In a recent article in Financial Advisor IQ, two reps that left Morgan Stanley, Brian Luts and David Greenleigh, discussed the benefits of moving from the wirehouse to Wells Fargo’s independent arm (FINET). “Our operating margins are still significantly better than when we worked as employees,” according to Luts, who also commented that he’s now netting about 70%.
David Greenleigh noted that the higher margins allow his practice to work with fewer clients. “At Morgan Stanley, we would’ve had to more than double the number of people we served to reach our goals.”
Luts’ and Greenleigh’s remarks point to a benefit of going independent that is rarely touted by the channel: making more with less and freeing up your time for a better quality of life.
The Constant Push at the Wirehouse
No matter how high you climb up the ladder of production, wirehouse representatives always face pressure from branch managers to get to the next level. Last year I was reminded of the top-down wirehouse mentality when I visited a large firm that had both retail and independent reps. At the end of my visit, management shared their thoughts that “…since the markets had recovered from 2009, reps had become lazy and content…” and evidently, it was the broker-dealer management’s job to change those bad habits.
As an independent broker-dealer recruiter, I was immediately turned off by this comment because in my view, the job of independent broker-dealers is to support their advisors’ practice, not tell them how to run the business or dictate the hours they work. The wirehouse’s constant push for reps to manage more assets and more clients—reps often must have 500-1,000 clients or more—raises the question, “What kind of quality relationship can you have with so many clients to service?”
Besides the time needed to service such a large number of clients, reps carry the “mental Rolodex” of clients and their needs that continually pop up in their minds, both inside and outside the office.
That constant barrage of information and concerns tests many reps’ ability to be in the moment and focus on friends and family. With the lines blurred, it can get to the point where you wonder if you’re living to work or working to live.
500 Versus 50 Clients
To illustrate the point, let’s take a look at a favorite independent model of mine. This particular advisor had $85 million of assets and grossed close to $800,000. She had 35 clients that were all wealthy and because she had this relatively small pool of clients, she was able to shower them with attention.
Besides coming to her for their financial needs, her clients came to her for assistance when they wanted to buy a car, purchase a home and even plan a vacation. They had her cell number so they could reach her any time they needed. Because they felt pampered by her attentiveness, they would refer friends and family who like them, were wealthy.