The banking industry is a complex and competitive landscape, and private bankers/advisors play a crucial role in maintaining client relationships and generating revenue. However, many banks often lack patience with new advisors, expecting them to perform exceptionally well from the get-go.
This approach can negatively impact both the advisors and the banks, as it may result in a loss of potential talent and harm the banks’ reputation.
This article will delve into the challenges faced by new advisors and emphasize the importance of patience and investment in their development for long-term success.
The Pressure to Perform
New advisors often face high expectations to generate significant revenue and attract new clients quickly. This pressure can be particularly daunting for individuals who are new to the industry. Non-solicitation agreements further complicate the situation, as new advisors are unable to contact clients from their previous firms, making it more challenging to establish a client base quickly. In fact, “the use of noncompetition and non-solicitation agreements [can] be the legal equivalent of a ball and chain around a broker’s leg, preventing him from exercising the freedom to earn a living at the employer of his choice,” according to William A. Jacobson, a partner with Kaplan & Jacobson in Providence, R.I., which represents securities industry employees in employment disputes.
Midsize and smaller banks frequently exhibit impatience towards new advisors, focusing on short-term results at the expense of long-term growth. This mentality can hinder the progress and development of advisors who need time and support to reach their full potential.
The Fallout from Cutting Loose Advisors Too Quickly
By letting go of advisors too early, banks may lose potentially successful advisors who simply needed more time to develop their skills and client relationships. This practice can harm the bank’s reputation among advisors in the industry, making it more difficult to attract top talent in the future.
Increased competition for hiring top talent may result in higher recruiting costs and a less skilled workforce.
The Rise of Broker-Dealers and RIAs
According to McKinsey, “RIAs are a profitable and growing segment in US wealth management where valuations are high.” The appeal of the broker-dealer and Registered Investment Advisor (RIA) industry for private bankers lies in the increased flexibility and autonomy, making it an attractive alternative to traditional banks.
The managing director’s view of the advisor/client relationship differs between banks and broker-dealers/RIAs, with the latter often placing more emphasis on long-term relationship building and a client-centric approach.
The expansion of the RIA industry poses a threat to the banking industry, as more advisors may choose to leave banks for these alternative firms.
The Importance of Patience in Developing Advisors
Giving advisors time to develop their skills and client relationships can result in more loyal, successful, and motivated employees, benefiting the bank in the long run. At Avior Executive Search, we understand the industry and what separates top advisors from the pack.
Banks can cultivate a culture of patience and support for new advisors by implementing strategies such as mentorship programs, ongoing training, and performance evaluations that focus on long-term goals.
Investing in new advisors can lead to increased profitability and long-term success, as these advisors become skilled at building and maintaining strong client relationships.
The problem of banks not having enough patience with new advisors has significant implications for both the advisors and the banks themselves.
Banks must prioritize patience and investment in new talent to ensure long-term success and stay competitive in the ever-evolving financial landscape. By fostering a supportive environment, focusing on long-term goals, and investing in the development of new advisors, banks can create a workforce that is skilled, motivated, and well-equipped to tackle the challenges of the industry. It’s time for banks to reconsider their approach to new advisors and prioritize their long-term success.
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