As published in RIABiz on September 21, 2020
RIAs who have left the wirehouses to set up shop often cite fiduciary reasons for doing so. They escape sales pressure, but many times they stop making sales altogether.
Next thing they know, they have no organic growth (aside from their original clients’ referrals) and may reluctantly need to sell themselves back to a giant institution.
At the center of the advisor sales dilemma is a dreaded word -- quota. Professionals know it as an inflexible performance metric applied to a task where technically we have no control over the outcome. See: How an ex-Goldman superstar asset gatherer in LA is bringing her bazooka to the RIA knife fight
The prospective client holds the signing power, the assets and the ability not to respond to voicemail messages.
What we know of quotas is that their rigid nature can force a broker's hand -- leading to deception, intimidation or even the opening fake accounts. Totally get that.
But a fear and disgust of quotas is counterproductive. Just because athletes want to win so badly they take steroids, doesn't mean we toss athletic competition.
A quota is simply a measure of accountability.
It is the key ingredient for sales and growth-- that “number” that you have to achieve in sales by a certain date.
That quota is what keeps every sales person on target, focused on the prize and many times up at night. As dreaded as it is, it works and it's unlikely that most firms can find an alternative.
Live by the book
Large wirehouses are extremely familiar with the concept of quotas. Underperforming a quota is how many wirehouses shed a certain percentage of their advisors on an annual basis.
At many such firms, compensation is reduced if an advisor does not reach their quota. If your “book” isn't growing, you’re a target for the chopping block!
Quotas also lead to many positive status levels. I’ve been invited to and spoken at several lavish destination offsites for wirehouses where guests were the top 1% or 5% of advisors that overachieved their quotas.
They came to get continuing education while their kids jumped in one of the 10 resort pools, and their spouses shopped in the hotel.
They are what promotions are based on. Quotas also result in better people, such as more advanced administrative assistants and support staff.
I didn’t say quotas are pretty!
They can certainly be a recipe for high blood pressure, bring out the A type in every person and cause a Darwinian-like environment.
It creates a fierce and competitive person out of even the meekest employee. Why? Because their job is always in jeopardy, AND they would like the upside. It is a recipe for success and growth.
Read the rest of the article in RIAbiz here
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