Why The Branch Manager Role is Broken
SuperUser Account posted on January 13, 2011
Office politics can poison relationships; it can also lead to bad management decisions at brokerages, where favoritism, mismanagement in hiring and corporate restructuring are all having disastrous effects. The most damage is being inflicted lately at the branch manager level, where brokerages are increasingly forcing out seasoned veterans for less qualified peers. It’s a trend that impacts both the bottom line and morale.
In many cases, the branch manager works for a company for 10, 15, even 20 years. He (or she) always goes the extra mile for the firm; it’s the manager’s home away from home. He puts his heart into recruiting to make sure he is always in the top 25% to 30% at the company. He works 60 hours a week and goes to a lot of late night functions. He runs a clean branch and in most cases his audit comes back with a favorable rating. His advisors like him and are loyal. He even misses out on his kids growing up, and maybe even has a strained marriage because of his job dedication.
What does he get in return for this loyalty? He gets fired. It is so impersonal. One day he is flying high; the next, he is at home painting the fence or fixing that loose handrail. He has to figure out how to write a resume for the first time in 20 years.
Unfortunately, the financial crisis has exacerbated turnover in this important role. Consolidation and cost-cutting has pushed many seasoned branch managers out of their position. For example, many Morgan Stanley Smith Barney branch managers found their place at the company – and way of doing business – had changed when the joint venture moved from a more dispersed branch manager model toward a more centralized complex model. The same changes occurred when UBS turned the branch manager position into a client-facing role.
Adjusting to any change is difficult, but nothing is as difficult to a professional as losing one’s job. In these situations, the branch manager is not used to being the interviewee and wonders if he remembers how. At first he stays positive. He thinks, “I know a lot of people in the industry and I will land a job soon.” He then spends the next few months going to many lunches and calling all those contacts, many of which he has not spoken with in years. After a couple of months, he resorts to reaching out to every recruiter he knows, or at least his favorite. The longer the process continues, the harder it can get.
In some cases, the managers are presumed, occasionally falsely, to be just dead weight and not as talented as the new replacement. There’s also a prevailing school of thought that the firm can just replace these more expensive employee at a lower fixed cost. However, in most cases, the veteran branch manager’s compensation comes from performance bonuses instead of a big salary. These professionals are also very talented and have strong relationships with their advisors. That often means these branch managers are able to take many of their advisor colleagues with them when they land at a competitor. In those cases, it can take years to recover in a branch that has an elite team walk out the door with a fired branch manager. But many firms don’t consider the negative financial impacts when they push these branch managers out.
Sadly, I have frequently seen firings occur because a new regional manager wants to bring in their “own boys.” It seems like an awful big waste of money, but it happens all the time. In fact, I recently witnessed an incredible manager, a patriarch at his firm, get fired from a wirehouse and replaced with a manager who had much less experience and talent. The fired manager was loved by all, and the new manger was an unknown. There were dozens of managers who were next in line for such a big promotion, but it was given to a “nobody” in the industry. However, that “nobody” happened to have the right contacts. This left everyone in the region scratching their heads and quite frankly shocked.
At a small bank brokerage, on the East Coast, I recently witnessed another example of insanity. When the regional manager resigned, the firm promoted a manager from the banking side who was not even licensed. Financial advisors want their leader to be someone that has been in the seat – yet this new manager had never even been a sales assistant, let alone a financial advisor. This was an example of a manager promoting her “own girls” – in this case a female manager promoting a female. These incidents are also part of the reason why wirehouses and the brokerage industry are routinely hit with lawsuits that charge discrimination and harassment at the workplace.
If handled properly, I find that most of these managers would have stayed loyal to the firm. They could have been offered a different role, or opportunity, in another part of the country. We all know this is a dog-eat-dog business, but does it have to be? Does a firm have to kick a manager to the curb who has been so dedicated and loyal? It is hard to enough to find loyalty from a person and even harder to find it from a company anymore. At the end of the day, it seems pretty costly to have just your “own boys” working with you.