Experience tells us that bullish stock markets will inevitably turn bearish: often, dramatically. Our Nov. 24 blog—“Buying High and Selling Low: Are you ready for the next downturn?”—suggested that the damage to independent advisory firms from failing to be prepared for the next down market almost always outweighs any growth gained during the tail end of a run up.
We still believe that these are risky times for advisory firms still in pedal-to-the-metal growth mode. Yet, we also believe that the advisory business has changed dramatically since the market meltdown in 2008: perhaps most of all, in its reliance on adding new advisors to grow, and to succeed the current owners. And, that this demand for younger advisors has created a shortage for the foreseeable future.
Consequently, whether owner-advisors feel a need to hire a successor now, or they wait until after the next downturn, finding the right advisor at the right price will continue to be a challenge. So much so, that hiring a professional recruiter is not really an option any more: You just need to do it. In fact, in the advisory world, employment recruiting has become such a specialty that we don’t do it in house anymore. But we do help our advisor-clients to find good recruiters and work with them effectively. It’s harder than you’d think: here’s what you need to know.
The biggest mistake we see firm owners make is in thinking that hiring a recruiter will help them hire an advisor faster. In most cases, it won’t. In fact, it will probably take longer. But that’s a good thing. Think of it this way: what would you say to a client who wanted to hire a financial planner who could give them a financial plan the fastest? Exactly. In the vast majority of cases, it’s way, way, way more important to hire the right new advisor, than it is to hire her quickly. (Believe me, we’ve cleaned up far too many messes created by advisors who hired someone too quickly.)
What a good recruiter will do is help you to hire the right candidate for you and your firm. Just like financial planning, hiring is a process: it takes time—and a commitment to do it right. The first step is to figure out what the right job candidate would look like. Most recruiters have learned that most employers are pretty bad at articulating what they are looking for in a candidate. To open that communication channel, after they’ve had a discussion to get a general idea, they’ll send a few resumes. Advisors who don’t understand the process, are often put off when this first round of candidates aren’t what they are looking for. In fact, it’s not unusual if we have to talk an advisor out of firing the recruiter at this point.
What they need to understand is that the first resumes are mostly to start the discussion: the employer responds with what she does and doesn’t like about those candidates, what’s missing, and what’s good. It’s very important that employers spend time with each resume, and provides detailed, honest explanations of how they feel about each potential employee, and why. This gives the recruiter a much better idea about what the firm owner is really looking for, and enables them to narrow down the candidates, saving time and effort—and increasing the likelihood of finding the right one.
The next step—interviewing a few candidates—is much the same: giving the employer another opportunity to communicate what they do and don’t like about various candidates. At this point, you might get lucky, and find someone you want to hire. But chances are, you won’t. And that’s really OK: it just part of the process of teaching the recruiter about what you really looking for. More often, it isn’t until the next round of resumes and interviews that most advisors find someone that they want to hire. But to find the right employee, an advisor that you are comfortable turning over your clients to (sooner or later), or even turning over your firm, we think it’s worth it.
While finding the right employee isn’t easy, choosing the right recruiter isn’t much easier. We think it’s important to find one who has experience with independent advisory firms—and that really narrows the field. But we think it saves time, and lots of effort, if a recruiter is familiar with the different jobs at advisory firms, and what it takes to excel at each. We also ask how they find new potential candidates, how many people have that they have placed with independent firms, and whether they have potential candidates now?
We find that the most successful advisors view hiring as a learning curve: first, for themselves to figure out who they are looking for, and then, for the recruiter to figure it out, too. They also understand that a recruiter isn’t a magic bullet: There is still a limited number of “star” job candidates out there, no matter who is looking for them. (Although, it is true that we do find more star candidates through recruiters.) And, then, to work with a recruiter on their learning curve: with good feedback, and the time to do their job right. As competition within the independent advisory world continues to increase for young advisors, we believe the most successful firms will see need for recruiters—and the importance of effectively working with them—regardless of what the markets do.