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Financial Planning > Trusts and Estates > Trust Planning

A Star is Made

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When it comes to hiring junior advisors, virtually every advisor I’ve ever seen wants to hire a star: some youngster with a resume’ that will knock your—and their—socks off. That strategy almost always turns out to be a big mistake. Here’s why: When advisors hire “stars,” they expect them to “hit the ground running,” to come in and start making significant contributions to the firm almost from day one.

But all practices are different; their culture is different and so are the ways they deliver advice to their clients. Expecting a new employee—even a star—to figure out how to work within a new firm in a short period time is almost always unrealistic. Consequently, the “star” is set up for failure right from the start: When they don’t live up to those unrealistic expectations, they’re usually met with disappointment, and often, considerable criticism. It can take even the most resilient employee to overcome that, and if they do, it can take years.

This problem is so pervasive that I’ve come to the conclusion that it’s usually better not to hire “star” job candidates, and avoid altogether the downward spiral of unrealistic expectations. With new employees whom advisors aren’t so high on, the owner/advisors typically allow more time for the employee to become acclimated to their new firm. And more importantly, the owner spends a lot more time training them to do the job they were hired to do. In fact, over the years, I’ve come to the conclusion that how firm owners train—or don’t train—newly hired young advisors within their first three months at the firm, will determine not only their job performance throughout their tenure, but their ability to contribute to the success of the firm, and often will determine the success of the firm itself.

Those critical first three months (or so) are when new advisors learn how to work within their new firm, how to do their new jobs, and most importantly, how to become self-managed employees: that is, how to make a maximum contribution to the firm with a minimum amount of direction from the owner/advisor. And the only person who can deliver this essential education is the owner/advisor. It’s an investment of time, to be sure, but one that will pay a dividend on the three months of intensive training with years of great—and virtually unsupervised—performance.

I know this is going to sound a little “new-agey,” but I’ve found the first step toward creating great employees is to teach them to teach themselves. And the key to doing that is to give them permission to trust themselves (OK, just call me Yoda). Let me explain. I’ve found that to get the most out of employees, it’s essential to communicate that the culture of your firm includes permission for your employees to: make mistakes (it’s how they’ll learn); speak up (if you don’t know what they are thinking, you can’t help them); and, to ask for more responsibility (they’ll know when they are ready to grow). In return, owners need to ask for only one thing: that employees honor their word, and keep the promises they make.

Taken together, each of these “permissions” will enable new employees (and existing employees, too) to gain confidence in themselves. They’ll come to realize that they don’t have to be perfect, and that it’s OK to make mistakes, as long as they own up to them, do what they can to fix them, and most importantly, learn from them. They’ll learn that it’s OK not to know and far better to find the right answers than to pretend that they do know. They’ll learn to trust their own instincts about what they can and can’t do. And they’ll learn that to earn the trust of others, they have to act honorably.

This trust in themselves as employees of your firm will enable your employees to learn on their own (with minimal effort from you), to virtually manage themselves, and to find ways to contribute to the success of the firm that you’ve never thought of. It’s truly the key to having an ultra-successful—and enjoyable—advisory firm. And it can be achieved in a relatively short period of time.

Once you’ve shown new employees how to learn, you need to teach them about their new firm. They need to learn the technology you use, and how you deliver advice to clients. Often this step requires little more from the owner/advisor than a list of what they need to learn, access to other employees, and time to read the firm’s operations manual, which details all your processes and procedures (if you don’t already have one of these, having a new employee create one is a great learning tool).

Then, they need to learn about their own job. I’ve found that giving new employees general information about what their job entails is of little value, since they have no concrete frame of reference to understand what you are telling them. Instead, a ground-up approach works better and gets much faster results. Start by giving them one task that their job requires. Encourage them to ask any questions they have, and to trust themselves by doing the best they can. Then evaluate how they did and give them feedback. This is key: Be sure to use their mistakes as learning opportunities (not as a reason for criticism).

Their mistakes are how you’ll know the limits of their knowledge, and are their opportunities to grow. Have them attempt a similar task and check to be sure the mistakes are corrected. If not, have them repeat similar tasks until they get them right. All along, encourage them to ask about things they don’t understand. (It’s far more efficient to answer specific questions than it is to lecture in generalities.)

Then move on to another job duty, one after another, until they’ve learned how to do everything their job requires without mistakes. This obviously will take considerable supervision and input on the owner’s part, but you’ll be surprised how quickly your employees “get it,” and after that, the time you spend managing them will become minimal.

This “teaching” system works great for new employees because it combines giving them permission to learn with teaching them to trust themselves. With existing employees, it’s a little harder to implement, because usually they already know enough to get by in their jobs, and are often less than motivated to increase their knowledge. I’ve found this is particularly true when employees find they dislike one portion of their jobs. Often, they’ll avoid that task, leaving it for others to pick up, reducing the efficiency of the firm, and potentially causing some resentment.

In these cases, I’ve found a simple solution that turns out to work well with all employees. Instead of conducting annual performance reviews and then announcing salary increases in the same meeting, separate them by a few months. In the performance review, point out one or two specific tasks that they need to accomplish: learn the document management system, make sure all the annual client reviews have been completed, etc. Let them know their comp review will be in a couple of months. The results will be surprising.

Recently, I had a lead advisor in one of my client firms who just refused to learn the CRM. Maybe she didn’t like technology or maybe she was afraid of it. Either way, she relied on a junior advisor to do all her inputs. Info on a new lead could be done in two minutes, but she wrote it all down by hand, and then sent it to him to input, so it was taking much longer, and he had other work to be doing. In her annual review, we told her she had to learn the CRM and that we’d give her a raise at a later date. Now she’s doing her own inputting.

Creating self-managed employees means enabling them to learn everything they need to do their jobs well. Sometimes, it’s creating the right motivation. More often, it’s giving them permission to trust themselves and to learn their own way. And it always includes providing constructive feedback about what they need to do better. But no matter how you do it, once you’ve created motivated employees who believe in themselves and know how to learn, the job of an owner/advisor becomes much, much easier. And their firms become much more successful—whether they hire star employees or create them.