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Financial Planning > Behavioral Finance

The Indispensable Staffer

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Late last year, in a study group discussion among LPL Financial advisors in Southern California, brokerage executives asked the advisors to identify what they most needed help with to build their business.
Tops on their wish list: the professional development of staff.

“One of the clear messages was: ‘I need help with my staff. What can I do to help them grow?’ They want to offload, delegate, encourage staff to take on more responsibility,” observes Andy Kalbaugh, the firm’s executive vice president of business consulting. “The more productive and efficient the staff, the more productive and efficient the advisor will be.”

In response, LPL created AdminU, an educational curriculum to help support staff up their game when it comes to client service, office management, technology, and sales and marketing. An inaugural class of 26 graduated from the program in May. Hundreds more are enrolled today. Already, advisors with staff in enrolled in AdminU are reporting rapid improvements in performance and productivity.

The LPL experience — and others like it — represents new thinking when it comes to the sometimes underappreciated advisory staff. As the producer/sales assistant model gives way to ensemble casts that include more sophisticated support roles, firms are beginning to recognize that they need to create career paths. Not only that, the support staffer in many practices has been elevated in stature — no longer the grunt but a collaborator who is credited with adding assets to the advisor’s business.

Consider: Raymond James Financial Services this year instituted an award for outstanding branch professionals, a first for the company. Two of the three award recipients are certified financial planners. And Morgan Stanley Smith Barney two years ago created a national advisory council of the firm’s client service associates, who tend to be the first line of contact for clients.

“They’re trying to get feedback from the people who actually do the work,” says advisory council member Cherise Perlas, a client service associate in Brea, Calif., who organizes client seminars and manages interns for two of the advisors she supports. “I feel they do treat me as a partner, not just as an assistant,” she adds. “It’s one of the key things that helps me become inspired to contribute more and work harder.” Perlas also participates in the team’s revenue.

Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network, says all individuals in a firm have to grow and flourish — not just the advisor. “And being diligent, proactive and accurate at all levels — that’s what separates a good employee from a great employee,” she notes. “As an advisor, you can’t delegate out strategy or vision, but you can delegate out a number of human relations issues” to someone who demonstrates those characteristics.

In groundbreaking research from consulting firm Angela Herbers & Associates, the so-called P4 report shows that support staff work most efficiently when they learn the power of leverage. “Take this item off this producer’s plate and that producer can then produce more,” says Herbers. Also, she cautions, there is nothing cookie cutter about creating a great support system.

“We’ve said we’re not going to teach you to be a great support person. We want you to be a great person within your own strengths. No phone scripts — be what’s real for you,” she adds.

Herbers believes there is also something to be said for “happiness principles”: creating a corporate culture that involves passion, perceived progress and control of one’s destiny. Perks count, too — among them, paid time off for volunteer work, flextime and continued education. 

One stunning statistic: Data from “P4: The Four Keys to Creating Great Employees” shows that advisors who follow a strategy that highlights employee preparation, pay, perks and performance actually work fewer hours — 30 to 35 hours per week as opposed to 50 to 55 hours.

“The owner time piece is big, especially for aging advisors who are ready to decrease their time,” says Herbers, who received over 100 emails from advisors about it after presenting the report at a Financial Planning Association retreat in May. “Maybe this is one of those unexpected consequences that will help set a new standard.”

The Missing Link

The one piece in the support staff development track that Herbers has found lagging is that overall compensation is not yet on par with employees’ ambitions, passions and talents.

“Lifestyle benefits are not at all what they should be. The industry has not yet gotten to the point where it’s looking at bonuses, flextime, compensation, sabbaticals, open vacations. This is now a pervasive problem,” she says. “The industry has finally figured out: How do I leverage talent? Now, it needs to figure out: How do you keep people? This, in my opinion, is the only missing link.”

As an example, in her research Herbers tracks new hires three months after their start date. In many cases, she hasn’t liked what she she’s found.

“Support staff is coming in very passionate and ready to help but other elements like compensation and benefits aren’t matching up. Advisors are hiring great people and turning them into mediocre people, or problems at worse,” she says. “And this is going to take some time to change. It’s going to take a lot of leading companies in the industry to create a new standard.”

Nancy Caton, president and CEO of Caton Financial, a Raymond James Financial Services affiliate in San Rafael, Calif., provides a textbook example of the trajectory many advisors find themselves on today.

Ten years ago, when she hired Jodi Johnson as her registered sales assistant, Caton was gun-shy about employees.

“I had had more people in and out of this office. It got to the point where I’d put in writing everything I wanted them to do. The next morning, we’d go through the checklist and check things off,” says Caton, who manages $190 million in assets. “After a week, Jodi, who is very quiet and not babbly like me at all, said: ‘You know Nancy, let’s just assume that if you give me something to do, it will get done. If I have a problem with it, I’ll come and tell you.’ Experience had taught me this was not possible. For me, Jodi was the first employee I’d ever had that I could really trust.”

Today, Johnson is Caton’s vice president of operations. She’s a certified financial planner, a designation Caton paid for. Johnson’s ability to handle details has allowed Caton to focus more squarely on client issues and bringing in new business. In the throes of the recession, Caton gave Johnson and her other support staff bonuses while forgoing one herself. She also pays Johnson well. “When I tell other advisors what I pay Jodi, they roll their eyes at me,” she says. “I think it’s worth it.” In May, Johnson was honored by Raymond James as one of its first outstanding branch professionals, commended for both her problem-solving abilities and commitment to excellence.

Robert Reed, founder of  Personal Financial Advisors in Covington, La., and his financial planning director, Lauren Lindsay, offer an inside peek at where Herbers hopes to see the industry head. Reed, an advisor since 1978, consults with Herbers on hiring and business growth matters.  

Like many advisors, Reed started out as a solo practitioner with an assistant. “My theory was that I would do everything I could possibly do and then I would hire somebody else,” he says. But instead of hiring another clerical person, he decided to hire a financial planner: Lindsay.

“The key thing is to hire up, rather than hire down,” he says.

With Lindsay on board since 2006, Reed has been freed up to do investment planning for his fee-only business.

Lindsay, a certified financial planner who has run her own firm, says: “It’s very collaborative. It’s also nice because of the way we have things segmented. I don’t do investments, he does. He doesn’t do planning, I do.”

Meanwhile, Reed says that while he likes to hold the remote control, he has learned to let go.

“The key is to treat people like the professionals you expect them to be. They have roles to play, and you let them do it,” according to Reed. “I don’t try to micromanage.”

Reed’s philosophy extends to all levels of his business.

“If you’re sick, don’t come to work. If the car breaks down, fix it and then come to work,” he notes. “When you’re here we have plenty of work to do. If you’re thinking about something else and you’re not fully engaged, get fully engaged and then come back.”

The firm has an open vacation policy and a revenue-sharing bonus based on hitting certain revenues. It’s also a fan of telecommuting. Since 2008, Lindsay has worked from her home in Houston, a five-hour drive from Covington. She uses Skype to conference with clients and staff and she has an assistant who works in the office as her liaison. She travels to the home office every four to six weeks to meet personally with clients.

At the firm’s annual retreats, employees talk not about how many more clients Personal Financial Advisors can get but additional services they can provide. “They understand the client is the boss and that we’re here to provide a service,” Reed says. “That’s our culture.”

Reed also routinely asks his support staff: Do you have a good quality of life? When you come to work, are you doing what you like to do mostly? His next question for Lindsay: Will she become partner?


The Bottom Line

  • Firms need to prepare themselves and their employees to succeed.
  • Base a significant portion of compensation on the success of the firm.
  • Create a flexible and supportive work environment.
  • Supply the tools necessary for employees to excel at their jobs.

Source: Angela Herbers & Associates


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