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Practice Management > Building Your Business > Recruiting

2 Hiring Secrets of the Most Successful Firms

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What You Need to Know

  • Advisors might believe that adding administrative help is the answer to growth. It’s not.
  • Think about how a new hire could benefit the entire team, not just make the owner's life easier.
  • Leaders who manage less attract and retain employees who require less management.

It’s not surprising that professional financial advisory firms are about people. The better your employees, the better your service to a client. While many people believe building an advisory practice is mostly about investment returns, operational processes and procedures, the best technology, rainmaking, marketing, etc., the truth is no firm would exist without great employees, including the owner.

Building a firm, whether an owner chooses to make it a small specialist boutique firm or a large national dominator, it is still mostly about the people employed and retained. If owners get these practices right, they are way ahead of many advisory firms operating today and likely on the path to more growth in the future.

But most advisory firms aren’t built with much in the way of hiring, retention and/or training programs to enhance and build their people. Instead, many firm owners add an employee when it’s necessary or as they run out of time to do tasks themselves.

At some point, many firm owners will realize that they’re growing a business and that the humans they hire into the business are the most important factor in making the business great.

There are three components to successful human capital programs that attract and retain great people: hiring, training and retention practices. Hiring is the first step to get right, so let’s talk about best practices that help you build better people programs to benefit your growth.

Two Truths About Hiring

The most successful firms think about their hiring differently than the average business. They follow two truths in their hiring practices. And it might surprise you that these truths don’t involve a job description, some personality test or specialized interviewing process.

First, successful firms hire by design rather than wants. In other words, they don’t hire when they run out of time to do a particular task. They look at the firm globally and ask themselves what type of person would make the greatest impact on their firm growth today and in the future.

It might not help them individually as owners of the firm in the short term, but it helps the business continue to grow. Many of these owners will hire advisors over support staff and trained business managers over administrative assistants.

Second, they think about others first. When owners get stressed and overwhelmed with work, it’s natural to think about themselves first. This means they make a list of everything they need to get off their plate and then seek to hire a person who can do all that work.

But what if, when you got stressed and overextended, you thought globally about the others in the firm? What would be the best hire(s) to expand everyone’s ability to work with more clients, not just yours? If you’re stressed in the work you’re doing, are others stressed in the work they are doing, too?

The most successful firms seek to remove the stress, rather than seek to hire another person as a bandage for the stressor, whatever it may be. In other words, they don’t solve stress problems by hiring more people.

They solve the stress associated with growth by using their brains, not their pocketbooks.

The easiest and fastest way to use your brain is to look directly at your organization and find the stress points. These points might begin with a broken client experience, operational process, lacking technology or a person who is causing stress who doesn’t belong in the organization.

Prior to hiring, they figure out where the real problem is and solve it first. Then, they hire for the benefit of the whole team, not simply for the benefit of removing the stress and overwork that is on their plate only.

Creating a Well-Designed Hiring Plan

A well-designed hiring plan will increase revenues and profits together — which is the goal, of course. In a professional services firm, allocating your human capital in the right way helps you achieve the greatest results. To do that, you’ll need to do some prep work. To help you get started, here are the first two steps you can take to make your hiring practices more effective.

Seek experts before you seek support.

It is not uncommon that an advisory firm owner gets loaded up with clients and overwhelmed. Her marketing efforts worked, and now she is facing a capacity issue. As a result, she decides to hire a client service manager and/or admin assistant. Hiring support staff isn’t a bad idea, but, if she is loaded up on clients and those clients are taking up most of her time, what does she really need? Perhaps another professional advisor?

Many firm owners make the critical mistake of hiring support staff when they are filled with clients. Their idea is, they take the lower-level, non-advisory work off their plates. In turn, this frees up time for that owner-advisor to serve more clients.

Remember these ratios: An average financial advisor can serve roughly 125 clients per advisor. If you hire one client support staffer for that advisor, it expands capacity to 155 clients, gaining an additional 30 clients. But, if you hire another advisor and keep doing the support work yourself, you’ve expanded capacity by 125. Which is a better return on investment, expanding capacity by 30 clients or 125 clients with one hire?

It’s almost always better to hire the experts.

Do less managing and more leading.

What is easier to manage, five or 10 people? No matter how many people you are managing, it is far better to lead your people rather than manage them. Doing so will allow you to work together with many more people than you can dream of managing.

Many advisory firm owners believe that “leading” people involves making key metrics, goals and protocols advisors and support staff must hit or accomplish. In other words, owner-advisors will require their advisors to talk to their clients five times a year or make their support staff work 8 a.m. to 5 p.m. and answer 30 service requests a day.

Making protocols and metrics is not leading. It is clearly a management strategy to get all people hitting the metric you desire to hit for profitability, retention, growth or some other ratio. If hitting ratios is your primary goal, you’re managing people.

Leading, on the other hand, is great communication and willingness to be there for your people. When hiring, your ability to be present, available for training, open to honest feedback and trust is ensuring you make time for your people. On average, advisory firm owners who have the best people (and retain them) spend over 20 hours per month working with them.

Holding people to some metrics is asking them to manage by your numbers. Even the greatest employees will eventually need you to help them, train them and hear them.

Leading them is far more effective than managing them, and when you over-manage, you automatically attract more people to your organization that need managing.

Do yourself a favor: Before you ever start hiring more people, free your time to be with them, help them and guide them based on what they need, not what you need in a metric.

As you do that, you’ll attract and hire the best people.

Angie Herbers is an independent consultant to the advisory industry. She can be reached at [email protected].