Whether hiring a veteran advisor or someone just out of school, there are clear benefits and drawbacks

As financial planning firms grow, eventually they need to hire a new planner. The question firm owners face is this: hire someone new to the industry, or hire an advisor who’s more experienced?

The short answer, not surprisingly, is that “it depends.” Firms have different skill needs, managers have different styles, and there are varying cultures, personalities, client types, etc.

Here are some advantages and disadvantages to consider when deciding to pursue an experienced planner versus a new planner.

Advantages of New Planner Hires

Hiring a newer planner can be very cost effective, since this is typically one of the first stages of their career. Since the firm is likely catching them early on in their lives and careers, these candidates are often mobile, making national relocation a valid option because they tend to not have established families yet.

A new hire from a CFP Board-registered program will have a specific education that encompasses all the main technical areas such as employee benefits planning, investments, insurance, etc., as well as the completion of a full comprehensive financial plan.

Some firms have found solid value in a new planner hire’s ability to bring a fresh perspective from their academic and internship experiences to the organization where they begin to work. Last but certainly not least, a new planner brings no undesirable work styles from another firm that can delay their assimilation into your firm and new culture.

Disadvantages of New Planner Hires

New planners, if this is not a career change, look like new planners. For some firms—and their clients—their youthful inexperience can be a challenge. In addition, new planners typically will not have a book of business or be able to start producing revenue for your firm for at least a few years. They will also have to wait 24 to 36 months to gain experience in order to use the CFP certification, assuming they have passed the exam.

Although mentoring and an open attitude can help, surpassing this challenge may be virtually impossible with firms that are already too busy or simply do not want to provide the mentoring and training it takes to effectively give solid advice. This is why attrition rates from the industry are still so high in the early years.

Advantages of Experienced Planner Hires

At this point in their career, experienced advisors should be CFP certificants, be well on their way to mastering the art and science of financial planning, and be skilled at building rapport with clients. Their résumé should provide a history of their accomplishments and show a proven track record to assist in determining probability of success at your firm.

An experienced advisor could possess a small book of clients that the advisor will bring to the new firm. However, this has become less common, as more firms have moved to an ensemble model where clients are clients of the firm and the advisor has a non-compete clause with the firm or a non-solicit agreement for clients.

Nonetheless, these hires can be revenue generators sooner rather than later, and they can be good hires if their skill set is actually where you need it to be—and if you can unwind any “bad habits” they may have picked up at other firms.

Disadvantages of Experienced Planner Hires

Experienced advisors often command salaries in excess of $150,000 per year, which puts them out of reach for many smaller firms.

Unfortunately, experienced advisors are often less keen than newer planners on being told what to do. Make sure your expectations are crystal clear when negotiating with the hire. Unwillingness to change their mindset and existing way of doing things to assimilate into the new organization is the leading cause for these hires to not work out.

Finally, these candidates are often restricted to certain geographical areas due to having an established family. This can make relocation very complicated, raising the risk of turnover if they are unhappy with their relocation and making it a challenge for firms to find a candidate already living in their geographic region.