Legions of stock brokers built their books of business with long hours of cold-calling complete strangers. Federal legislation behind the National Do Not Call Registry removed millions of potential wealth management prospects from the financial sector's reach. The USA PATRIOT ACT further required financial institutions to thoroughly know their potential customers, in the expectation that familiarity kept terrorists out of finance. Brokerages in the early 2000s knew these legal changes would quickly make mass cold-calling an obsolete way to attract new business. They needed some new juice.
Demographics answered the brokerages' growth dilemma. Some market researchers figured out in the 1990s that wealthy people increasingly preferred doing business with other people who were just like them. Being rich was the surest sign of trustworthiness. Everybody was getting rich in the 1990s from the dot-com bubble, so it all seemed so easy without any work ethic or basic financial competence.
Leading brokerages hired consulting firms after the 2001 dot-com crash to redesign their new broker employment pipelines, compensation plans, and even their branding and cultures. The result was a collection of top-tier brokerage firms that defined success as walking in the door with enough money to instantly produce high six-figure revenue. Most firms would put this figure at a minimum $10M book of business. The only people who could pull this off were the trust fund kids born into serious wealth. Mom and dad hand over the family fortune to Junior, who takes a wealth management job to fulfill some stipulation in their multigenerational trust fund. Meanwhile, the brokerage's branch manager acts in loco parentis to ensure Junior sticks around during market hours. It all makes being rich look so easy, and that's enough to fool newly rich clients.
It's easy to become a top-performing wealth manager today. Just walk in the door with your family's $10M and do absolutely nothing. Anyone else hired in a wealth management branch who walks in with less money will be fired in a few months, because their expected production after half a year will curve up by the amount of revenue they would have made if they had walked in with $10M. In other words, wealth management firms employ the hard-working poor to generate qualified leads that their rich peers will collect after they are fired.
I have no empirical research to support my observations above. Chalk it all up to what I have personally witnessed since earning my MBA. Investors have every right to know what their hired financial professionals do with client money. In almost all cases, the hired pros do somewhere between nothing and less than nothing.