How do smaller firms recruit talented young advisors and keep them motivated to stay with the firm beyond the first three years? In this, the second of a series of blogs on succession planning, I address the issue.
The talent is out there, and this next generation of advisor is tech-savvy and social-media ready. They’ve also done their research. In addition, they have lots of choices, from small, independent fee-only or fee-based firms to larger firms and brokerages, though these may not necessarily provide a clear vision for an advisor’s long term career path.
That’s where smaller firms can to step it up to compete with larger firms, who can afford to lure young advisors away from RIAs with attractive incentives, like Bank of America Corp.’s (BAC) Merrill Lynch did last year, when it announced its new pay incentives to motivate advisors to focus on fewer but wealthier clients.
Smaller firms—which I remind you make up most of the industry—have their work cut out for them when it comes to finding and holding on to good, talented people. In the first blog in this series, Succession Planning 101, How Small Firms Can Recruit the Best New Advisors, I provided a few tips based on my experience on how to recruit the best new planners for your firm. In this posting, I’ll focus on how to retain those new hires.
Some industry experts say that a forward thinking succession plan is the best way to recruit the best young talent, and I wouldn’t disagree. Smaller firms without a formal plan for succession compete with larger firms who can help a new advisor envision a long-term career in the industry with three-year, five-year and 10-year benchmarks.
Landing a new advisor is only half the battle, however. Once you’ve chosen someone who fits into your practice and can potentially play a role in your firm’s succession plan, how do you build loyalty and trust, and how do you encourage them to stick around? Simple: let their personal succession plan play a role in your firm’s.