Robert E. Smith will not be using his right hand as much. About the only thing the former Master Sergeant could do with his right hand was shoot a rifle accurately, he says. While training with the Marine Corps, he switched back and forth, "left handed to right handed, left handed to right handed," he demonstrates in the cafeteria at Edward Jones' training facility in St. Louis.
"It's all about muscle memory," he explains. Having served in the Marines for more than 20 years, Smith started out in Luxembourg guarding an embassy and has since traveled to more than 30 other countries including Senegal, Iraq, and, last year, Bahrain. For five years after 9/11 he was the counter intelligence chief for President George W. Bush's helicopter squadron, HMX-1.
Although he's still sporting his regulation crew cut (which his wife, Emily, shears to "zero on the sides and three on the top" every other week), he's traded in his fatigues for a three-piece-suit and red tie. From now on, he'll be aiming for quality stocks and investment goals rather than hitting paper targets.
This cool November day in St. Louis is Smith's last official day in the transition from protecting presidential assets to safeguarding clients' assets. He is one of two candidates in the maiden graduation of Edward Jones' new "FORCES" program, a 26-week course which helps train veterans to be financial advisors. When he returns to his home office in Mandeville, La., he'll officially be buying and selling on clients' behalf.
FORCES is one of a number of programs being rolled out on Wall Street to help draw in former military. Competition for veterans is heating up as troop numbers contract and up to 300,000 service members are expected to cycle out of the armed forces over the next five years, according to Syracuse University's Institute for Veterans and Military Families. Broker-dealers are hoping that they will be able to prospect a unique group of young, disciplined and experienced job seekers from that pool. Edward Jones and Bank of America Merrill Lynch both launched large internal programs this year that were designed to help veterans transition from the front lines to the front office and spread a familiar message: I want YOU.
"It's a very rich talent pool and the competency, skills and experience that they develop while serving, we believe, align very well with what we're looking for in a successful financial advisor at Edward Jones," Mark Eberlin, a principal in charge of talent acquisition at the firm, says. Lewis Runnion, an advisor, former Army officer, and director of the Military Affairs Advisory Group at Bank of America Merrill Lynch, adds: "One of the things we try to convey to men and women leaving the military now is to try and consider those things that are outside of your comfort zone. Whether you're looking at the financial services industry for banking, retail or financial advisory or on the operations side, don't skate to where you're friends are going."
Along with fellow talent acquisition specialist Matt Doran*, Eberlin spent nearly eight months figuring out how to leverage Edward Jones' history and training in order to bring in ex-military at a rate of nearly 500 to 600 per year for the next eight years. They reached out to some of the 1,300 veteran advisors already in the firm and to veteran employment agencies and eventually came up with FORCES, an extended training program for career changers coming out of the military. It launched in May with Smith and two other veterans of Iraq and Afghanistan in the first class and by December had 125 trainees at various stages.
"Our FORCES program has given us an opportunity to go tell a great story to military veterans to get them excited and interested in a career in the financial services industry," Eberlin explains, sitting in the dining hall at Edward Jones' training facility in St. Louis on the day of the program's first graduation.
Of the approximately 70% of veterans who enter the private sphere, less than 5% of that total go into the financial industry, according to data from Syracuse University's Institute for Veterans and Military Families and the U.S. Bureau of Labor Statistics. A small majority, nearly 22%, wind up employed by the government.
Smith committed to the Marines in his senior year in high school and had a degree in criminal justice, which he received online from Park University in St. Louis while serving. He hoped to find a job in government or a support agency, but those plans were stymied by hiring freezes. Positions had become "uber competitive," he says, owed in large part to the higher number of veterans coming out after 9/11. By his own count, Smith filled out more than 250 job applications before humbly reaching out to friends.
"It was frustrating," he says. "I wanted to earn my merits based on my resume and being able to interview and selling myself. I didn't want to call somebody to help me get a job, but networking is what it is."
Without a financial services background, wealth management was not top of mind. It was not immediately clear how what he learned in combat or how any amount of muscle memory he had would help him remember everything he need to know for a test like the Series 7.
A fellow Marine, Kyle Robichaux, regional leader for military recruiting at Edward Jones, first put the idea of being an advisor in Smith's head, and Smith's wife, Emily, finally convinced him. She had heard from Robichaux's wife during dinner that advisors' hours were more conducive to family life and lightened after about the first two years. Since the couple had spent more than half of their 13 years of marriage apart, they liked the idea of something that would allow them to remain in one place together.
"My wife was pushing me into it more than I was at first," Smith remembers. "My wife understands that I might have a Saturday meeting every now and then when I get longer in the tooth, but I might not work as many total hours in the day, so I'm looking forward to that."
Many of those returning, especially younger generations from recent conflicts, face a similar challenge. As of October of 2012, one in ten Gulf War era II (post-9/11) veterans was unemployed according to the Department of Labor, and that number is as high as 23.8% for those age 20 to 24. That compares with a little over 7% of the general population.
Linking Two Unrelated Fields
Over drinks with colleagues at other large firms in New York, Runnion of Bank of America Merrill Lynch decided it was his mission to find ways to bring veterans to Wall Street. As a result, Citi, Credit Suisse, Deutsche Bank and Goldman Sachs pooled their resources and co-founded Veterans On Wall Street in 2011 to help with the mission "to honor and employ" former military personnel by hosting annual conferences and career fairs.
"Whether it's giving them roles inside the bank or giving them direction or other career opportunities, we have a debt as veterans," Runnion says. "And that debt is to protect those who came before us and gave us this opportunity and educate those who came after us."
Sometimes the connection between the two industries is not clear for recruiters, however. Veterans can look very different from a stereotypical career changer, especially on paper, according to Eberlin. He and other members of the talent acquisition team at Edward Jones studied their existing pool of 1,300 veterans and consulted with military employment agencies to come up with a rubric for identifying veteran talent.
"The way you translate a military veteran's experience and track record of success compared to a career changer that's nonmilitary is competencies," Eberlin explains. "We believe one of the most important competencies is the ability to build relationships. We know this is a people business."
Smith did not have a masters or financial services degree, but he had spent the last 16 years dealing with sensitive information, protecting Marine troops and building relationships with sources on the ground in places like Fallujah, Iraq. At the least, it gave Smith some added confidence when he went into the "Know Your Customer" classes to practice conversations with a prospective client.
"I've been role playing forever in the Marine Corps," Smith explains, careful to draw the line between the two fields. "I'm talking body language and stuff like that when dealing with a client. I do not interrogate clients."
In addition to metrics such as rank, qualifications like a security clearance, for example, can reveal a level of trustworthiness, James Schmeling managing director and co-founder of the Institute for Veterans and Military Families, a nonprofit partnered with JP Morgan and Syracuse University, says. In many cases, firms can also be confident that the veteran will not have any criminality, because that would have led to a dishonorable discharge.
"If you think about characteristics and traits of military members you can go immediately to trust and integrity," he says.
As an added benefit of their discipline and ability to adhere to structures, veterans are quick to adapt to the regulatory environment as well, according to Schmeling.
"The ability to follow rules and regulations laid out is a very important thing veterans bring to the table in this industry," Schmeling says.
There was a moment for Smith during Field Foundations, the part of Edward Jones' FORCES and traditional track that involves door-to-door prospecting, when the connection started to make sense. Approaching his first house in an upscale neighborhood, Smith had no idea how it would go. He was nervously reassuring himself on the walk up to the front door with his Marine Corps pin fastened to his lapel. Once the door opened, adrenaline and a familiar instinct took over.
"You just feel kind of like a calming," he observes. "You get that feeling sometimes at intense momentseverything just kind of slows down."
He coolly introduced himself and explained that this was his first house, and the lady who answered the door became Smith's first real prospect. Although he did not get another lead for two hours, Smith still considers it an 'Ah-Ha' moment that conjured up a similar sense of pride to what he felt in the Marines after a promotion or when he received an award for the time he spent with HMX-1. He felt confident that he could master Edward Jones' five step process: know the client or prospects' current situation, design goals, assess goals, build a plan to get there, and walk that path alongside the client.
In the Marine Corps, it was BAMCIS or "Begin the planning, Arrange for reconnaissance, Make reconnaissance, Complete the Plan, Initiate the order and Supervise," which is essentially a six-step version of the same thing, according to Smith.
"We have within our training a five-step process and many times our military veterans have standard operating procedures," Eberlin observes. "They parallel well into being able to follow a process that allows them to identify client needs and identify solutions for those needs."
And when things are not going according to plan, that's when a veteran's background can be especially helpful, according to Runnion, who had been deployed to Saudi Arabia as a Scout Platoon Leader overseeing a squad of tanks during the first Gulf War. That experience helped keep life in perspective during the tumultuous markets of 2008 and 2009 and the uncertainty when his firm was acquired by Bank of America.
"It was a stressful time," he said. "But at the end of the day I took the train home, and I didn't worry about the commute. Is somebody going to shoot at me? Is there an IED [Improvised Explosive Device]? I had a warm meal every night and slept in my bed, so the level of stress that I experienced was nothing like our troops were experiencing at that time in Iraq and Afghanistan."
Making Modifications
Bank of America Merrill Lynch helps veterans get a boot in the door by considering all applicants an "executive referral," according to David Smith, relationship manager in the Military Veterans Recruiting Program at Bank of America. That designation guarantees that they will automatically get an interview, which means a lot considering Merrill Lynch receives over 36,000 applications to its financial advisor positions each quarter. "The key to the interview is getting the interview," David Smith says. "You do have to compete with others, but we do give you a boost up," he explains.
It is after a veteran is hired, however, that the real work has to be done, according to Runnion. In early 2012, he took a look at other firms' veteran initiatives and founded MAAG in April, and it has since become a "second full time job," he says.
"There's a big jobs initiative in the financial industry, but giving a vet a job is the easy thing to do. That's day one," Runnion explains. "It's day two that's the challenge. And that's assimilating them back into the private sector, making sure that job is the right fit for him and his family, making sure that they understand the leadership culture, what they bring to the firm and how they reintegrate back in."
Runnion speaks from experience. After leaving the Army in 1993, he ran into AXA Advisors at a recruiting fair. He was one of a handful of veterans entering the financial services industry at the time and was the only one hired from that fair. With only his degree in psychology and sociology from East Tennessee State University and his military service to lean on, his first few times on the job were like "drinking from a fire hose," he says. "I had no idea what I was doing."
Runnion modified Merrill Lynch's existing training program, Practice Management Development, to compensate for the confusion he initially felt. The group identifies each veteran entering, where he or she is coming from and which office he or she is in, and then assigns him or her to an experienced advisor who often has prior military experience as well. Regularly scheduled meetings are in place for at least two or three years.
"I find they last much longer than that," Runnion says. "It becomes the person you can go to from day one, 'Where's the coffee room?' to 'Help me build this portfolio, what would you do for this client?'"
In addition, Runnion personally makes himself available as a counselor, helping to spread the message and provide support.
"When I talk to a veteran who's starting day two, I say, 'I've been there. I know what day two is for you,'" he says. "Sometimes I think we find that for two to three years after [they retire], veterans miss that camaraderie they had with the guy who maybe had been in a tank or jumped out of a plane or deployed or been through boot camp, so I try to recreate that network back inside the bank."
Edward Jones bumped its traditional training program up from 16 weeks to a total of 26 for FORCES candidates. That provides former soldiers more time in an office with an experienced advisor, more time to study for regulatory exams and more time until they enter variable compensation.
"We realized very quickly that training is critically important to these folks and this population," Eberlin says. "They're very accustomed to a military training style, which is a left seat/right seat kind of experience. I'll show you and then let you experience that."
Although less physically challenging, the last 26 weeks took Smith back to the 16 weeks he spent in boot camp. While studying options eight to 10 hours a day and "going 'Ugh!' and pulling your hair out," he says, Smith recalled the time he spent marching up and down the mountains in San Diego at the will of his drill sergeant.
"The physical level was not there for the Series 7," he laughs. "Honestly, I actually thought a couple times about my drill instructors. As physically demanding as boot camp was, it was also mentally demanding because they both really go together."
Once he got to Field Foundations, Smith wore out a pair of boots canvassing suburbs of New Orleans in the heat of the summer. "Good thing my sister works at Zappos," he jokes.
A support network of friends and colleagues at Edward Jones helped him up those hills on his way to the Series 7. Kyle Robichaux, the military development leaders, or coaches, at Edward Jones, and even some of the recruiters on the acquisition side would call to check in. One day before the options chapter, Robichaux offered a few words of encouragement:
"Just barrel through it man. Just hunker down, get some coffee and go," he remembers Robichaux saying. "Go. Go. Go."
A lot of the Edward Jones' culture is instilled in the classroom. In each session, there is an experienced Edward Jones advisor (sometimes a veteran as well if the class has ex-military on the roster) who takes time away from the office to come back and relate stories from the field.
Moreover, the military development leaders, who were calling Smith throughout the process, oversee several trainees at once and can share common issues and ideas.
"It can help the culture," Steven Kuehl, a financial advisor training head who helped design the FORCES curriculum under Eberlin and Doran's guidance. "It makes a large firm feel a bit smaller."
As an added benefit, that extra time can give some recently discharged veterans time to master the finer points of their transition out of uniform, such as their language.
"That's one thing I was warned about," Smith said. "Marines are marines and we can get unruly at times talking with each other. I'll be totally honest: as a father and a Christian, it's something that needs to be done anyway."
To make the experience more familiar, Eberlin and Doran had to think about compensation as well. Smith and others had been receiving a paycheck on the first and 15th of every month for over 20 years, which is different from the commissions and bonuses many trainees and advisors receive.
Edward Jones decided that in addition to keeping veterans essentially salaried during training, FORCES offers five-and-a-half more months of guaranteed income after they have graduated from the first 26 weeks. The first eight weeks of studying provide hourly pay and then that increases to a regularly monthly payout to total $65,240 in the first year by Edward Jones' estimate. Veterans can also tap into the GI Bill's On the Job Training (OJT) benefits to help pay for housing, although neither of the first two FORCES graduates did. "As much effort as Edward Jones puts into training everybody, there's eight to ten weeks more of preparing me to move into something that I'm going to make commissions on," Smith says. "It's very important to be good at what you do, especially when every month you start back at zero."
In addition, the experienced advisor who mentored Smith in his office in Mandeville, Louisiana, is handing over to Smith a $5 million account to ease his transition. That occurs through the firm's Goodknight program, which allows an advisor to delegate some assets to a trainee who has performed especially well.
For the financial advisory industry it is more than just the right thing to do, Runnion says. "Remember, there's also a business element." But there is a future benefit as well. And Runnion says, one only needs to look back to the last time veterans came home from the major war. "The men and women leaving the active force now are going to be the next great generation, the next great business leaders," he points out. "They're in their late 20s, early 30s. Soon they'll be in their 40s, and that generation is going to lead our industry. If we don't embrace them now and give them opportunity as an organization we're going to miss out on that."
For a more in-depth video interview with Lewis Runnion,
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*Editors' Note: This name has been changed from a previous version which incorrectly specified "Matt Huffman" as the talent acquisition specialist involved.
