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The one constant in all business is change. And although change can be a great thing, it can provide setbacks in terms of advisor turnover. Retaining quality advisors is a high priority, not just for the sale of investment products and services, but to increase the comfort level of financial institution clients and branch staff. Seeing a familiar face in the branches each day helps to ease the uncertainty of the investment arena. At CUSO Financial Services, LP (CFS) and Sorrento Pacific Financial, LLC (SPF), a primary goal of ours is to retain the quality advisors that service our financial institution partners.

Talent is a sustainable advantage that can be obtained in business. In order to keep talented individuals in the branches of your financial institutions for the long-run, we have created an environment at SPF and CFS where top performers want to stay and work. We fully support our advisors in order to help them meet their client’s investment goals.

We accomplish this through a combination of service and support. We provide our advisors the tools necessary to help them become successful while providing your financial institution’s clients with the appropriate products and services. Our advisor retention program includes access to a multitude of resources to support their investment planning, generous payout options, organic growth initiatives and the back-office support that affords advisors more time to spend with their clients.

One unique challenge for investment services programs in the financial institution channel is that advisors generally do not have ownership of their book of business. Upon employment, financial institution advisors sign agreements that dictate non-solicitation and trade secret requirements. These agreements generally state that if the advisor leaves the financial institution’s investment program, they are prohibited from taking any client information and may not solicit their former clients for a period of 1 to 2 years. These covenants in advisor agreements are made to clarify that the financial institution clients are, first and foremost, clients of the financial institution.

Non-solicitation clauses sometimes can lead to challenges in retaining quality advisors, as well as potentially limit an advisor’s willingness to offer recurring revenue products and services as part of a comprehensive solution for clients. I will touch on both issues and provide a potential solution below.

The investment services environment is very competitive and transparent when it comes to recruiting top producing talent. If you are fortunate enough to have such an advisor, chances are that other investment firms know of your top advisor as well. Other firms will attempt to recruit your advisor with higher payouts, upfront cash, forgivable loans and the ability to own their book of business at their firm. Outside of the financial institution channel—independent broker-dealers and wire houses—allow advisors to own their book of business to a limited extent. This is a great advantage to advisors who, being in the planning business, think about retirement too. An advisor’s book of business is a commodity that can be sold for as much as two to four times the commission revenue generated in the last 12 months.

All too often, financial institution advisors are recruited to another firm and attempt to bring their financial institution’s clients with them, in violation of their advisor agreements. Unfortunately, this can lead to litigation to stop this activity and recover damages due to lost clients and revenue. Litigation is costly and not client friendly. Finally, it is important to note that often, top advisors have built strong relationships over the years and have clients that trust them dearly. If a financial institution’s client wishes to follow their advisor to his new firm, FINRA rules are very explicit that the client may do so.

The second topic relates to recurring revenue streams from product sales. Recurring revenue can be received from advisory fee-based accounts and planning, as well as trails from brokerage and insurance products. Much effort has been made by our industry to educate advisors on the benefits of recurring revenue and not relying solely on transactional business. Recurring revenue allows an advisor to work more deeply with their clients, attain higher wallet share and produce a consistent revenue stream for themselves as well as your institution. Unfortunately, advisors that do not own their book of business may not wish to commit the time, effort and foregone revenue associated with embracing a recurring revenue model. They may not be committed to staying with your financial institution and may want to keep their options open to the advantages of joining an independent firm.

One way to address both of these issues is to offer an advisor a retirement/succession plan at your financial institution. More and more financial institutions are developing and deploying such plans to attract and retain their top talent. The typical plan will have terms covering the following main areas:

  • Term of Service: Typically 5 to 10 years
  • Age of Advisor: 55 years and older (remember, the advisor will be retiring from the industry)
  • Production Thresholds: Can range from $350k per year and up, for the past 1 to 3 years. Also, production amount can be limited to recurring revenue only, or a significant portion of overall production
  • Retirement: Pay the retiring advisor a percentage of the revenue generated from his or her book of business for 3 to 5 years after retirement. The successor advisor would receive the balance of the revenue. Payout can be heavily weighted or limited to recurring revenue.
  • Successor Choice: Allow the retiring advisor to be involved in choosing their successor. Prior to retirement, the retiring and successor representatives can meet with clients to explain the transition.

Retaining top talent is a challenge in any business. Our industry has the added complexity that advisors are the lifeline between the financial institution and the customer. Strong relationships, glued by loyalty and trust are inherent in successful advisors. Losing an advisor poses a real risk of losing customers and related revenue. Although it may not be easy and may require a change in the current business model, fortunately, there are ways to keep top financial advisors working productively and happy to stay for the long-run.


CFS and SPF are dedicated to helping financial institutions build successful investment programs and retain quality financial advisors. We deliver flexible yet efficient financial planning, retirement, investment and insurance solutions to boost the financial well-being of your institution and deepen relationships with those they serve. We’ve helped programs of every size position investments and insurance as core services and, in many cases, set new and meaningful revenue records in the process.

By Peter Vonk
EVP and Chief Compliance Officer,
CFS and SPF