This month’s issue of Wealth Management magazine brings up an interesting question…Can Financial Advisor training programs redeem themselves?  It’s a dirty little secret that’s been well-known for years- big brokerage firms are more interested in hiring salesmen than financial experts.

 

It costs these wirehouses a great deal of money to get an advisor up and running.  According to Wealth Management magazine, some firms spend up to $300,000 to fully train a recruit.  That’s a lot of dough.  And frankly, they want their money back.  The problem is, less than 20% survive the training program after two years. 

 

Why is the success rate so low, you might ask?  Because in a nutshell here is how the program has worked for decades:   we spend a lot of money on you to get licensed, provide sales training on cold calling and overcoming objections,  give you an impressive title, and expect you to sell something!  Depending on the firm you joined (Morgan Stanley, Merrill Lynch, UBS etc.) they put sales quotas on you that mandated certain assets or you were fired.  For instance, they might say, you need to bring in $10 million in assets and $80,000 in revenue by your one year anniversary or you’re fired.  No exceptions.  That’s a heck of a lot of pressure to put on someone and it certainly shows what was important to the firm.  There’s no customer satisfaction survey or credit for doing the right thing.  It’s X dollars in assets and Y dollars in revenue, or you can hit the bricks.

 

The new trend in the industry is to team new advisors with old ones to try and teach them the ropes.  Honestly, this should have been the trend decades ago.  Handling other people’s money is an awesome responsibility that has been taken for granted by large institutions for far too long.  You can’t just give a trainee a briefcase and tell him to go knock on doors and make revenue for the firm.  People work hard for their money and the advice financial advisors give to their clients should be honest and competent; not some canned sales pitch that puts the company’s needs ahead of a clients. 

 

When it’s time for you to look for a Financial Advisor, trust your gut.  Ask the person sitting across from you how long he’s been in the business.  Why is he qualified to manage your hard-earned money?  If she can explain her answers in an honestly and sincerely, that’s a great sign.  If you’re being given a scripted pitch, or feel pressured or manipulated in any way, head for the door!