You may not be aware that some financial advisors have asset gathering or commission quotas (not all do, it depends on their firm). For example, new investment advisors at the big bank owned brokerages will typically have asset gathering targets of around $5 million per year (some are higher, but $5 million is roughly the average from what I have seen).
Every firm is different, and some will assist you by providing referrals from the bank branch network – when a client has perhaps outgrown the mutual funds and GICs offered at the “bank branch level” they may get referred up to the brokerage. Others (most) expect you will source the assets entirely on your own.
I don’t know the exact stats, but a large number of advisors do not stay with their first big brokerage firm after the first two years. You see a lot of them crossing the street. That means they switch firms and bring their clients and assets with them as best they can. The new firm may pay them a bonus on assets they bring in, or treat them as rookies again (with a base salary plus reduced commissions). When their new base salary expires, they will probably have more assets under their belt (what they brought with them, plus what they sourced at the new firm). They will keep on switching until the next time their salary runs out they have enough assets to support themselves from commissions alone.
Branch managers have “new hire” and “competitive hire” targets as well. At the end of the day, the brokerage business lines contribute to the bottom line of the overall companies, so what they do is in theory driven by maximizing shareholder value – but there is something about this advisor turnover that just seems odd don’t you think?
For those who would argue that those who hit their quotas won’t have any problems and those who don’t hit their targets don’t have what it takes to be financial advisors, I would say that if you replace “financial advisor” with “salesperson” then I couldn’t agree more.