Last month, I sat on a panel about attracting and retaining professional talent at the FPA Northern California Conference in San Francisco. As if often the case, I felt the questions and comments from the advisors in attendance were the best part, and on that day, they were nothing short of eye-opening. From my consulting work, I’ve known for years that most financial advisors don’t train their junior professionals, and the ones who do try are, for the most part, pretty bad at it. But I never really understood why, until San Francisco.
What I realized, sitting there listening to experienced advisors talk about their frustrations and challenges with young associates is that when it comes to training, advisory firm owners generally fall into three camps: They don’t feel it’s their job to train young advisors, and therefore they try to hire experienced professionals; or they honestly want to train their associates, but don’t have the time to make more than a cursory effort to do so; or, they have trained their professional employees only to have them leave the firm time and again, until the firm owners have just given up.
The first strategy, of course, has contributed to the current bull market in young professional talent, which only promises to get worse as demand continues to outstrip supply. The second, to unhappy employees, frustrated owners, and short relationships. The third approach, just giving up, leads to burning out firm owners, and putting a cap on the growth potential of their firms. I’d like to suggest a another alternative, one that’s proven to get advisors the help they need to grow their firms and reduce their workload: Effectively training young professionals to shoulder half your burden, in one hour a week, for six months.
Like Losing Weight, It’s Simple if You Follow the Plan
I know it sounds like an infomercial for washboard abs, but believe me, my clients will tell you that the solution is just that simple. It only requires two things: A formal training program, and the commitment to spend one hour a week working with your young professional.
What’s the catch? If there is one, it’s creating a clear job description of what you want your junior associate to be able to do in six months. Something like: assume responsibility for all advisory processes for all types of firm clients–prospective, new, and existing–except interacting with the clients. Seems like a tall order, right? Well, it really isn’t, if you just break down exactly what you do for your clients and how you do it.
The first step in the training program is to teach the new advisor about all the computer programs used in your practice. If they’re well trained, they’re probably familiar with most of your software. But what they don’t know–and this is key–is how you use those programs.
To impart that knowledge, take one program each week, spend an hour explaining how you use it, and let them spend the rest of the week learning the program and working on projects just using that software. Next week, new program, one hour, work with that program. Do that for Naviplan, Goldmine, your custodian/BD trading platform, Principia, or whatever your technology is. In most firms, that will take four or five weeks.
Next, they need to understand what you do for each type of client you have: prospective clients, new clients, ongoing clients, and attracting clients through marketing. Each week is devoted to a different client group. Starting to see a pattern here? Take an hour, explain your entire process for handling prospective clients, what information you need up front, what documentation you take to the first meeting, how you follow up, etc. Then let them spend the week working on sample clients. Do that for each client group. It will take four weeks.
The third month is the key: teaching your trainees how you apply each software program you use to your process for each type of client. This is where most advisory firms fail, and as a result, even two or three years later, their junior associates are still only qualified for menial tasks, which is a waste of their education and your money.
So each week in month three, take an hour and show them how you use each of your software programs with one type of client. With a new client, what do you do with your client management program? Your trading platform? Your investment software? Your planning software? You get the picture.
Don’t Forget to Review
At this point, I recommend a review. Every advisor my clients hire goes through a 90-day probationary period: If they don’t understand how the firm’s software relates to the firm’s planning processes at the end of that time, they haven’t fulfilled the conditions of their employment, and we will let them go. So far, we’ve never had to let anybody go.
Now, the training portion of the training program is done. In the fourth month, we’re going to give our trainees real, hands-on experience. Start with one real client, take an hour and show them what needs to be done, then let them spend the next week doing it: Processing real trades, preparing for real meetings, entering data in real plans, preparing to follow up with a real prospective client. No face time or any contact with clients, but doing real client work. Each week, give them a different project with a different type of client. At the end of the fourth month, they’ll have pretty much done everything you do, and done it your way, except for meeting with clients.
So, in the fifth and six months, all that’s left to do is to slowly hand over your “back office” client work to your young advisors. Don’t overload them, just turn over each client as soon as they can handle him or her. A good rule of thumb is about 20% of your client base per month. The goal is to have the new planner take over 70 clients by the end of their first year of employment. And I recommend for the comfort of the senior advisor, he or she hold back the top 20% of their clients, until the associate has proven the quality of their work, which should take about a year, and then hand them off too. At the end of this time, the senior advisor should be able to walk into any meeting with any client–new, old, or prospective–without having to do any of the behind the scenes work they need for that meeting.
It’s Really That Easy
And that’s it. Imagine how many more clients you could see if you didn’t have to do any of the back office processing? How many new clients you could bring in? How much time you’d have to think strategically, increase marketing, or just slow down a little? Could you double firm revenues in three years and still work less? You bet.
After a year, you have a junior professional who’s greatly contributing to the firm, the time to grow your firm on a steep curve, and less pressure which will make you more productive, happier, a better boss, and probably a better advisor. At this point, even if your associate advisor leaves after the typical three years, you’ll have made more than a good return on your investment in them. And you’ll have the revenues and the system to attract and train their replacement.
Chances are, though, they won’t leave after three years. The fact is that effective training is a retention tool. The reason most young professionals leave at about the three-year mark is that they still don’t fully understand their job (how the software relates to processes), so they are handed menial tasks, get frustrated, don’t feel valuable, and leave. People who are properly trained feel valuable to the firm, and stay at least five years.
Five years? Why five years? Well, the truth is that successfully training your professional employees is a double-edged sword. They are indeed more valuable to the firm, and in two years, you’ll know it. After five years, they’ll know it too, and chances are they’ll also know they aren’t being compensated for their real value, and you won’t have a career track to allow them to reap the benefits of the practice they’ve helped to grow. So you’ll need a plan to keep them. But that’s a topic for another column.
Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at firstname.lastname@example.org.