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I have a client who faced an issue that will challenge more and more advisors: How to attract and retain high-quality professional talent, when you can’t afford to pay the high competitive compensation of the big firms? Our solution was a low-cost benefits and policies package that created the best possible work environment. Contrary to what you might have heard, most Next Gen professional advisors are not all about the Benjamins. Armed with a great job, at a reasonable salary, my client attracted the candidate he wanted–a CFP with three years in the business, and experience with clients. And by following through on everything he promised when he offered her the job, she started making a contribution almost right from the start, and after two years, all indications are she’s in for the long haul.

Competition for high-quality young professionals is at an all-time high, and by all indications, only going to increase in the coming years. Practice owners of all sizes have come to realize they can grow their practices faster and serve their clients better by adding talented young professionals. And recent studies by Moss Adams indicate that the economic value of an advisory firm skyrockets with the presence of junior professionals who can take the reigns and continue to grow a practice.

Yet recruiting and retaining the young talent you need to help you grow your practice and eventually fulfill a lucrative exit strategy doesn’t mean you have to win a bidding war. Just as the older generation of independent advisors almost unanimously left high-paying sales jobs to better serve clients in their own firms, Next Gen advisors tend to be more concerned about the quality of their jobs and the contribution they can make to their firms than their starting salaries. To attract them, and keep them on your team, you need to create a job offer and a working environment that communicates three things: That you’re serious, that you want them to be successful, and that you value the contribution they are making.

The first impression you and your firm make with prospective professional employees is your benefits package. As I’ve proved with my clients time and again, what you communicate with the benefits you offer is far more important than how rich the package is. The starting salary is really only important in as far you don’t appear to be trying to lowball the recruit. If you don’t have $1 billion under management, you don’t have to act like it. But you do have to be upfront about your situation, that you currently have X revenues, so you can only afford Y salary, but, (and this is a very big BUT), you expect your junior advisors to help grow those revenues, and as they do grow, so will their comp.

An excellent way to demonstrate that you intend to follow through on that promise is to include a bonus as part of the package. But don’t make the mistake of tying bonus comp to practice profitability. Young planners usually don’t have any control over profits. Even worse, every time you take a vacation as a “business trip” or buy a new computer you don’t really need, your employees will resent it. Bonuses based on revenues are much better for everyone. When you bring in more, everyone gets rewarded.

Next, a well-defined career track communicates that you’ve thought about their role in your firm, and how they can grow professionally as the firm grows. You don’t have to make promises or set dates in stone. But you do have be specific about your expectations: they’ll start doing this clearly defined job, and if they do it well, they can go into another specific job, and after some years, perhaps five, or seven, or whatever you want, if they prove they are partner material by demonstrating X,Y, and Z, then you’ll begin to sell them equity in the firm, etc. It wouldn’t hurt to be fairly clear about your exit strategy and their role in that, as well. Of course, all this can change with circumstances, but if it does, you’d better explain why, and exactly what the new plan is, or you’re going to have a very unhappy camper.

Then there’s the issue of relocation. It’s hard for me to believe that I even have to mention this, but it’s been my experience that sadly, I do. What does it communicate to a potential employee when you tell them that you’re looking for a high-quality, experienced, educated young advisor to help you grow, and hopefully one day take over ownership of your firm, but that you won’t pony up a couple of grand to relocate the right person should they be out of state? Exactly: that you aren’t serious.

As I’ve said, quality candidates aren’t growing on trees these days, and finding the right fit for your firm is going to shrink the pool even further. To limit yourself to recruits in your town is just simply silly. And even if you find a great one down the street, if they know you’re not willing to help with relocation, they’ll know you’re not a serious player. The client I talked about above found the person half a continent away, paid $3,000 to relocate her, and never looked back.

Finally, lighten up on the rules. Smaller firms have a tremendous recruiting advantage in that they can be flexible enough to create a great working environment. So don’t blow it by acting like Nurse Ratched. Offer your professional employees flex time, the occasional long lunch, and a personal day every now and then.

In fact, I go so far as to encourage my clients to have an open vacation policy for their professionals. Letting your junior advisors decide when and how much vacation they want to take which in turn shows that you trust them to act like adults. And it forces them to take responsibility to schedule time off when appropriate and when their workload is light. You’re not hiring children, and you should not treat them as such. My experience shows that you’ll find way more often than not, that with an open vacation policy, your junior advisors will tend to take less vacation, not more.

To communicate that you want your young advisors to be successful, you need three things:

  • A clear job description: In order to succeed at their jobs, young people have to know exactly what you expect them to do. In the case of my above client, as the new client services advisor, her job was to: handle client inquiries, prepare for client reviews, conduct annual reviews, do follow-up work, and network within community to attract clients. Don’t be afraid to itemize responsibilities because you might leave something out. Happy, well-incentivized professionals will tell you when they see something that needs to be done, and that they want to do it. Particularly if their bonus is tied to firm revenues.
  • Clear goals: her goal was to create maximum leverage for the owner by taking as much client work off his desk as possible, and to keep the clients happy while she did it. It doesn’t have to be complicated, in fact, the simpler the better. But professional employees do need to know exactly what they’re trying to achieve.
  • Monitor performance: New professionals should be evaluated every 90 days in the first year, then every six months in year two. Employees need maximum feedback in the beginning of their job, but once they clearly understand what you’re looking for, you don’t have to monitor them very closely for the rest of their careers. If you wait to create a feedback loop, they’ll resent the change, you’ll get pushback, and you may never get them on track.

And finally, to start your relationship with a new professional off on the right foot, nothing communicates how you value them, and sets the stage for their whole experience with you, more than the way you introduce them to other employees, and most importantly, to your clients.

The new advisor in my client’s practice was just 31 years old. The owner has some concerns that his clients would think she was too young, and not take her seriously. So we consciously made sure that he always treated her like an equal in front of the clients. Of course, she wasn’t an equal, and the clients knew this as well as anyone. Yet, by introducing her as a CFP who has been added to increase client service, in e-mails and then in person, and allowing her to send out a monthly newsletter of her commentary, it was clear to everyone that she had his respect.

In the first client meetings, they’d have a 10 minute introduction to her, and then she handled the review, even though the owner was there. And the clients got the message: In a client survey to see how they felt about her joining the firm: clients responded that they liked their experience better; the owner had not always been available to them, but she was, and they felt they were getting better service.

By the way, when my client added this young professional, with the right job, early feedback, and validating incentives, firm revenues increased from $400k to $750k in 2 years–an 87% growth rate and still going strong. Now they’re bringing in another professional to leverage her time. How much is that worth?

Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at [email protected].


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