Culture

We can agree that a great culture is imperative to an organization's success. In the financial services industry, success takes hard work.

Before we discuss a great culture, we must look at what could lead to a not-so-great culture. Under Contract, we defined compensation, costs, and client data. Under Training, we looked at sales tactics and lack of education as the status quo. A not-so-great culture can happen when advisors join an organization where they are over-expensed, not directly compensated, and do not own their client data. Additionally, they may feel they are not being properly trained and/or challenged to learn anything of value.

Over time, in this environment, advisors can get frustrated. Typically, they have not been given any additional resources, training, or content that benefits their growth. If the advisor wants additional training or education, they may be forced to pay for it. The advisor may recognize that their model of financial services is just sales… and then it hits them. The financial advisor, while looking for a way out, learns that all compensation and client data belongs to the firm and/or manager. In certain cases, the advisor does not own his or her book of business, the financial institution does. This means, that if the advisor quits, the firm may profit by keeping the compensation (trials/renewals) and the client data. The phrase I hear far too often is, “I want to leave, but if I do, I have to start all over… I would lose everything”.

After years of recruiting, training, and coaching financial services professionals, I believe that many are not financial advisors at all. Through no fault of their own, they have been recruited into a system that benefits the financial institution far more than it benefits the advisor. Now, while I must believe that there are good people in tough situations, most financial professionals come to realize that they are simply the sales arm of their institution or firm.

Large financial institutions continue to compress the commissions the advisors (salespeople) earn on their “grid”. Remember, an advisor at a large bank or brokerage house may charge a client 1% on $1,000,000 which equates to $10,000 in “fees” annually. The $10,000 “stops off” at the financial institution, and then a percentage of that $10,000 is paid to the advisor. If 40% is paid to the advisor, the advisor makes $4,000. Conversely, the institution keeps 60% or $6,000. More than ever before, institutions are reducing the percentage paid to the advisor and retaining more for themselves. Therefore, if the advisor wants to earn more income, they must bring on more clients or charge each of their clients more in fees or both. Remember, if the advisor/salesperson leaves the financial institution frustrated about the compensation changes, he or she could lose all their clients, residual compensation, and client data.

Most advisors and clients would agree that this type of culture is not something you aim to be a part of. If you truly are an advisor acting in the client’s best interest, you should learn to recognize this possible outcome and avoid it.

Now, what do the right training and culture look like? People, in general, want to be intellectually stimulated. In financial services, intellectual stimulation may come from a healthy skepticism of the status quo, sales cycle, or fee structure. It’s coming to mathematical conclusions on your own instead of relying on marketing material. It’s acquiring additional certifications and industry designations. I have found that financial professionals who are challenging themselves, accomplishing goals, and coming to conclusions on their own, are as valuable to culture as any amount of money or compensation. When the financial services industry focuses on the training and development of advisors, it will increase overall satisfaction for clients.

Ultimately, when it comes to culture - you have a choice. When looking for a financial services firm to be a part of, remember that this is also the firm you intend to introduce to your friends, your family, and your community. Do your best to investigate. Do not let a recruiter tell you about their great culture. Ask-what does the contract look like? Then ask, what does the training program look like?

Remember, without the right contract and training, the right culture is impossible.

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