The relationship between client and broker is a topic of increasing importance in the financial services industry. It gets sliced, diced, and put back together on a fairly regular basis. Not so the relationship between manager and broker. What skills do both groups possess that complement each other, or that contribute to one another’s success? What traits are inherent in high-level producers and branch managers, and can they—or do they want to—learn from each other?

Described as everything from confrontational to protective, to a partnership, and everything in between, the manner in which managers and advisors relate to—and complement—each other sets the tone in a brokerage office and defines how things are done, whether at a wirehouse, regional firm, or an independent shop.

Do managers and advisors share similar skill sets now more so than in the past? Are producing managers more of a “threat” to their brokers than are non-producing managers? What affects these important relationships and how have they changed over recent years? How does the way in which a manager relates to his or her brokers affect clients of the firm?

These questions and more will be addressed below after a review of some of the changes and trends in the manager-broker relationship.

Changes in Management Concepts and Roles

There are many more facets to branch management today, just as there are more (and different) challenges for advisors and their clients. Clients are coming to advisors with a greater number of financial and lifestyle concerns than ever before, and some are even questioning the level of trust they have in the firm. Some advisors have become less confident as a result of the extensive media coverage of dubious corporate practices which undermine public trust, particularly in the infamous cases of Enron and WorldCom. And as the financial industry itself becomes more complex, so do relationships between managers and their advisors.

While clients are demanding higher standards of care from their advisors, advisors who are meeting those demands also require an upgraded level of service from their managers.

“You’ve got to treat your brokers like they’re clients because, in reality, they are clients of the firm—they have the freedom to take their book of business to any firm on Wall Street. So there’s a keen interest in making sure brokers get what they need,” says Will Deupree, managing director and branch manager at Morgan Keegan & Company, Inc. in Memphis, Tennessee. In some circles that interest is called “leadership” and Deupree considers coaching and mentoring part of that leadership.

This has been one of the major shifts in recent years from management to leadership.

“We’ve evolved from just being supervisors to truly being leaders—we have more of a partnership with our advisors,” explains Michael Higgins, resident director at Merrill Lynch in the Boston area. “Our goals are aligned and we’re all on the same page, which wasn’t necessarily always the case. Managers today are much more than just ‘a signature’ to approve things; we ask advisors what they’re doing in their businesses and how we can help.”

Heather Walsh, a vice president and wealth management advisor at Merrill who works under Higgins, describes the new manager-advisor relationship pointedly: “Management as an analogy has gone from someone telling me, ‘You’re doing it wrong!’ to ‘Here’s how we can do it better.” She agrees with Higgins that it “really has become much more of a partnership.”

According to Scott Tiras, CFP®, MBA, and senior financial advisor with Tiras, Pennington and Associates, an advisory practice of Ameriprise Financial Services in Houston, there are two important roles a manager plays today. “One is to pool the resources of the various advisors in the branch,” says Tiras. “If they [the broker] desire to hire staff, everyone can tap into that staff (or technology or supplies) without having to pay a $50,000 salary out of their own pockets. The other role is compliance based. Relationships with advisors need to be a little more at arm’s-length than before because of all the regulations and changes. Leniency regarding compliance can put both managers’ and advisors’ livelihoods at risk.”

Skill Set Similarities

In years past, managers mostly cocooned themselves in their offices, troubleshooting when necessary, overseeing the administrative work of a branch office, and concentrating on increasing revenues through product sales. Typically, a broker’s job was to cold call, get new clients, and sell product. But the previously distinct line between manager and broker roles, in many cases, are now somewhat blurred. With necessary changes and additions of job responsibilities to the face and function of management, the difference in skill sets of managers as compared to those of advisors is also less clear. Managers have had to assimilate many of the talents their brokers have adopted with their own clients, such as teaching, building and maintaining relationships, closer communication, and more personal service, as they relate to their own brokers.

“Whether you’re a manager or an advisor,” says Curt Lyman of Palm Beach Gardens, high-level advisor and managing director of US Fiduciary’s Florida operations, “fundamental communication skills—especially the ability to listen—are paramount. From the advisor’s perspective, his or her technical skills are also critical. In this business, as in most, knowledge is power, so those advisors who are better educated and skilled will be the most efficient and will do the best job for their clients, their firms, and for themselves.” He adds that both advisors and managers should try to learn these types of skills from each other in a more collaborative type environment.

Offers Will Deupree, “The relationship between advisor and client is increasingly better, which automatically makes the manager-advisor relationship better.” He believes that just as advisors must spend time to get to know each client, managers will do well when they spend time to learn more about their advisors—the blanket, cocoon style of management doesn’t work anymore. The ability to probe, ask questions, and fully understand an individual—whether a client or a broker—is vital to a manager’s skill set, and that’s where a manager can learn from their advisors.

Lynn Shaw, managing director with Memphis-based Morgan Keegan, but in the advisor role at a different branch than his colleague Deupree, says that clients have their own unique preferences of communication, which needs careful interpretation and follow-through. “Each client wants to hear from their advisor in a different way. The more successful advisors have the ability to understand how clients want to be talked to or communicated with.”

A manager needs to develop this well-honed skill set, too, according to Shaw, so he or she can know how to better serve each person in the branch office.

Merrill’s Higgins agrees, “Part of the role of manager is that you have to understand what motivates people. Once you understand that, it’s much easier to inspire them. It also helps a manager make good decisions rather than rash ones, including treating everyone fairly, not necessarily equally, but fairly.”

With the proliferation of, and trend toward, high-level brokers forming wealth management teams, these individuals must learn certain leadership and personnel skills to work effectively with their partners and their team. Managers, too, must balance a slate of skills similar to those required of the broker and wealth management teams.

Lyman states, “The mark of a good manager is one who can manage the human resources issues, the compliance issues; one who is also sensitive to staff, and who is technically proficient.” These talents are complementary and are transferable from manager to broker and vice versa.

Skill Set Differences

Major differences in skill sets between broker and manager lie primarily in the traditional managerial roles of being a compliance maven, corporate liaison, business consultant, and educational supervisor.

“You have to be on top of compliance and not tolerate people who aren’t doing the best thing for the client. Instead of trying to rehabilitate someone with lax judgment and ethics, you just pull them like a weed and don’t have them inside your office. Then your management responsibilities from a compliance standpoint are much easier,” explains Deupree. He adds that building a reputation for hiring good, ethical advisors can circumvent potential problems. Rather than spend time troubleshooting, the manager can focus more on mentoring and helping advisors build their businesses.

Taking their cue from their managers in this area of compliance, advisors can learn from these particular managerial skills and put them to good use when dealing with their own difficult clients, i.e., either weeding them out when pruning their books, or having honest discussions with them about the problems and trying to resolve them.

As a former broker who morphed into producing manager, David Geschke, regional director at H&R Block Financial Advisors, says, “The biggest change in skill sets going from broker to manager is being able to use all the technology and tools that are available to me on the compliance management side. You’re always focused on doing the right thing for the client as a broker, but a manager also has to be very protective of the brand name for the company from the compliance side. I think you’ll find that—across the industry—that concern is pretty top-of-mind for managers right now.”

In this regard, brokers can indeed learn from their managers how to protect the brand name of their firm. For example, when doing their own marketing and PR, they will learn the compliance rules and regulations of what to say and what not to say both in their collateral material and when speaking to the media. Brokers may feel compliance is a hindrance to their business-building, but in the long run, it can help keep the broker, as well as their firm, out of the court and arbitration systems.

Along with some of the complementary skill sets of communication, education, relationship- building, and brand protection come new challenges for managers. “Now, more than ever, clients are demanding red-carpet service—not just from their advisors, but also from the manager and the administrative staff. They want to know who’s managing the office and that I’m available to them if the need arises,” Merrill’s resident director Higgins explains.

More branch managers are agreeing with Higgins than they otherwise would have in the past. “Today, you’ll find managers sitting in on client meetings—I don’t think we saw that five years ago. It builds trust with clients and also gives managers a chance to evaluate the broker and help with their specific skill sets,” says Geschke.

Other issues concerning managers’ responsibilities and how the effect of their actions can trickle down to brokers are also seen in the challenge of keeping the morale of an office upbeat. This enormous task requires a dedicated and motivated manager, one who can turn a pessimistic atmosphere into an optimistic one.

Deupree cites negative media as an example: “We’re bombarded by stories in the media about advisors who’ve done the wrong thing for the client. Rarely do we ever see a story hit the newspaper about a client saving $500,000 in estate taxes because an advisor insisted on proper listing of beneficiaries for his retirement plan, or that a client’s wife was able to live comfortably after his death because his advisor urged him to get life insurance two years before.”

A proactive manager who understands the local media can help launch a positive PR campaign in the local and regional newspapers with the help of the advisors in his or her office. This is where everyone pitches in to help, offering their respective talents in this area, e.g., writing an article, proofreading, connecting with a reporter or editor, or simply being available for interviews or comments. Often, a big producer in the office will already have media contacts established in his or her hometown and may offer assistance to the manager. This creates a mutually beneficial and collegial atmosphere in the office as well as a learning environment for everyone.

Transparency is another issue that branch managers and advisors share, albeit in different ways, but nonetheless it can lead to another learning and sharing environment. Higgins talks about the issue of fairness to brokers and how it relates to transparency. “The best way to solve the fairness issue is to be completely transparent with your management style,” she says. “It’s got to be a completely open book. People need to know what’s acceptable and what’s not. Take fairness in assigning accounts, for example. The method for assigning accounts is posted for everyone to see every account that’s been moved from one FA (Financial Advisor) to another and also the dollar amount. With such transparency, people respect the process and stop trying to ask for things they don’t deserve.”

According to wealth manager Walsh, brokers view such transparency as a prime ingredient for a trusting relationship with management. “It not only builds staying power within the management team, but we know that there’s a system governing who deserves what when we get new accounts and how each individual is handled in each situation. By having that staying power and having one manager for a long time, you really do begin to trust the mechanisms and the guidelines that are in place.”

And how can that relate back to the broker to benefit the client? In addition to the positive aspects of building trust between broker and manager, the transparency issue can be emulated from broker to client. Full disclosure of fees, soft dollars, potential conflicts of interest, proprietary products, and other issues are mandatory but it also continues to build that trust that is so critical in the relationship. Managers can set an example of transparency through their own actions in the office, and advisors will follow it—the trickle down theory is applicable here, too.

Producing and Non-Producing Managers vs. Advisors: What They Learn From Each Other

Managers who still maintain a book of business, regardless of the size, face different challenges from those whose concentration is solely on management. For one thing, some brokers may feel that the manager is a threat or an added competitor. Heather Walsh does not feel that way, in fact she learns from their skill sets. “I’ve worked under both types of managers—those who produce and those who do not,” says Walsh. “A producing manager is in the trenches with you. You have more respect for them and they tend to be more empathetic; they would never tell you to do something they wouldn’t do themselves. They can recommend best practices to you with confidence because they’re applying those practices with their own clients.”

Tiras cites the importance of working with a manager who also has clients. “They can relate to me and my challenges better. They understand the compliance issues I wrestle with because they’re wrestling with the same issues—they’re out there shaking the bushes just like I am.”

Curt Lyman believes managers have a very difficult job, especially if they are producing. But he agrees with Tiras that both advisors and managers can relate better to each other if the manager is in the trenches, at least partially. “It takes an exceptional manager to effectively manage while he or she is producing,” says Lyman, “particularly from the standpoint of fundamental fairness.”

Deupree insists, though, that a producing manager must have a junior partner in order to be successful in today’s environment. He adds, “It is essential in any large branch office to have a strong operations manager working with you as well—they’re as important to running the office as a partner is to running your book.” He believes that both producing managers and teams require the same type of support. Partners, skilled assistants, and associates with specialized expertise keep an office or a team operating at peak performance. This is another area where advisors and managers can learn from—and help—each other.

For H&R Block, Geschke cites the size of an office as a primary factor in whether a manager maintains his or her own book of clients. “Our offices with producing managers typically have five or six advisors in a satellite office,” he says. “ It’s very difficult to find time to do production when you have 12 to 20 advisors under you. One advantage a producing manager has is the ability to lead by doing. Someone who still does 90 percent transactional business and sees a producing branch manager moving his or her book to fee-based will consider more seriously transitioning his or her own book.”

In this scenario, brokers and managers can collaborate with each other and exchange experiences and skills in the ever-expanding world of fee-based business. Managers can pass on solutions to transitioning challenges they may have faced, thereby strengthening relationships with their advisors, and helping the bottom line by encouraging the capture of more fee-based assets by the brokers.

But there are ways for non-producing managers to overcome what can be labeled as “the production gap”—not being in the trenches, so to speak, with brokers. As mentioned earlier, these managers are more likely to sit in on more client meetings while a producing manager is handling so many meetings with his or her own clients there is no time. This open arrangement allows both the non-producing manager and the broker to have meaningful dialogue, exchange ideas and their individual expertise for the added benefit of the client.

Another common area of interest for managers and brokers is professional education and designations. This can be a big plus for the maintaining of relationships and for establishing an environment where managers and brokers alike can learn together and mentor each other in such areas as financial planning, legacy planning, stock analysis, and wealth management to name a few. Such designations often require continuing education to stay in force, thus enabling the non-producing manager (in particular) to stay more in touch with broker issues.

Even the certification courses in various areas of marketing and business building (no designations) allow more opportunities for ongoing dialogue in the office. Ethics education, as an example, is causing more introspection and conversation among staff, team members, brokers and managers than ever before and, as a result, a higher level of trust is being built. Better judgment and decision-making is another intended consequence that is added to everyone’s skill sets.

Although a producing manager, Higgins cites the influence of Walsh on his personal education focus. “Heather was one of the first people I knew who obtained her CIMA [Certified Investment Management Analyst] designation and she inspired me to go out and do it myself. The industry is constantly changing and it’s my role to stay on top of new and interesting developments.”

What else can advisors really learn from their managers, what do they really need, and how is this help reciprocated?

Seasoned, high-level advisors such as Shaw and Walsh need a different level of service from managers. “I need management to let me know the firm’s goals and objectives from a macro standpoint, any new areas of the firm, any new business opportunities the firm is bringing to the table. We also want some discretion over our budgeting with respect to staffing, how we spend our marketing dollars, expenses, staff salaries, etc. Creating a formula that everyone can understand is key to establishing a comfort level on both sides regarding such discretion. Advisors have autonomy to run their own businesses within the firm and managers feel comfortable that advisors aren’t trying to take advantage.

Walsh agrees, “When I first started in the business, I was looking more at the product of the day and how the business works. Now, I need situational advice and help getting something done within the company for a particular client need. I need someone in my corner to say, ‘Look, we need to get this done for this client, who do we call?’ ”

An example of such support comes from Tiras. He and his team are considering hiring an AFA (Associate Financial Advisor). They looked to management to contact other advisors who have gone through the same process and provide guidelines based on those advisors’ experiences to help Tiras’ team make better hiring decisions.

“A trend we’re seeing is more metrics for each team branch, and advisor. Those are getting more fine-tuned using the technology tools we have. And compliance isn’t going to go away. Obviously, a good manager needs to be a good business analyst. Using these metrics, how am I going to drive business in my branch? That said, client focus has to be a priority,” Geschke explains.

And what are the skills that allow managers to drive this business? Old-fashioned support for the brokers and dedication to helping them grow their own business. “Managers should have incentives to help existing brokers as well as new ones. When I’m sitting in this chair trying to run a business, I’m very focused on what I have to do, so managers need a lot of training in psychology and understanding different relationships,” explains Lynn Shaw. He also feels a manager’s compensation should be based on providing support for advisors through marketing programs and for growing their businesses—in other words, “improving his people.”

The Last Word

So, is there really a world of differences between high-level producers and their managers as we have perceived them in the past? If there is, are these differences meaningful enough to complement each other as we’ve heard through these interviews, or if not, are they such that the differences allow brokers and managers to co-exist for the ultimate benefit of the client? As the industry grows more client-centric and investors continue to demand real value and substance from their brokers, together managers and their brokers must strive to accomplish the goal of delivering that value. At the end of the day, it’s all about helping each other grow by sharing skills, experiences, and ideas, through counseling clients, and by making a worthwhile personal contribution to the most rewarding profession of them all.