The demand for licensed sales professionals in the financial services industry has never been stronger.
Though the roaring bull market is the primary engine powering this demand, other forces are also acting to shrink the available supply of brokers, product wholesalers, and insurance agents. This situation is having a serious impact on the broker-recruiting needs of bank investment programs.
The large Wall Street firms, traditionally major suppliers of brokers to banks, are themselves expanding and are making it exceedingly difficult for sales representatives to leave and work for any competitor.
Noncompete agreements, combined with the rise of so-called wrap accounts, have made it tougher for reps to take their client relationships with them to a new firm. One firm is even charging reps a $100,000 fee to recover "training costs" if the rep leaves to work for a competitor.
And though the practice is still controversial, many Wall Street firms are enticing new reps by paying them upward of 30% of their prior 12-month gross commission in up-front cash bonuses.
Though the wave of bank mergers is leaving many middle managers seeking employment, most banks are in a recruiting mode for experienced investment sales professionals.
With many reps currently making incomes well into six figures, bank investment programs are facing a serious dilemma: Should they hire inexperienced people (if they can find anyone at all) or pay market rates?
With supply so tight and demand so strong, what can bank investment programs do to attract the talent they need and protect the talent they already have?
To attract quality investment sales talent, banks must take new and aggressive approaches. In the current environment, just running help-wanted ads and relying on referrals from product wholesalers or existing employees won't work.
Bank investment programs must go beyond traditional methods to find candidates who are interested in more than just fat compensation packages. Banks must take a diversified approach to recruiting, and not rely solely on any one avenue. And they must make recruiting a full-time activity and not gear up only when there is a specific opening.
Methods such as "career fairs" and using the services of professional recruiting firms are useful options. And once qualified candidates are found, it's imperative for banks to clearly communicate that the reasons to join their program go far beyond base salary and commission payout.
Though it's still important to offer competitive compensation packages, banks shouldn't get caught up in bidding wars. They face risks not only of unhealthy expense levels but also of losing the rep to a higher bidder down the road.
To sell their programs to candidates, banks must describe why it's in the candidate's best interest to change firms. Value-added features such as sales assistants, laptop computers, outside research, and bank-paid sponsorship for professional designations such as certified financial planner go a long way to entice candidates to their program.
Though recruiting experienced reps away from competing bank programs and other brokerage firms offers fast revenue production from a candidate with a proven track record, this is not necessarily a good long-term solution.
Many Wall Street firms have announced major efforts to train thousands of new reps. These firms are aggressively seeking career changers- successful professionals and entrepreneurs who want to become brokers.
They are willing to invest millions of dollars to build "home-grown" sales talent. Clearly the economics for these firms is far different than at most bank programs with far more modest expansion goals.
However, it is inevitable that banks will find ways, through cooperatives or joint-ventures, to make viable the economics of hiring and training unlicensed people to become investment reps.
Perhaps the most important responsibility of a bank investment program manager is maintaining the loyalty of the existing sales staff. With the intense competition for talent, it's safe to assume that your competitors know who your top people are, and that they either have tried or will try to recruit them.
It's only natural for reps to at least listen to other opportunities, but it's imperative for managers to make certain their key people are well cared for and happy.
The best time to do this is not after a top salesperson tells their manager, "I've just received a lucrative offer." Managers must continually listen to the needs and desires of their people and become their advocates.
The biggest factor in a rep's decision to remain with or leave a program is loyalty to a manager. And a manager's ability to build a loyal and enthusiastic team is a terrific recruiting tool. Every candidate wants to be part of a successful program.
A large market correction will certainly have an effect on today's strong market for brokers, wholesalers, and insurance agents. However, the long-range strategic plans of the major firms still call for significant expansion of their sales forces. Additionally, structural changes bringing assets to mutual funds and other investment products, and away from traditional deposit products, will act to maintain solid demand for top sales talent.
To build strong sales teams, banks must make recruiting their top priority, one that deserves the full attention of management. And it takes a top program to recruit and keep top people.