The branch network is going through something of an existential crisis. The issue might have predated the pandemic, but accelerated when we grew our FC population from 1400 FCs to 1900 FCs. We experienced meteoric growth and we arguably overcompensated.
The reality now is that over 50% (true stat) of our FCs have a tenure of less than 2 years. We also abbreviated the FC Academy program from 2 years to a year. So you basically have FCs that barely have any life experience in a position where they're giving 'advice' to clients with millions. The vast majority of these FCs have never seen a bear market.
The other corollary to this is the branch leadership track that seems to have become the norm: Client relationship specialists (CRS) -> Client Relationship Managers (CRM) -> Assistant Branch Managers (ABM) -> Branch Managers (BM). We now have career service professionals tasked with 'coaching' on sales and business development. Basically the blind leading the blind.
This cultural problem is pervasive and comes top down: 2 of the 3 DMEs don't have a Branch background (one comes from service and the other comes from the bank) and don't really understand what the field has to deal with on a day to day basis. As a result, we have widespread micromanagement: relationship reviews, financial plans, and everything in between. FCs are metric-ed to death and focused on checking boxes to keep their leaders happy.
Correlation has been confused with causation: a financial plan isn't the magic elixir that's going to induce clients to transfer in assets or sign up for managed money. The expectation for FCs is to essentially run about 10-12 financial plans a month themselves or through a planner partner. The average financial plan consumes at least 3 hours of time: an hour to gather data, an hour to assess the data, and an hour to present the data. So FCs are basically expected to spend a week monthly on financial planning activity. The financial plan that an FC can run is a basic cash flow analysis. The average client has at least $2 million in liquid assets, so it's not exactly an earth-shattering revelation when a client learns that they'll be 'ok' after a planning exercise is completed.
I don't want to suggest that financial planning isn't impactful: good FCs do run financial plans when the circumstances necessitate it and clients get value out of it. The maniacal obsession and one size fits all approach is the problem.
FCs are tired. The FC role at Schwab is different compared with other firms, and senior leadership fails to recognize that. The FC role at Schwab requires a ton of service support since it's relationship-based. Unfortunately, all of the service teams are overextended so FCs spend much of their day on service. If senior leadership spent a day shadowing a Level 1 or Level 2 FC, they'd understand that their expectations are impossible to meet.
It's worse for the tenured FCs that have highly engaged practices. They're expected to spend most of their day hunting, when in reality, they're playing defense all day. To add insult to injury, newly-hired FCs are brought in with higher salaries than many tenured FCs are making in service pay. ROCA (revenue on client assets) is also dropping, so now tenured FCs have to work harder to make the same paycheck.
We're losing great FCs and branch leaders as a result of all of this. That experience and institutional knowledge is irreplaceable. The client experience suffers and it su-ks for everyone all around. I don't know what the solution is, but honest awareness, a meaningful acknowledgement, and genuine empathy are a starting point. The head of the branch network is solid and I'm confident we can weather this storm ultimately. We all love the firm and the culture was built by us: that's evidenced by the passion expressed by everyone here.