By Michael Wursthorn
For Wall Street brokers, a promotion to branch manager once was
a career-crowning achievement. Now, many shun the job.
Branch chiefs at the biggest brokerages say they are being
loaded up with more responsibilities as the banks that own their
firms impose tighter controls, cut costs and push advisers to
promote commercial-banking services. Even as profits rise, their
once-coveted positions are typically less lucrative and less
secure, part of a broader industry shift away from its more
freewheeling roots.
"Becoming a branch manager was the pinnacle of one's career,"
said Mindy Diamond, president of Diamond Consultants, a Chester,
N.J., recruiting firm for financial advisers. "But unfortunately
it's a really tough position today."
The increasing grind of the job is one factor behind an exodus
of branch bosses to independent wealth managers, where they are
joining advisers who have been recruited from the big brokers.
These smaller firms are adding clients rapidly, pushing banks to
increase compensation for top producers to keep them from
defecting. At the same time, some Wall Street brokers are
struggling to fill empty management jobs.
Michael Maurer enjoyed his job when he ran branches in Albany,
N.Y., and Washington, D.C., for Smith Barney in the 2000s.
"Every Wednesday morning, I would have a cup of coffee for an
hour with three of my advisers or so, and Tuesday mornings, I'd
take out some of the support staff," Mr. Maurer said.
But in the wake of the 2008-2009 financial crisis, after Morgan
Stanley bought Smith Barney from Citigroup Inc., Mr. Maurer said
the number of employees he oversaw tripled to more than 150.
Relationships he had worked hard to build suffered.
"That Wednesday cup of coffee turned into a quick nod as I
walked," he said.
In 2013, Mr. Maurer left Morgan Stanley and helped launch
independent wealth-management firm Steward Partners Global Advisory
LLC.
Morgan Stanley declined to comment.
Rank-and-file brokers complain about more routine duties, less
autonomy and the disappearance of perks such as generous expense
accounts following postcrisis changes in the industry. But unlike
their managers, their compensation is rising and workloads are
about the same.
At firms such as what is now Bank of America Corp.'s Merrill
Lynch, which has about 14,100 brokers, or Wells Fargo Advisors,
with roughly 15,200, becoming the manager of a branch or multiple
branches traditionally meant a healthy bump in pay, a closer
relationship with a firm's leaders and a chance to both lead and
advocate for the rank and file. These managers can number in the
hundreds at the major firms. Wells Fargo Advisors, a unit of Wells
Fargo & Co., for example, employs about 650 of them.
A wave of postcrisis mergers caused a shift in the industry
where more brokerages were bought by banks, and companies looked to
diversify their cyclical investment-banking and trading revenue
with the more-steady cash generated by wealth management. Layers of
management were pruned, and those managers that survived had to
adapt to overseeing larger staffs, increased bureaucracy and an
emphasis on selling banking products such as mortgages and checking
accounts, current and former managers say.
"A lot of my time was spent on stuff I didn't necessarily
believe in," said Steve Altman, who worked for 16 years at Merrill,
with his last eight spent as a manager.
Mr. Altman left the company in 2012 and helped form True Private
Wealth Advisors, an independent firm based in Salem, Ore.
A Merrill spokeswoman said that Merrill, which was acquired by
Bank of America in 2009, had revamped its manager-training program
in 2012 to cast a wider net among brokers and other areas within
Bank of America.
Brokerages are also grappling with the rising popularity of
independent wealth-management firms such as the ones where Mr.
Altman and Mr. Maurer now work. Research firm Cerulli predicts that
by 2018, independent firms will edge ahead of the major brokerage
firms measured by their share of client assets.
In response, brokerages have offered lavish pay packages that,
for the highest producers, can reach into the millions of
dollars.
That hasn't benefited managers. Instead, they have seen their
bonus pools tightened and new, more subjective factors added to
determining their payouts, according to some current and former
managers.
"Most [managers] don't even understand how the evaluation and
compensation process works," said Chris Dupuy, a top regional
executive for Merrill Lynch in the Pacific Northwest until he left
last year to join Focus Financial Partners LLC.
One longtime Merrill manager said the introduction of subjective
measures to gauge compensation was necessary to reflect the job's
increased complexity. He added that metrics, such as new assets
brought in, remain a factor in evaluations as well.
It has also become more common for brokers to turn down
branch-manager positions when they are offered. Wells Fargo
Advisors, for example, has had difficulty attracting managers at
the branch level in some markets, despite looking for candidates
both within the company and at some competing firms, said people
with knowledge of the matter.
Wells Fargo spokeswoman Rachelle Rowe said the firm doesn't
"feel the need to rush to fill roles that have been open for a
longer period of time." She said Wells Fargo Advisors can "wait to
find the right candidate." The company recently created a group
dedicated to branch-manager development and training.
One Wells Fargo adviser who was approached to take a manager's
position said he declined because it would have required him to
give up his clients. "It's a risky proposition to become a pure
manager these days," the adviser said. "Your book of business as a
broker is gold."
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