What Advisors Should Look for When Hiring Staff

Many a successful financial advisor, whether in a solo practice or part of a larger enterprise, eventually realizes his or her plate is beyond full.

In the past, stockbrokers’ activities were essentially limited to buying and selling securities. Today, advisors provide a comprehensive range of services. This includes advice on investments, insurance, estate planning, taxes and answering all questions pertaining to clients’ financial lives.

Advisors also open accounts for clients, assist clients when transferring money into and out of accounts, remind them to take required withdrawals, and advise on business ventures, real estate or other large transactions. On top of that, many advisors prospect for new business.

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At some point, it becomes more than one person can comfortably or efficiently handle.

After 20 years, Meredith Moore realized she needed help from another advisor. The founder and CEO of Artisan Financial Strategies in Alpharetta, Georgia, reviewed her available time for meeting with and serving clients.

“I figured out I not only needed a junior advisor for scalability, but also one that aligned from a philosophical perspective for business succession,” she says.

Moore wanted an associate to work with clients who didn’t fit her ideal profile. It was important that this advisor’s outlook aligned with Moore’s when it came to planning and client service. She also wanted to maintain her firm’s identity as new staff joined.

Rather than simply place ads and hope for the best, Moore created a paid one-year intensive practice management class with strict rules about attendance and completion of assignments that required hours of study. She had candidates watch videos and listen to podcasts featuring advisory industry experts.

“I was looking for mindset and adherence to the protocol laid out and what they learned through the exercises and assignments,” she says. She thinks of this process as her own version of “Charlie and the Chocolate Factory.”

“I knew that someone would ‘drink from the chocolate river and eat the everlasting gobstopper,’ ” she jokes. “And ultimately by the end of the year, the last person standing would by my ‘Charlie.’ ”

Moore worked out the new advisor’s compensation by splitting her cases with him. She did not require that he bring over billable assets on which he could get paid. That is a requirement at some smaller advisory firms that can’t afford to pay a salary to an advisor without his or her own book of business.

Ryan Shanks is co-founder and CEO of FA Match, which runs an online platform to help firms hire advisors. He is familiar with the idea that an advisor needs to bring assets under management to a new firm.

“There is a misconception that AUM means everything when considering hiring advisors, but actually there are other qualities that often outweigh the importance of AUM,” he says.

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Shanks cites an advisor’s ability to build and nurture client relationships as a key quality. He also says hiring firms should consider a candidate’s attention to detail and whether he or she is planning-focused or purely commission-based.

“There are benefits of hiring a greener advisor with lower AUM versus hiring someone with $500 million in AUM. Hiring a newer advisor allows the firm to teach the advisor their methods for caring for clients without any conflicts of interest from prior training. In other words, they can teach a new dog new tricks that align with their code of ethics,” he says.

Rather than basing compensation on AUM, Shanks suggests other metrics, such as client retention and satisfaction. “For example, on an annual basis, the rate of retention and satisfaction can be weighted as a back-end component that helps to retain great advisors and ensures that all priorities are in alignment,” he says. “As the advisor captures additional investment dollars from the existing clients, there is income that rewards them for the efforts.”

Stoy Hall, executive director and senior wealth advisor at Centric Wealth in West Des Moines, Iowa, developed his business with the idea that he would hire a junior advisor.

“I always knew I needed help. It was built into the business plan,” he says. “Because as the senior advisor, I have no time for the daily operations part of the business, such as account opening, client information gathering or certain trading.”

Two junior advisors report to Hall. He met one while speaking on a college campus about the advisory industry. The other connected with Hall on LinkedIn. “We built a relationship over the past year,” Hall says. “He finally asked for a position in which he could grow to running the business and focus on minority clients. I said, ‘You’re hired.’ ”

Hall says the hiring process is not always smooth sailing. “Of course, there are failures,” he says. “I learned that not everyone is fit for this industry. Some people need to experience the corporate side over the independent side.”

He notes that some candidates would be good additions to a firm, but not necessarily in an advisory role. “You have to create a seat on the bus for them, meaning your firm has many positions. Not everyone should be an advisor,” Hall says.

Giulia Silva is a junior wealth management planner at Wambolt & Associates Wealth Management Partners in Littleton, Colorado. Her firm operates an internship program to identify college students with potential to become advisors, and who fit within the firm’s culture.

“We actively search for interns at local universities to start each summer before their senior year,” Silva says. “Often, interns will continue throughout the school year. This is a perfect chance to take 90 days to identify talent and good work ethic. It’s also a great chance to see how they fit in with the team and our culture.”

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Usually toward the end of the summer, it’s clear whether the student would be a good full-time hire upon graduation.

Because the new hires are recent college graduates, or even college seniors, there’s no expectation that they bring AUM to the firm immediately.

“We are in a position to pay a salary and an incoming book of business isn’t necessary,” she says. Once a junior advisor is hired full time, he or she is eligible for a bonus after one year. Bonuses are pegged to firm-wide profit goals and whether the employee meets or exceeds personal key performance indicators.

Silva went through the firm’s internship program before joining full time. She says cultural fit is an important aspect of the hiring process.

“By hiring someone full time before they start their senior year of college, if it’s a good fit, they want to continue working at a place where they’re already comfortable, understand the business and all the roles,” she says. “Speaking from experience, as soon as I worked for this firm for a summer and got to know all the team and how we help clients, it was a no-brainer to accept the full-time position before I went back to school for my last year.”

Cultural fit is a key component for success at any advisory firm.

Shanks cites an example of FA Match helping an advisor with a $30 million book of business to join a larger, more established firm. At the new firm, this advisor could focus on serving current clients, rather than spending time prospecting for new business.

“If he had had enough client AUM to start a firm of his own, or if a smaller firm had hired him with the intention of doubling their revenue, he would likely be so consumed with performance goals that he’d be stunted as a fiduciary,” Shanks says.

He notes that qualities such as honesty, integrity and ability to communicate effectively with clients are often more important than a large book of business. He adds, “These aren’t traits that can be taught, but they can very negatively impact a firm when an advisor is lacking these skills.”

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