Train the Young, Build an Industry

Financial planners themselves–especially ones who own or run firms–must share the burden of building an industry by fostering the development of younger talent. Many financial services industry coaches today advise their customers to shed the bottom 10% or 20% of their client base every year, because the top 20% produce 80% of the business. The concept doesn’t always make sense. Does GM drop the lowest 20% of their automobile buyers every year? No, because they understand that all revenue can be good if they can find effective ways to serve that lowest 20%.

Taking on a junior associate to work with these clients would keep revenue in the firm and provide excellent positioning for future growth. The revenue from these clients could pay a salary for the “junior.” Any new business she brings into the firm could be split between the firm and the junior associate. Over a period of three to five years, the junior associate would earn “equity” ownership with these clients and perhaps the firm itself.

The other advice coaches often give plannis is to add staff as your firm grows. Why not think about “investing” in your business? Hire a junior associate. Bring someone on as an apprentice to do servicing, learn the business, and someday become a revenue-producing member of the firm.

Many veteran members of the profession aren’t doing this because they don’t know how and are concerned about giving up control. Yet, like a great estate planning technique, the family limited partnership, building a business should not mean giving up control. The reality is just the opposite. It gives you back control over your life.

Many planners are reluctant to take on junior associates because they feel they are too busy to do the training that new entrants require. This is where FPA comes back into the picture. FPA can develop training and mentoring programs that will take the burden off the owner/planner. FPA, being a neutral party, should alleviate fears of theft of proprietary information or one firm stealing another firm’s best talent. FPA wants to see financial planning delivered in an advisory capacity through diverse organizations and styles–large and small, boutique and mainstream–so long as the planners share common values and meet high standards.

FPA has restructured and restaffed to transform our work in career and professional development. But this is a job that will require all who participate in the industry to do their part. I include independent practitioners, major financial services firms, the academic community, the CFP Board, and other membership associations. There will be plenty of opportunities ahead for all who desire to contribute to, shape, and practice in the profession of financial planning.

Jim Barnash is president of the Financial Planning Association. He can be reached at [email protected].