Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Financial Planning > UHNW Client Services > Family Office News

5 Big Hiring Mistakes We Made and How to Avoid Them

Your article was successfully shared with the contacts you provided.

At the three-year mark, I looked at how many target clients we had brought on: over 230! That’s the good news.

Of course no advisor gets to this level without help—a lot of help. Over the last three years we have put together the dream team of (I’m taking a deep breath now) one general manager/COO, three client service managers, one para-planner, one insurance case manager, one part-time bookkeeper, and three to five part-time interns and admin help.

Not to mention my favorite business partner, my husband Peter, who also helps coach and guide the team. Once you add me, you can see that we are quickly running out of office space.

Yes, it is a lot to manage and I couldn’t do it without Josh, our COO. Peter observed that our current team is even better than ones we have seen supporting $8 million advisors.

So what’s the bad news? We made a few costly mistakes along the way when it came to hiring team members.

This shouldn’t have surprised me, because when Peter and I go out to a multimillion dollar advisor’s office and do a gap analysis and business plan for them, we always start the process the night before with a private dinner for the owner. We use this time to discuss things that they don’t want to review in front of staff.

Almost always the biggest headache of a multimillion dollar advisor is an employee. Typically it is someone that is causing them huge problems, but they feel they cannot fire for one reason or another. They can’t fire them because they are the only Series 24 in the office, or they are related to the family, or maybe it is their own daughter, who is a coke addict. Yes, we have seen it all.

Keeping these issues in mind, we managed to avoid most of the problems other advisors faced, but we did find a few of our own:

1. Hiring the Son of One of Our Best Friends

When we hired Larry (not his real name, of course!), I was well aware that it could create problems with his mom, Colleen, one of our closest friends. I did have the good sense to tell her, if Larry was not doing his job, she would never hear about it from me. I also told Larry that I was not planning on reporting anything about him to his mom.

So far so good. Unfortunately Larry was lazy, a liar and liked to spend a good portion of the day surfing the Internet when he wasn’t on eBay or Facebook. Because of the close family ties, it took me almost a year to convince Peter we had to fire him. Just as I am about to terminate Larry, he quits! Woo-hoo!

My lesson learned: Be slow to hire and quick to fire. I don’t think we have ever had an employee that did not work out well in the first 60 days, turn his work product around and make a great employee. If they are not meeting your expectations early, it is highly likely they will never meet your expectations. So a quick parting of the ways is better than prolonged agony.

Now I must confess, that one of the best team members we ever brought on was Josh, who is also the son of some good friends—so this rule is not infallible.

2. Hiring an Employee Who Hasn’t Finished College

Since 2008, we have hired a number of administrative personnel in this business and in our other businesses. I quickly figured the hourly rate was much cheaper if the candidate hadn’t finished college. Unfortunately, I later discovered, there was a reason they didn’t go to college. The college experience is not just about cognitive ability; it is also about working with a team to get a project done, learning analytical skills and how to write reports.

My lesson learned: When you provide the concierge level of service that we do, the business becomes very complex. You don’t have to be a genius to work here, but it is important to demonstrate that you have the tenacity and brainpower to finish college. This let’s me know they have what it takes to serve clients in a complex industry.

Today we pass on any candidate who hasn’t completed college with at least a B average.

3. Hiring an Employee With Mental/Emotional Issues

Of course we all have baggage. I have my share and I am drawn to help employees with “issues.”

This really became obvious when we hired Denise, a 40-something single mom, who had straight As (sounds good so far). The real problem became the constant emotional meltdowns, the crying at the office and the significant weight loss. At one point she told me she had a problem with depression and had gone off her medication. I began to wonder if she was anorexic.

The men in the office complained that they didn’t know how to handle a woman who was crying. This is Minnesota after all and we suck it up here! I think we could have worked through the fact that she was burning through a lot of political capital at the office, if her work product had been accurate and on time.

I really agonized about what to do about her, when I was once again saved from my own mistakes. She gets married and moves away.

Lesson learned: I do wish we could ask employees about their medications before we hire them. I think employment attorneys would frown on that. So we try to get at these issues in the interview process. We are now asking more questions about their previous employment—what they liked and what they didn’t—to get more insights into their personality and their baggage.

4. Not Doing Regular, Documented Performance Reviews

Yes, I know this is crucially important, but we got so busy with client work, that some of the basics fell through the cracks. This became a problem when we hired Jim, an African-American veteran. Obviously I want to support all veterans, but it became apparent that he, too, spent his day surfing the Internet and talking to his girlfriend on his cell, when he wasn’t back-biting our COO.

It can be difficult to fire an employee who is in a protected class without the proper documentation. Unfortunately we had nothing. Lots of verbal feedback on how to do a better job, but nothing that would stand up to an unemployment claim.

Lesson learned: Verbal feedbacks need to be documented in a private, written file, and our quarterly performance reports must also be in writing.

5. Not Keeping an ‘Ear’ on What’s Going On With the Team

It is difficult for me to manage the team as half my time I am working remotely in Rhode Island, and the other half I am in back-to-back client meetings. I really depend on Peter and Josh to keep a finger on the pulse. When they get busy, it is hard for them to hear what is really going on.

Case in point: We had one team member, Suzy, who came to us as an experienced client service manager. Suzy came in exactly at 8 a.m. and left promptly at 5 p.m. On the surface, it appeared her work was done on time and accurately. What we didn’t know was she was only doing the “visible” work—not the behind-the-scenes tasks.

Take entering data into our contact management system regarding a client’s employment and income. Might not seem important to a team member, but when we have to sort our clients by employer to invite them to a special event, not having the information becomes a big headache. In fact, it is impossible to do the event because we would have to go through hundreds of client files to discover which ones worked for the employer in question. This one small issue can cost a small firm like ours thousands of dollars in lost revenue.

Suzy decided to leave to open a business with her husband. Only after she left, did the team tell us they called her Teflon Suzy because assigned work tasks just seem to slide off her. In fact, they really disliked Suzy and I had no idea this was the case. The other team members were angry that I hadn’t made Suzy do all of her work—when I had no idea she wasn’t. I was upset because I can’t fix something the team won’t tell me about.

Lessons learned: First, I had to make sure all the team got the message: It is not tattling to tell me you have been trying to work things out with another team member but can’t seem to break through. We are here to help, but we have to know what the problems are. We can’t fix what we don’t know about.

We have gone to extra lengths to use our contact management system to review tasks. If they are completed, the software will tell us. If not, it should show up clearly. It is important for our leadership team to be monitoring the team to see if they need help to finish something.

Biggest lesson learned: No surprise—I am no manager. It doesn’t bother me to say it. If you are like me and have other talents, then you will need to make sure a top person on your team is a good manager, and then document, document, document!


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.