The Kehrer Bielan team facilitated a conference call on March 25th to help the participating firms manage through this time of uncertainty. The call channeled the spirit of our community’s long history of collectively benefiting when coming together to help one another. The health and safety of everyone through this unprecedented time was the priority on everyone’s mind. The objective of the call was to help participants better address their responsibility of leading their businesses. A select group of attendees were invited to share their collective best practices with the participants, with participants provided an opportunity to ask questions.

We grouped the questions registered attendees wanted to discuss into six main topics. Here are our key takeaways from each segment of the discussion.

1. How are firms empowering advisors to work remotely and what is working

This question received the most interest and given the most time on the call. Firms are making significant progress using some form of video conferencing like Web-Ex or Zoom, with usage varying by firm and within firm. Some firms have had a conferencing application in place and in use for some time, enabling advisors to cushion the impact on business. Others have not installed, are currently installing, or have installed but are not yet using this type of tool. Not surprisingly, those that have advanced through the technology curve are faring better, highlighting why it is just a matter of time until delaying investments in technology becomes more expensive than the savings.

2. Operations procedures, digital signatures, utilizing bank resources or overriding bank restrictions, U S mail processing for closed branches, interoffice mail, working in non-registered offices

This question focused on how business is being processed. There was again vast differences by firm in the availability of branches: some have branches open as usual, others have limited access by appointment only and drive through, and others are completely closed. The importance of business resumption plans came through, with the agility of managers to adjust on the fly ever so important to adapting to the circumstances. With no business continuation plan able to account for every issue, times like this are the best employee performance evaluation tool imaginable. The employees that shine are the ones that can harness the right people, have them focused on the right priorities, and provide it with the right attitude in times of uncertainty.

3. Advisor and sales manager compensation adjustments

Most firm are evaluating next steps with decisions focused more on the second quarter and beyond, when lower assets fees will be reflected in revenue after the good start in January and February bolstered first quarter revenue. The compensation decision will be made depending on what role each firm wants to play in how they support their advisors. It can span from doing nothing different than paying like they do today, since advisors experience market ups and downs that are always out of their control, to performing a safety net role by doing something like filling the monthly gap between run rate compensation on any lower compensation earned for a period of time. Some firms will take the middle ground of keeping the grid in place but removing hurdles like referrals to retail or relaxing other KPIs on the scorecard. Much will come down to the financial impact of any change and how a firm wants to position its role in backstopping employee compensation and preventing attrition.

4. Client and advisor communication protocol and advisor communication with their branches

Firms varied on how they approached this, but all have protocols in place for ongoing and scheduled proactive messaging to clients and branch partners. Many used multiple communication mediums. The topics included operations and procedural issues, market insights from chief investment officers and product partners, and emotional and motivational input from industry experts to address the stress employees are facing. Again, we see the value of the availability of existing resources keeping some firms ahead of the curve.

5. Banks and credit union interactions with their third-party broker and product partners and specifically, required wet signatures

We found out that depending on the firm and location, banks are not all in the same operating mode. About half the branches are open and doing business, the other half run the gamut from appointment only, drive through only, or completely closed. Depending on the circumstance, procedures are impacted accordingly. It is clear that the operating situation that firms are in today were cast years ago when they selected clearing and product partners and made technology investment decisions.

6. How to maintain revenue and if firms are moving towards performance relief 

Firms estimated that the first quarter is fairly strong with future quarters reflecting reduced revenue from 20% to 30%. This points out the dynamics that both fee revenue and transaction revenue provide. The benefit of fee income is it will still show up even if a branch is closed and an advisor isn’t in communication with every client. The drawback is the revenue will be down based on market performance similar to what we experienced in the fourth quarter of 2018. For transaction revenue, an advisor has the ability to change the result through new business generation with clients. But this is in a different environment that what an advisor is accustomed to, which might mitigate that benefit. It comes down to a balanced mix of fee and transaction revenue might be the best way to weather this environment.


Key Takeaways from the Call

Again and again we saw that decisions and investments made in the past shaped how well firms are managing the current crisis. While creativity and agility is helping to overcome some shortfalls in capability, firms with both solid infrastructure and strong leadership are getting through this better than their peers.

As with the fire drill with the DoL Rule, the current crises is pushing firms to take steps off the ledge of business as usual – improving their ability to conduct professional virtual client meetings, improve communication among the firm, financial institutions, advisors and clients, and taking paperwork out of processing – that will ratchet up their abilities to conduct business in the next new normal.

The Kehrer Bielan team would like to thank the 11 colleagues who shared how they are responding to the crisis:

  • Jim Fujinaga, President & CEO, Hancock Whitney Investment Services, Inc.
  • Clark D Smith, AIF®, Senior Vice President, SunTrust Investment Services, Inc.
  • Rob Comfort, President, CUNA Brokerage Services, Inc.
  • Connie L. Gregory, SVP, Cetera Financial Institutions
  • Jane-ellen Porter, First Vice President, People’s Securities, Inc.
  • Mims Clayton, President & COO, First Horizon Advisors, Inc.
  • Paul Hansen, President, Key Investment Services
  • Michael Miroballi, CFA®, President of Huntington Investment Co
  • Tom Mudlaff, COO, United Brokerage Services, Inc.
  • Arthur Osman, EVP Institution Services, LPL Financial
  • Rob Varner, Managing Director-Retail Brokerage, Synovus Securities, Inc.

as well as the 139 members of the bank insurance and securities community who dialed in and asked questions. Many of them are asking us to host follow up calls in the coming weeks.