How do smaller firms recruit talented young advisors and keep them motivated to stay with the firm beyond the first three years? In this, the second of a series of blogs on succession planning, I address the issue.
The talent is out there, and this next generation of advisor is tech-savvy and social-media ready. They've also done their research. In addition, they have lots of choices, from small, independent fee-only or fee-based firms to larger firms and brokerages, though these may not necessarily provide a clear vision for an advisor’s long term career path.
That’s where smaller firms can to step it up to compete with larger firms, who can afford to lure young advisors away from RIAs with attractive incentives, like Bank of America Corp.’s (BAC) Merrill Lynch did last year, when it announced its new pay incentives to motivate advisors to focus on fewer but wealthier clients.
Smaller firms—which I remind you make up most of the industry—have their work cut out for them when it comes to finding and holding on to good, talented people. In the first blog in this series, Succession Planning 101, How Small Firms Can Recruit the Best New Advisors, I provided a few tips based on my experience on how to recruit the best new planners for your firm. In this posting, I’ll focus on how to retain those new hires.
Some industry experts say that a forward thinking succession plan is the best way to recruit the best young talent, and I wouldn’t disagree. Smaller firms without a formal plan for succession compete with larger firms who can help a new advisor envision a long-term career in the industry with three-year, five-year and 10-year benchmarks.
Landing a new advisor is only half the battle, however. Once you’ve chosen someone who fits into your practice and can potentially play a role in your firm’s succession plan, how do you build loyalty and trust, and how do you encourage them to stick around? Simple: let their personal succession plan play a role in your firm’s.
Creating Your (and Their) Succession Plan
Mark Tibergien, CEO of Pershing Advisor Solutions, once told me that you can’t motivate your employees, you can only de-motivate them, I agree. You can support and encourage them to feel like they’re a part of your team by being straight, open and honest about your business and where it’s going, by treating them fairly and by expressing your appreciation.
But more than that, you need to pay particular attention and be aware of each advisor’s personal agenda. If you’ve done your homework and chosen people who share your same philosophical outlook, you shouldn’t be surprised by what someone’s goals are. Understanding each team member’s personal motivation to come in to work every day is essential to figuring out how to keep them satisfied over the long haul.
Other ways you can help inspire new advisors? I suggest these:
- Lead, don’t manage. You invested a lot of time to make sure that you’ve hired the right person for the job, so it’s time you trusted them to take the reins. Empowering people to make decisions, supporting them, guiding them and then getting out of the way helps promote a sense of ownership in the business.
- Map out a mutually beneficial plan. Listen to what your employees want for their future. Start with the right now, then ask them to look out three, five and 10 years. Help map out a plan that’s both beneficial to the employee as well as your firm. Do you have a trader interested in investments? Have you considered expanding your investment committee? Help your firm grow right along with your people.
- Be ready to adjust that plan. Things change, and that’s okay. Say someone wants to go back to school to get an advanced degree. Does it benefit your firm? Does this person show potential as being a part of your succession plan? Do your best to adapt to the changing tides.
Of course, no one expects you to be the perfect, most patient omniscient leader, and I know as well as anyone that sometimes best intentions falter. But this approach to leadership has helped me time and again in my firm as I’ve watched young new planners join the firm and blossom into full-fledged powerhouses—each with a unique talent that gives me great security knowing that we’re providing the best services to our clients.
In the end, isn’t that what matters?
See part one of this series on how to recruit and hire new advisors for your small(er) advisory firm.