bucks.
Cold calling? Still works, but you better be one tough cookie.
Networking? Hit and miss. Realistically, the assets are with fifty-somethings, retirees or widows. How is the twenty-something going to network with them?
