Succession Planning 101: How Small Firms Can Recruit the Best New Advisors

While the first wave of financial advisors nears retirement age (and scrambles to finalize succession plans), a new generation of planners is entering the field without a clear path of establishing themselves in a still fairly young industry. This presents a dilemma on both sides: veteran advisors need forward-thinking talent to continue the work that they’ve started; new planners feel unsure of where to get their first three years of experience.

In this, the first of a multipart blog series on how smaller advisory firms can hire and motivate new advisors, I’ll present some of what I’ve learned over the years on how to smartly hire new advisors for your firm.

According to the Financial Planning Association’s “2010–2011 Financial Planning Salary Survey,” nearly half of financial planning firms reported that they planned to hire additional staff over the next 12 months. Students surveyed who are graduating between 2012-2013 with a certification or degree in financial planning expect to start in a junior financial planner or paraplanner position; 87% will hold a bachelor’s degree and 61% will hold Certified Financial Planner certification by the time they graduate.

With the majority of firms still relatively small--fewer than five people—finding that right “fit” is a challenge, and a potentially costly one if a new advisor doesn’t stick around.

So while casting a wide net for talented new advisors may work for larger firms, we “little” guys have to be incredibly selective about who we bring on board. That means going beyond the numbers and finding the superstars who will make a difference in the firm not only today but also in years to come. 

Recruiting Beyond the Numbers

I don’t have to tell you that a dazzling resume does not necessarily make for a dazzling addition to your practice. At Private Ocean, we go through a hiring process that is key to creating the right team. That means lower turnover and greater loyalty, and because we aim for enviable levels of client service, we’ve chosen new hires who share our philosophy on customer service and as a result elevate our company’s reputation.

That may sound like finding a needle in a haystack, but investing the time to select recruits makes a world of difference in running an efficient practice on track for a successful future. So here are some of the best recruiting practices I’d recommend:

1) Hold lots of interviews. Don’t just review a stellar resume, hold an interview, and then drop the gavel. Consider a series of interviews—an interview with a direct manager and then additional in-person meet and greets with the people this candidate would be working with. It doesn’t matter how qualified someone may seem on paper. Observing how they engage with different groups of people can provide meaningful insight—you learn motivations, passions, personality trait—and you can quickly tell if this person fits (or doesn’t fit) in your environment.

2)  Ask the right questions. Are they as focused on your priorities as you are, or do they just want to work five minutes away from their house? How passionate are they about customer service? I always say that you can teach skill, but you can’t teach heart. Ask the questions that you’d want someone to ask you if you were the candidate. Also, encourage the candidate to ask questions about the firm. Their questions can be as revealing as their answers.

3)  Keep in mind generational differences. Young planners today don’t necessarily have the same values, beliefs and goals as the previous generation, but one thing is clear: they want to help people. Looking ahead means embracing what these advisors have to offer, while holding on to the values that you started in this business to begin with.

4) Change Venues to shake things up.  A longer interview process can start to seem like a Spanish inquisition if you don’t change things up. Once you’ve decided the candidate has potential, take them to lunch. While I know that’s not a new practice, it’s important to consider the venue as part of the interview. See how the candidate interacts with the servers, how they conduct themselves in a more social environment. It’s at the lunch that people start to get comfortable,  and show their true colors.

Bottom line: you’re looking for chemistry just as much as an impressive GPA and certification. Work with your team to compare notes, especially from different areas of the company. You may find that a candidate makes a great impression on his potential managers, but a not-so-great one on colleagues. 

Trust me, the homework pays off.

In part two of this series, I’ll share some best practices on how to retain and motivate new hires for your small(er) advisory firm.

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