DEFENDING YOUR PROFESSIONAL INTEGRITY
Stay current on recent changes in the regulatory environment
Blue-chip stock GE’s Jack Welch was a big proponent of it.
Many bellwether companies use it.
Cetera utilized it during their turnaround.
And now, Oppenheimer is doing it as well.
The “rank and yank” leadership strategy (more formally known as the Vitality Curve) is what many high-level managers think of when they look to steer a firm or business in a new direction or achieve greater goals. The general theory being to give extra resources and compensation to your top 20% of producers, help the middle 70% of producers try to move upward on the ladder, and simply weed out the bottom 10% in an attempt to find more of the “top 20%” producers.
Oppenheimer is now the latest firm to take a look at its advisor assets, rank them based upon productivity and compliance, and then purge the bottom advisors. Ever since Oppenheimer was named the #7 worst offender in the financial space as measured by “investor harm” disclosures, the firm has looked to clean up its reputation. The study cites the fact that over 12% of OpCo’s advisors have at least one disclosable event and over 4% over their advisors were hired after being terminated. The good news is that there are remedies for expunging these types of disclosures.
For better or for worse, Oppenheimer understands that having a customer dispute or U5 on an advisor’s record is detrimental not only for the advisor but for the firm. Wells Fargo, a firm that is squarely in the Congressional cross-hairs, scores four percentage points better than Oppenheimer on this same scale. With the DOL rule looming, and the uncertainty of the regulatory environment given the recent presidential election, firms are looking to shore up their exposure to compliance issues.
From the firm’s standpoint, it’s just good business strategy to rank their producers and get rid of the bottom bracket. However, we only represent the interests of the advisor. We can give advisors a good business strategy to repair and clean up erroneous disclosures so that they are no longer in the bottom bracket.
Oppenheimer, UBS, Wells Fargo, Morgan Stanley, Raymond James & Janney are all in the top 20 of that same list. If you are a broker that is worried about being “pruned” by your firm over compliance disclosures, give us a call.
EA, Executive Vice President
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This blog is my ongoing effort to inform and educate FINRA licensed professionals about the evolving regulatory ecosystem in which we operate.