Our 2018 benchmarking study revealed that most advisors want to hire a client-facing employee in the next 12 months. Positions that are responsible, in part, for revenue are usually the hardest to hire. So, what should you keep in mind as you’re thinking about that next hire? We’d suggest you start here:
1. Why are you hiring? What are the position’s responsibilities?
2. What are you going to pay — now and in the future?
3. How do you cultivate employees?
4. How can you solidify client relationships with your firm — not just their lead advisor?
Why you are hiring?
It is best to go into the hiring decision with clarity on what exactly are the new hire’s responsibilities. Is your business growing and you need help to take on more clients? From our benchmarking study we know that advisors generally require one full-time employee per every $50M in AUM or $350K in revenue2. These numbers are helpful when deciding whether you should be hiring or focusing more on time management. Another reason you may be hiring is to build out a new service offering.
Once you have determined why you are hiring think about the type of work your prospective hire will be doing. What will their responsibilities be? Are you bringing them in to help with financial plans or to help with more administrative work?
Lastly, think about what competencies the hire will need to be successful. If they are joining your firm to help with financial planning, you should be looking for a more of a CFP-type candidate or someone who is pursuing their CFP. If they are coming in as an associate advisor perhaps you are looking for someone right out of college who is more focused on administrative tasks, learning the business, and building up their skills.
What you are going to pay?
Figuring out salary for a new hire is not easy and relies on so many different variables. In our 2017 benchmarking study 72% of firms are using some industry benchmark study to set salaries, whereas 42% are still relying on just ‘gut’ feeling. If you completed a benchmarking study in recent years that should be the first place you turn to research pay ranges by positions.
Second, base salary with some type of incentive structure is vital to employee compensation. The brokerage industry used to focus on an “eat what you kill” or production-only compensation model, and for various positions this has become unproductive and shifts the focus from building the firm to only building a siloed client list. It is best to set a livable base compensation range that is augmented by an incentive.
How do you cultivate your employees?
If you have taken the time to interview and hire a new employee, you want to make sure you are helping that employee grow with your firm and in their career. In the survey only 25% of respondents have documented employee development plans. Increasingly, employees are expecting a clearly defined career plan from their employers. Differentiate your firm today by providing new hires with a plan that lets them visualize what their growth with the company may look like. Advisors are also looking for ways they can coach new hires, especially in areas of business development. From the study we learned the top three ways advisors are training staff for business development today: networking, internal sales training and coaching, and job shadowing.
Solidify client relationships
We know that efficiency in an advisory practice can help you serve more clients and spend less time on administrative work. Implementing workflows through your CRM is a vital way to institutionalize the data and the processes that come from working with clients, ultimately ensuring everyone has visibility into the client relationship. The more you can instill your processes within the business the less employee turnover will impact the day-to-day of the business. From the study we know that most firms are using Redtail for their CRM. Loring Ward has built workflows within Redtail that you can access and begin implementing today.
Going into this new year, get a head start in thinking about your hiring decisions. The Practice Management team is here to help you. Contact us to learn how we’ve helped advisors:
- Create a compensation plan balancing servicing and sales
- Identify a competitive salary structure in their area
- Optimize their team to leverage the resources of a TAMP
1 2013-2017 Benchmarking studies
2 2017 Benchmarking Executive Summary