55555 A Recruiting And Training Action Plan For Today’s Broker-Dealers. | David Macchia

A Recruiting And Training Action Plan For Today’s Broker-Dealers.

National Underwriter Life & Health, March, 2006

mar06_articleTHE CHALLENGE OF RECRUITING qualified producers to any financial services organization, be it an insurance company, broker- dealer, wirehouse, IMO (independent marketing organization) or bank, may be at an all-time high. Yet, the basic fundamentals for success in recruiting and training remain the same.

The best recruits derive from referrals from satisfied and successful producers. If top producers are pleased with the value provided, they will happily recommend the firm to their peers. Financial services companies successfully can garner such referrals by being creative, marketing- oriented and committed to building the success of the advisor over the long term.


When the National Association of Securities Dealers issued its Notice to Members 05-50 in August 2005, it changed the recruiting landscape across the industry. While the NTM 05-50 conveyed to member firms guidelines for the supervision of equity- indexed annuity (EIA) marketing and sales, it also signaled the beginning of a new era in which the NASD assumed de facto regulation of the EIA business.

As a result, broker-dealers now are assuming a new responsibility for supervising their registered representatives’ fixed annuity business and dealing with the challenges of training, marketing and supporting fixed product sales through their current systems. Plus, B-Ds aggressively are looking for reps who have clean compliance records and who have solid experience in selling EIAs. After all, these products are a new source of revenue and offer B-Ds another way of growing their business.

While B-Ds ramp up their recruiting of reps who are successful in the EIA business, they also need to implement the marketing, training and administrative infrastructure to build this business. Reps faced with redirecting their EIA (or other fixed annuity) business to their B-Ds also will be looking at the responses formulated by IMOs, the organizations which historically have provided valuable training, marketing programs and service on fixed products.

There will be pressure on the B-Ds to display competency in handling the presale and post-sale service aspects of the EIA business, and there will be even greater pressure to offer the high-quality marketing programs typically provided by the IMOs. B-Ds that pass these tests will benefit in terms of top-line revenue growth, producer loyalty and strong recruiting results.

Those firms unable to satisfy the expectations of producers run the risk of seeing some of their best talent recruited away.


Some broker-dealers lure experienced advisors by offering high payouts. This is basically a “show me the money” strategy, or more accurately, a nonstrategy destined to lead to a bad result. Arguably, the compensation- driven approach may win in the short term, but it fails to sustain long-term growth because there is always another larger, richer organization that can pay top dollar to producers.

Rather, B-Ds should focus on a “show me the marketing” strategy. Firms that can solve the marketing and prospecting challenges for both new and experienced producers will gain immediate attention and recruiting success. In discussions with executives of many B-Ds, representatives’ desire for marketing resources is a consistent theme. No matter how many advisors are asked, it seems that virtually all are interested in how to better market themselves. B-Ds should honestly evaluate whether there is a disconnect between what they provide and what reps say they need to be successful. I believe reps want assistance to more effectively up-sell and cross-sell. They are interested in organizations and individuals who can make it easier for them to be compliant in their sales and marketing efforts while still building their GDC (gross dealer concessions).

How do they better communicate to their targeted markets? What tools may help them reach new prospects? What strategies can be employed to sell additional products to existing customers? A firm that answers these questions has no reason to be concerned over recruiting.


In addition to the many recruiting challenges, advisors and B-Ds face a huge training challenge. The baby boomers, who now are reaching age 60, are becoming concerned with retirement income planning. There is an enormous opportunity to help them prepare for this new phase of life. Yet, most advisors are unprepared for what is surely their greatest sales opportunity because they lack the knowledge and insights necessary to place a customer’s retirement assets into a distribution mode.

As an industry, we’ve been so focused on retirement accumulation planning that we have not created the advanced training and marketing programs geared toward boomers poised for retirement or even those currently in retirement. The need for training advisors on how to help clients and prospects plan for retirement income over 20-plus years is of paramount importance.

No matter how large or successful a firm may be, the retirement income distribution challenge will make some B-Ds even more unbeatable and marginalize others. The forward- thinking, creative organizations that invest in the training, marketing, technology and services to address this marketplace will garner the greatest recruiting, productivity and profitability in the future.

Reprouduced with permission from National Underwriter Life & Health. Copyrighted 2006 by The National Underwriter Company. All Rights Reserved.