05.16.18

Making It Upstairs: Banks Forge Elevated Career Paths for Elite Advisors

by: Rich Blake

In a post-Fiduciary Rule world, the bar on financial advisory conduct standards would seem to be heading higher. As a result, it makes sense, particularly for banks operating in the wealth management space, that organizational structures are elevated as well.

Recently, this has led to new tiered models whereby the most senior personnel focus more energy on larger accounts while at the same time less experienced staffers are given more responsibilities and put on a clear path toward upper-echelon opportunities ahead.

The resulting realignment could point to all-around growth for the various constituents with skin in this game, from banks seeking fee revenue right down to the retirement accounts of an institution’s smallest customers. In the middle — the linchpin to it all — is professional growth for financial consultants at varying stages of their careers.

This tiered-model trend, which some in the bank channel are calling the rise of "second-story advisors" (sort of a play on the term "upstairs broker") appears to be taking hold. Some 15 of the 20 largest banks are believed to have designated at least some key players as second-story advisors, according to Kehrer Bielan Research & Consulting, an early proponent of the concept.

One noteworthy example of the trend is playing out at Webster Bank. The Waterbury, Conn.-based bank, with a footprint that extends from upper New England to Westchester County, N.Y., last January initiated a pilot program involving 10 of its 57 financial consultants. These are the cream-of the-crop producers in terms of overall experience and assets under advisory. These “elites” advise to, on average, between $100 million and $200 million in assets. Assigning them special second-story status is part of a focused effort by Webster to create a service model by which:

• The elite members of its team progress to the next level of their careers, transitioning roughly the bottom two-thirds of their clients while retaining around 80 percent of assets.
• The more junior advisors, in absorbing the run-off, take on more responsibility while also being made to feel part of a team, and they’re on a track toward one day reaching the second story.
• More clients overall, from the largest to the smallest, get improved, higher-touch service.

The result is what Webster Director and Senior Vice President John Olerio refers to as a “win-win-win.”

"From a fiduciary standpoint, it's not practical for some advisors to be responsible for so many accounts," Olerio said. "We want our most talented people to be focused on smaller sets of clients. And that’s what they want."

Giving the junior advisors a clear path ahead and more responsibility factors heavily in Webster's initiative, which has been done in transition phases playing out over the past 16 months.

Three of the 10 lead advisors have obtained their Certified Financial Planner (CFP) designation. “We encourage all kinds of continuing education, but we view the CFP as the gold standard,” Olerio said.

Looking at the 10 lead advisors in the Webster second-story program, we see eight of them have junior brokers who started with them as interns in college. These eight “juniors” have worked up the ladder, going from intern to financial associate and next to financial consultant. So how does one go about transitioning to the higher level?

The traits of a successful bank financial consultant are not a secret but bear repeating: These folks, Olerio said, all tend to have an entrepreneurial spirit, an engaging personality (wallflowers need not apply), a sense of community and a hunger to learn.

"The common thread between the 10 participants in our program is that these are people who truly care about perfecting their craft," Olerio explained. "Whether it’s by continuing education or constantly reading up on new trends and strategies. I'd say to be a second-story advisor, the key is not settling, never thinking you know it all. You want to expand the offerings at your disposal. You can't be a one-trick pony."

Working Toward Common Goals

For many decades, the biggest producers might have reached a higher professional threshold by becoming "upstairs brokers," a term referring to those brokers placed in charge of executing large block trades, although the term upstairs broker has also come to serve as shorthand for a firm's heaviest hitters.

Bank-affiliated wealth management teams charging into the brokerage-firm-dominated RIA space have faced a unique challenge — a larger number of smaller clients with, at times, untenable ratios of clients per individual financial consultant. 

"With the old model, a single consultant may have more than 1,500 individual clients under their purview and, even with a junior consultant assisting, it just becomes overload," Olerio said. "We want all of our consultants to be more selective — that is nothing new. What is new is having a focused, firm-wide initiative to strengthen our best client relationships while putting ourselves in the best position to bring on new relationships — and to do a better job servicing those clients."