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Practice Management

Bringing on and training new—and often untested—advisors presents a unique set of challenges. 

This Practice Management article is intended for financial advisors only (registered representatives of broker dealers or associated persons of Registered Investment Advisors).

Across the industry, planning firms are scrambling to find new talent. Since experienced advisors are hard to attract and often command big pay packages, many firms are shifting their recruiting efforts to focus on younger advisors, with few (if any) existing clients.

But that strategy has challenges of its own. Although few senior advisors say they expect new hires to generate 100% of their business from the outset, they need to have junior advisors contribute meaningfully early on.

"The old model of bringing in a new planner and giving him or her a phone book... just doesn't work anymore," says Mike Berry, of Legacy Wealth Management in Grand Junction, Colorado. "However, you still need to find ways for them to be productive and profitable for the firm." The recruiting challenge has forced firms to think more strategically about the ways they bring on and train new—and often untested—advisors.

For instance, Berry and his partner, wound up creating an associate planner position: New advisors initially perform administrative tasks, are mentored by a senior colleague, and are paid a salary. Under supervision, the junior planner takes on such responsibilities as conducting investment research and helping prepare plans, then begins sitting in on client meetings.

In-house training is also key at Mallard Financial Partners in Newark, Delaware. "We generally bring in green planners and want them to learn organically," says Paul Baumbach, the firm's director of investing.

At the outset, Baumbach says, junior planners team with senior staff to learn about clients—working on research, handling account paperwork, and sitting in on client meetings. "Then, after the new planners have learned how we do business, we have existing clients available to provide to them," he says.

Recruiter Caleb Brown says most of the firms he works with already have more business than they can handle. "They need new planners to prepare for and run client meetings, help them run the analyses, and follow up on things after client meetings," says Brown, a partner at New Planner Recruiting in Athens, Georgia—a recruiting firm that focuses on young advisors. "The planners I place aren't expected to call family and friends to drum up business."

However, Brown does tell the planners he places to expect some business development activity if they want to increase their income.

Detailed Career Path
One of Brown's clients is Matthew Starkey, president of KHC Wealth Management of Overland Park, Kansas, which has outlined a detailed career path for new planners. The firm often hires recent graduates with less than two years' experience, without CFP certificates, and starts them out as planning associates. It's a support role, but they get a lot of client interaction, managing follow-up after meetings. Once associates get their CFP certification, they become financial planners and are assigned 20–30 households, based on the complexity of the relationships.

"They take on more of a point person role and begin to manage the overall planning activities for the families," Starkey says. "They conduct the analysis and put together recommendations with the wealth manager, and then actually present in client meetings in a lead role."

From there, a planner can progress into a wealth manager role, which also involves developing relationships with potential clients. "Most of our new client generation comes from referrals, but we also encourage our wealth managers to be very active in our community, which provides a lot of opportunity for new client contacts," he adds.

RegentAtlantic Capital in Morristown, New Jersey, also requires no business development from new hires. Yet every planner needs to have a "business development mentality," says Brent Beene, the firm's managing partner.

"While we don't expect new planners to engage in business development right away, I am a bit concerned about a trend I see in the attitudes of more and more new planners that we interview," he says. "It seems these days that most of them have a very negative attitude toward business development. It makes me wonder just how successful they will be down the road because, at some point, it will need to be a very crucial component of their jobs."

Assigning Clients
During what is essentially an apprenticeship period, advisors are cautious about turning existing clients over to new hires. "We don't walk into a client meeting and tell the client that so-and-so is going to be their new planner," Beene says. "We want those relationships to develop over time."

Legacy Wealth Management's Berry says he assigns new planners to longer-term clients who may not fit the firm's profile any more. These clients still have potential, but may not have the assets to meet the firm's minimum, he says.

"Arrange for the new planner to sit in on some meetings with these clients, so they get to know each other," he explains. "Eventually, the new planner ends up making most of the contacts—and there finally comes a time when the clients are comfortable with the transition."

Other planners suggest similar strategies. At Mallard, new clients initially work with both a senior planner and junior planner, with the understanding that they will eventually become the sole responsibility of the new planner.

"Certainly, we aren't going to transfer clients to a new planner from a senior planner who has really strong relationships with those clients," Baumbach says. "Clients who seem comfortable with the two-person team as a whole are often ones that we might eventually transfer to the junior planner."

To ease the shift, Brown recommends that a more senior executive send a letter or an email to existing clients to introduce the new planner and explain the role. "In addition, each time a client is scheduled to come in for a meeting, the associate planner should contact the client a couple of days in advance to confirm the meeting time and see if there is anything the client wants to add to the agenda," he says. When the client arrives, the senior planner can explain any shift in the relationship.

Flexible Strategy
Seattle advisor Karen Ramsey takes a more flexible approach to onboarding—one based on the individual strengths of the people she hires.

Having spent 10 years in human resources before becoming a planner, Ramsey says she likes to observe new people for at least six months to see what they can do, how they do it, what their skill sets and weaknesses are, how they deal with daily pressures, how they interact with clients, and what their technical skills are. Then she determines the next step.

In some cases, she will shift the new hire into a planning role that involves working directly with clients. In other cases, she will transition that person into a more technical role. "I recently hired someone whom I initially thought had really good technical skills, so I expected that he would end up in a more background database role here," she says. "However, after observing him for a while, I realized his technical skills aren't nearly as good as his people skills, so I am putting him in front of clients more than I initially thought I would."

William Atkinson is a financial writer in Carterville, Illinois.

Read more:
"New TDAI Efforts: Retirement Plans, Next-Gen Recruiting"
"Next-Gen Advisor Shortage Demands Hiring Reforms"
"Pershing Chief: Advising 'Isn't a Boomer Business for Long'"


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