During the past 10 years, perhaps no role in the wealth management industry has changed more than that of the branch manager. Usually a former advisor, a branch manager was typically in charge of just one facility, serving many roles within the branch. To the advisor, the branch manager was the boss, a confidant, friend and protector who understood what the advisor did every day. To the firm, he or she was an entrepreneur in charge of a profit center and responsible for delivering a consistent profit to the parent company.
The wirehouses also had extensive “benches”; managers in waiting who were being trained to effectively lead a branch. When the manager position at a large branch opened because a manager retired or was forced out, it created a chain of openings within the system. The manager of a midsize branch would apply to head the large branch, the manager of a small branch would apply to lead the midsize branch, and one of the managers in waiting would get off the “bench” to take his or her first shot at running a branch, usually in a smaller community.
Relocation was a given because branch managers knew they’d need to move to keep their careers advancing. Occasionally, the manager of a big branch would get an opportunity to run a region, a regional director would get a chance to run a division, while a division chief presumably would get the opportunity to take over the wealth management division. Becoming a branch manager was desirable because of the money, the career path and the prestige.
Facing pressure to cut costs following the financial crisis, all the major firms have shifted to a structure in which one branch manager runs multiple locations. This “complex manager” oversees lieutenant branch managers in each location outside of the hub where he or she sits. A large satellite branch will still have a non-producing manager in charge, but in smaller branches, the leader is a producing manager. There are still some larger locations, where the complex manager is the branch manager and runs just one facility, but these are becoming few and far between.
As a group, advisors hate this structure. Where the old system had a clear leader responsible for making decisions, the new structure diffuses authority and often leaves advisors unclear about where to go to get a firm decision. One Morgan Stanley advisor described it this way: “The local branch manager is well-intentioned and hard-working, but is afraid to make a decision without the explicit approval of the complex manager. When I go directly to the complex manager, I’m asked whether I first talked to the branch manager.”
It is harder and sometimes impossible for complex managers in charge of multiple locations to be involved in the nuances of an individual advisor’s practice. At the old Smith Barney, a branch manager was in charge of 50 to 100 advisors. Now, complex managers oversee more than 300 advisors. Even the most talented and well-meaning of them can’t spend time with their advisors on a day-to-day basis. For their part, advisors feel less attachment to the management structure at their firms because the “value add” is no longer apparent.
In the years since Morgan Stanley bought Smith Barney from Citigroup, the combined wealth management structure has gone from 19 regions to eight regions after the latest reorganization in April. In the maelstrom of restructuring, it is easy to see why an advisor might be cynical about the latest regional leader who spends five minutes in his or her office trying to make a connection. One advisor’s take: “They are well-intentioned, I give them that. But how can I feel that I can connect with this person who covers four states and is likely not to be here a year from now, just like his predecessors?”
So, paradoxically, while the big firms appear leaner, with fewer layers, for the advisor they have become more bureaucratic because branch managers can’t effectively respond to the large number of advisors for whom they’re responsible.
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