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Sunday, June 16, 2024

Master These Magnetic Tips to Attract and Retain Associate Advisors


The financial planning industry is experiencing a monumental shift in advisor demographics. According to CFP.net, nearly a quarter of all financial advisors will be eligible to retire in the next five years. If you want to ensure that the future of your business is in good hands, hiring an associate advisor may be the right next step. But where do you start? And how do you not only attract talented candidates but retain them long term? Let’s find out.

Identifying Your Ideal Candidate: Experienced or Green?

Before you begin your search, ask yourself whether your goal is business growth or longevity. The answer will help inform which of the following pools you tap for talent:

  1. Interns and recent college grads could be the future of your firm. With little previous work experience, the time commitment to mentor them into future leaders of your firm will be greater than with more experienced hires. But that also means you can play a greater role in shaping their work ethic and values.

  2. Emerging advisors may already have several years of industry experience and a small book of business. They’ll likely need less handholding than someone just out of school, but there’s still a lot they can learn from you about forging long-term relationships with clients and managing a business.

  3. Paraplanners may not be the obvious choice, but those looking to switch to an advisor track may deserve your attention. Their technical knowledge of how to build financial plans and work with financial planning software could put them a few steps ahead of their competition.

Now that you’ve identified the type of individual you intend to recruit, you’ll need to attract the right candidates.

Attracting Candidates: What Are They Looking For?

First, ask yourself, what is attractive to young job seekers? Reach out to a colleague at another firm, and ask what attracted them there in the first place. Get a sense of what your competitors offer, and then identify what’s unique about your firm. And remember to look for any gaps to fill. These are the levers you’ll want to pull during the recruiting process.

You’ll need to sell yourself to new candidates, as well as the culture, the vision, and the firm overall. One way to do this is by highlighting how you’ve made a meaningful impact on clients’ lives. Share personal anecdotes about clients who have faced difficult circumstances and how you helped them. You can also highlight stories about your long-term clients, conveying that you remain part of each other’s lives today.

I’ve found that young job seekers want to make a difference in people’s lives. As independent advisors, we are well positioned to do that.

Wesley Botto, Managing Partner, Hillcrest Financial Groupwith Commonwealth since 2017

Many job seekers today also want to know they’re joining an ethically minded firm. Demonstrating community involvement and showing that you care about more than financial success can help you attract the next generation of advisors. It’s important to have a vested interest in making a difference in your community and sustaining that relationship into the future.

Besides knowing about the firm itself, candidates desire clarity and transparency from potential employers about what they’ll be responsible for doing today—and tomorrow. They will expect a detailed job description, a timeline for development, a competitive compensation package, and perhaps the potential for partnership opportunities.

To help those entering the workforce for the first time, try to include examples of day-to-day responsibilities and demonstrate a progression of competencies (e.g., handling service requests, conducting meeting follow-up, getting credentialed). Let candidates see your training plan templates, and show them that there’s a consistent feedback loop to guide them throughout their development.

“I feel that it is important to be transparent if opportunities for partnership exist with the firm, which is not always the case in the industry,” said John Nguyen, CFP®, CIMA®, managing partner of Clarendon Wealth Management. “If there is an opportunity for partnership, specific milestones should be outlined and reviewed frequently.”

You have an opportunity to diversify your firm by bringing on younger minds with a fresh perspective. Are you communicating clearly about how your firm stands out from others—and what you can offer candidates that competitors cannot?

Reimagining New Advisor Training

According to a 2022 Cerulli report, less than half of new advisors have financial industry experience. And the failure rate of these rookies? Nearly 75 percent! This statistic demonstrates how important it is for firms to establish formal training programs. They help new recruits learn what it means to be an advisor, understand the core competencies they need to master, and spell out what success looks like along the way.

Advisors should have a defined development program for new associates in their first couple of years with the firm. The program should include regular performance reviews and compensation increases linked to industry and firm metrics.

As you create your program, be sure to determine the duration, outline the different phases of development (e.g., early, mid, late), and communicate your expectations at each stage. You may want to include a mix of internal training and guidance specific to your firm, external programs (e.g., FINRA exam prep or other credential programs if you’re a fee-only firm), and training from your firm partner, if available.

At Commonwealth, we offer a range of development programs for affiliated advisors, including Advisor 101 (for new-to-industry advisors), Advisor Live (for new-to-firm advisors), and our NextGen Business Development Group (for support growing an advisor’s top line). We also offer our Associate/Lead Mentor program (for advisors with at least three years of on-the-job experience) and our Power in Practice program (for experienced advisors with ownership in their firms).

Additionally, Cerulli’s report highlighted that while many new advisors service smaller accounts, keeping associate advisors in a support role for too long can limit their production potential. Encourage them to prospect for clients independently and identify potential existing firm relationships that you could transition to them over time.

Associate advisors can be the future of the firm if you expose them to the business.

Wesley Botto, Managing Partner, Hillcrest Financial Groupwith Commonwealth since 2017

And remember, development doesn’t always mean learning technical skills. Consider building up your new advisors’ soft skills, such as showing empathy, navigating difficult conversations, and managing risk. These competencies can benefit young advisors throughout their careers.

Retaining Your Recruits for the Long Haul

Training and development are crucial to giving associate advisors the confidence they need to become future leaders in the firm. But they also need to be able to see themselves in that future. Some firms, for example, offer sticky benefits to get the next generation in the door and then keep them long term.

Offering equity ownership is one way larger firms are attracting and retaining talent. Many larger RIA firms include equity ownership opportunities in their employee value proposition.

Meanwhile, be sure that your compensation and benefits package is competitive. It takes time to build a book of business large enough to live off of. It’s unrealistic today to expect brand-new advisors to generate sufficient revenue from their own book immediately, so offering a base salary is essential.

You might also tie performance-based incentives to that income based on either the individual’s ability to meet established objectives or the firm’s success in reaching revenue milestones. After all, deciding to bring on an associate advisor is somewhat based on the lead advisor’s need to build capacity, bring in more clients to the firm, and possibly prepare for succession.

Finding New Associate Advisors

By now, you know how to attract and retain associate advisors, but where do you find them? Here are some tips:

Partner with local higher education institutions, especially those offering business, finance, or CFP® certification classes.

“Universities are a great place to start. In talking with faculty at local universities, I was surprised to hear that most aspiring financial advisors don’t have many options in the independent financial advisor space. We have a unique opportunity to offer them that stands out from some of the big companies in our industry,” said Wesley Botto.

Work with their career centers to add your internship program to their job board. You can cast a wide net and look for students from other fields of study beyond finance who might be interested in a financial planning career.

The end goal of the internship is to hire an associate advisor whom you can develop further. So, remember to give them a glimpse of what their future could be at your firm.

This website offers a helpful recruiting search tool. And based on program graduate demographics, 55 percent of graduates are under 35, and 30 percent are women.

“In my experience, CFP® professionals are zeroed-in, high-quality folks,” said Jay Dryden, CFP®, ChFC®, managing partner of Vector Wealth Strategies. “This is where you can find people who are serious about exploring a career in financial planning.”

Network at industry events and on social media to identify advisors who have been in a rookie program for a few years. Many wirehouse rookie programs now use a team approach rather than the individual sink-or-swim model. You may find someone who doesn’t feel aligned with their current team or doesn’t see enough growth potential.

You can also consider recruiting candidates who are unsatisfied with their career trajectory and may have already terminated their relationship with their firm. These advisors likely don’t have a big book of business, but they are licensed.

Your firm partner may be able to help you find qualified candidates. Commonwealth’s Talent Exchange Initiative actively sources interns and recent graduates for our advisors. Through our partnerships with institutions offering CFP® programs, we compile resumes and student information into a curated directory of budding talent our advisors can connect with throughout the year.

Build Your Firm’s Future Today

Creating a firm that’s built to last means attracting and retaining the next generation of financial advisors to carry on your legacy. And showing potential candidates how you will support their career development over time can help them envision a future with your firm. So, by building a pipeline of new talent, you can ensure that your firm has the right resources for a bright future.

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