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.
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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.