With competition for talent in financial planning at all-time highs, here's some observations for financial planning and investment advisory firms in search of great new talent.
LOOKING FOR EXPERIENCED ADVISORS?
First, everyone wants advisors with 2-3 years of experience. But, there just are not that many experienced advisors out there ... that are willing to change jobs, at least. You may get lucky, or you could be looking for months, if not years, for a lateral hire.
And, in my own experience, as a principal in a fee-only RIA firm, many of those who move from a "sales" culture to a "fiduciary" culture don't make the transition; within six months the firm dismisses them. Some can and will make the transition; some will not. Be cautious in attempting to "retrain" someone who comes from a distinctly different firm culture.
Be certain to also reach out to University programs. Most of us maintain connections with our graduates. While not many desire to migrate from one firm to another, on occasion we receive inquires from our alumni seeking to do just that. Email: Ron.Rhoades@wku.edu.
HIRING FROM UNIVERSITY PROGRAMS - EXCEPTIONAL TALENT IS AVAILABLE.
It has been my experience that good talent from leading undergraduate degree programs in Personal Financial Planning can greatly assist firms to grow. And, you get to train them to fit best with your firm.
Here are some keys to success, in terms of hiring great talent from university programs:
1) Plan ahead.
The best students have jobs in place 6 months or more before they graduate. Advertise your jobs and internships 9-12 months ahead of the hire date, if at all possible.
2) Hire a summer intern.
Test the person out. Give them projects to do in your firm. Have them sit in on (at least some) client meetings and take notes. Have them learn a major software program (CRM or PMS or Financial Planning). This is a low-cost way to test out talent.
Some of the best and brightest students actually undertake internships during their sophomore-to-junior year. They don't yet know a lot about financial planning, but they can be really good at tackling projects around the office. And you have a "leg up" on securing them for another internship the next summer, and then a permanent position. Some summer interns also turn into part-time (often remote) workers.
At Western Kentucky University, about 80% (significantly above the national average of about 57%) of our students who do internships get offers from their firm for full-time employment. We attract a lot of honors students, and high-GPA students, to our Personal Financial Planning Track (B.S. Finance) program (which is housed in an AACSB-accredited business college - which is tough to get into). Hence, we have a highly talented pool of students to choose from.
The best students receive some great internship offers (as to total compensation and benefits). Other students receive compensation that is enough to afford them to live reasonably in the internship location. (We don't encourage any students to take unpaid internships.)
Some university programs have internships "for college credit." Western Kentucky University does, but few students do this - as there are other classes that more than fill up their 120-semester-credit-hour requirements for graduation.
To let us know you have an internship available, please email me: Ron.Rhoades@wku.edu.
3) Have a clear career path.
Here is just one possible type of path. Of course, each firm will have roles that suit its client services dynamics and needs.
A) Client services assistant or paraplanner or advisor assistant. Do the inputs, gather data, formulate the plan - using Excel and/or financial planning software. Confirm or schedule client appointment. Learn the software and systems and procedures. Take notes during client meetings, and input notes and action steps after meetings. Undertake a great many financial plans (working with senior or junior advisors). After a few months, present a small portion of a plan during a client meeting, under supervision.
How long should this phase last for? For about 1-2 years. Work them hard - to secure licenses, then CFP certification. Work 45-55 hours a week, as well. Less hours until CFP exam is passed, and then more hours after that.
B) Junior advisor - serving some clients, under supervision, as soon as one year following graduation. Working 40-50 hours per week, for the next 3-7 years. Perhaps two levels of this. In the second level, more vacation time might be provided.
C) Senior advisor - 4-8 years following graduation. Taking on full responsibility for clients, of all types. And being assisted by assistants / para-planners / junior advisers.
D) Path to ownership. Could be through an ESOP or through a "junior principal" or "junior partner" buy-in. But the path should be well-defined.
There are many ways to structure career paths, and jobs / job descriptions. Many ways to build "teams." The foregoing is just one way. Practice management consultants can help you build career paths to fit what your firm does for its clients.
3A) Worried about hiring a person, then seeing them depart with clients? Here's a way to remove that worry - and which is fairer to the firm, their advisers, and clients (and without the need for litigation).
It's a legitimate concern, for many firms. Training someone, then seeing them depart with valued clients of the firm.
I often see firms who try to protect themselves via non-solicitation agreements, trade secrets covenants, and non-compete agreements. Yet, I often read that most advisors who depart firms take 50% to 80% of their clients with them. The fact of the matter is, non-solicitation agreements don't bar general solicitation efforts, and can often easily be avoided.
I have a solution. I used it in a prior firm I was associated with, with great success. It is a contract that states:
- If the adviser departs a firm, the adviser compensates the firm by paying to the firm a portion of the income received from the clients who follow that client, over a 5-year period, as follows:
- If the client was an existing client of the firm, and given to the adviser, the adviser pays 2x the annual revenue, spread over 5 years. In other words, quarterly payments (if billing occurs quarterly) of 40% of the income received from that client.
- If the client was secured by the efforts of both the firm and the adviser (as most clients are), then the pay is 1x annual revenue. Same terms, but payment is 20% of the income received, per quarter, for 5 years.
- If the client was brought to the firm by the adviser (such as when the adviser joined the firm), then no payment is provided.
- Likewise, for clients who choose to stay with the firm, and for clients secured with the efforts of both the adviser and firm, then the firm pays the adviser 1x the revenue, over five years.
- In either instance, if (for clients who choose to leave with the adviser) the client departs the adviser subsequently, payments cease at that time. Likewise, for clients the firm retains, if the client departs the firm subsequently, payments end.
- The payments increase or decrease with the actual revenue secured from each client relationship. Whether AUM goes up, or down, for each client - it does not matter. Even when wealth is inherited.
- Independent audit requirements exist, which either party may implement at their option, and at their own expense. If a material discrepancy is found by the auditor, the auditor's fees are then charged to the aggravating party. Often, another adviser I in the community can be agreed upon to do the audits.
Have every adviser in the firm train new advisers / para-planners in one specific area. Know what training should occur, and when. Map out the training schedule. Identify the skills, set of knowledge, to master. Formulate projects that emphasize mastery of those skills and concepts.
Have new advisers work with several different junior/senior advisors. I often tell students that they should focus upon picking up the best traits, characteristics, phrases to utilize, and approaches - from all of those in the firm they are privileged to work with.
5) Hire for quality ... and soft skills matter.
As does the ability to take personal responsibility for their own actions, working well in teams, and being proactive with completing work assignments and securing new ones.
And new advisers should possess a commitment to lifelong learning.
We stress at Western Kentucky University all of these - including the need to tackle projects without being "spoon-fed" the material, by doing research online (and otherwise) when confronted with an issue or knowledge gap.
And we stress the need to engage with others - smiling, greeting, firm handshakes, the ability to initiate and start a conversation, great listening skills, empathy skills, and presentation skills. The ability to secure, and maintain, relationships with others. We do a great deal of in-class, and out-of-classroom, projects to foster the development of these all-important skills, and the development of emotional intelligence.
Some of our top students are recruited into our Center for Financial Success - where they further develop their counseling skills by providing peer-to-peer basic financial counseling to other students at our university. Visit https://www.wku.edu/cfs/ to learn more about the Center for Financial Success. To see the current students who have been selected for this honor and who are currently working as peer counselors, please visit: https://www.wku.edu/cfs/staff/index.php. Students typically work 10-20 hours per week in the Center, and are paid. It costs about $2,500 to $4,000 each academic year, for each student who is hired; but it is a great experience - and these students graduate with a skill set strongly desired by employers today.
To support the Center, or WKU's Personal Financial Planning program, or to otherwise connect with us, please visit: https://www.wku.edu/finance/ways_to_get_involved.php.
We also encourage our students acquire leadership experience - by becoming a leader of a student or other organization, leading team projects, etc. Because, eventually, our graduates will lead teams, and perhaps assume leadership roles within firms.
If you hire for quality, the expertise will inevitably follow as greater knowledge and experience is acquired.
6) New graduates are usually willing to leave their hometown and go elsewhere (and they often prefer this).
I caution students to try to land jobs that are no greater than an 8-12 hour drive away from home. That way if a family emergency happens, someone can hop in a car. Or, if airports align right, cheap airfares are available for those quick long weekend trips home.
(Fortunately, WKU graduates land jobs from Kansas City to Omaha to Minneapolis to Chicago to Detroit to Pittsburgh to Washington DC metro area and then down through Virginia, and Carolinas and Georgia to Orlando, Florida, and then over through the Deep South to Houston, then Dallas, and up to St. Louis ... and all points in between. It is nice to be "centrally located" and within a days' drive of about 60% or so of the U.S. population.)
7) Connect with Personal Financial Planning Degree Programs.
We encourage our students to network.
Our FPA Student Chapter executive committee chooses guest speakers to invite on campus each year. Typically there are six guest speakers each semester. If you desire to present at one of our student chapter meetings, please email me: Ron.Rhoades@wku.edu.
Do you have an in-person or virtual presentation that can help train the next generation?
I encourage practitioners to reach out to us with ideas for 55-minute presentations, on a specific area of expertise. For example, presenting a case study, such as: (1) how to address long-term care expenses via different types of solutions, such as LTCI, continuing care communities, other products, etc.; (2) advising a corporate client on how to best establish a qualified retirement plan; and (3) specific estate planning techniques.
Or training in empathetic listening, or tools to facilitate better engagement with clients and understanding their goals, aspirations, and motivations. Or training in how to best change client behaviors. (These skills are taught in all of our PFP classes.)
If you have ideas for a presentation, please email me: Ron.Rhoades@wku.edu. During the 2020-21 academic year, I will be teaching:
- Retirement and Employee Benefits Planning (approaching the subject from both the standpoint of the employer, as well as the standpoint of the employee);
- Personal Financial Planning (foundational course for freshmen);
- Estate Planning (includes basics of a comprehensive estate plan for a married couple with children, prenuptial agreements, business succession planning especially in the context of financial services firms, prudent investor rule, issues involving consumer credit and consumer privacy, detecting and responding to elder abuse, and transfer taxation);
- Financial Plan Development (capstone course); and
- Applied Investments (i.e., an introductory course, best described as: "how general business majors can better save and manage their 401k in order to achieve their lifetime financial goals earlier in life).
We also have courses, taught by other professors this coming year, in:
- Insurance and Risk Management;
- Investment Theory;
- Portfolio Management;
- Advanced Financial Planning (tax planning included); and
- PFP Practice Management (financial planning and other software certifications, counseling skills enhancement, and securities licensing). All of our B.S. Finance (PFP concentration) students also take three corporate finance courses, and the wide-ranging business core curriculum you would expect from an AACSB-certified business college.
Would your firm be willing to host a short visit by a group of up to 9 students?
We often take students on day-long trips, or Fall Break muliti-day trips, to visit firms. Often we spend an hour at each firm, learning about whatever the firms want to say ... about their firm, about how they serve clients, what software they utilize, the culture of their firm, what a "day in the life of" various roles at the firm can be, tips for those still in college, tips for the first year at a firm, etc. (A few of the larger firms we visit have presentations that go for 2-3 hours and cover a more diverse range of topics, with multiple presenters.)
Our Fall 2020 field trips, subject to available funding and COVID-19 travel restrictions, will likely include:
- Fall break (early October) field trip to St. Louis and Cincinnati
- Late October field trip to NAPFA Conference in Atlanta, and to visit firms
- Day-long field trips in September and early November to:
- Nashville, Franklin, and Brentwood TN
- Louisville, KY
- Lexington, KY
If your firm would like to host a visit from our students (typically not more than 9 students at a time), please email me: Ron.Rhoades@wku.edu.
To generally connect with our program, you call also visit: https://www.wku.edu/finance/ways_to_get_involved.php
8) Consider Job Shadowing, Informational Interviews, and Mentoring.
Job Shadowing (Externships). We encourage our students to seek out a "job shadowing" for a day (or longer), either during the semester or during any breaks. It is so vitally important that students have some form of experience like this, so that they can "see themselves" working as a personal financial advisor. And, when they do, they become even better students!
Informational Interviews. We also suggest that our students just reach out to interview practitioners to find out what they love, and don't especially love, about their careers, and to learn tips on how to succeed. These are short interviews, usually lasting 30 minutes or more. We encourage our students to write down 10 questions before they meet with practitioners, and to take notes during the interview.
Become a Mentor. There are formal mentoring programs through both FPA and NAPFA. Or, if you would like to be connected with one of our students, to mentor, just email me at: Ron.Rhoades@wku.edu. Mentoring need not take a great deal of time. In fact, I suggest that mentoring take the form of phone calls, or FaceTime/Skype chats, lasting no longer than 45 minutes, 2 or 3 times a year. I know, from speaking with several of my students and former students, that for some students having a mentor can be life-changing!
9) Network with Students at Conferences.
Our students attend conferences, including those of FPA and NAPFA and TDAI. Including FPA local chapter meetings. Including other conferences when they come within a reasonable driving distance (to keep our travel costs down).
Better yet, sponsor a student to attend a conference. A national 3-day conference usually runs about $650 per student (with student registration fees, paid hotel room, and shared 15-passenger van cost to travel to the conference). (But even a partial sponsorship can go a long way.) Then, get to know the student you sponsor, at the conference. Mentor them. Professors can team you up with students who might be a good fit for your firm. And often the very best students are more likely to attend conferences - especially in their junior year.
Both practitioners (averaging over 80 at our first two Symposiums) and our students attend our own WKU Personal Financial Planning Symposium - scheduled for early November 2020 (COVID-19 permitting), at the Knicely Center, Bowling Green, KY. We provide ample opportunity to network, and we have our students spread out among all of the tables. Email me at Ron.Rhoades@wku.edu if you would like to be notified when the Symposium is formally announced.
10) Are you hiring salespeople? Or advisers?
Everyone sells themself. And everyone should be networking to seek clients for the firm. To this end, we teach practical networking skills - and we also encourage our students to take a popular class in "Personal Selling" as one of their electives.
But not everyone wants to sell investment or insurance products. At WKU our graduates want to work as financial planners and investment advisers. Most desire to work for firms that possess a fiduciary culture. (This does not mean that the firm is necessarily fee-only, however).
What we don't desire our graduates to encounter is being hired with the expectation that "95% won't succeed" or "Only 25% will succeed" after 5 years. Sorry, but we want our graduates to have great careers. Don't hire WKU's graduates if your business plan is to "weed them out" and "only keep the minority that can really sell."
Growing professional firms hire talent, train them right, and hold onto them. We want our graduates to have a 95% or better probability of succeeding at your firm, by joining firms that have that professional culture.
If you want to hire product salespersons, please talk to WKU's marketing professors, instead.
11) The most "valuable" hire is a rainmaker who also possesses exceptional project management skills.
These are rare, but they exist.
Every year I have a handful of students (2-4, out of 30-40 graduates) who will be the ones who have that natural ability to connect with people and bring in business. We identify these students early on, and seek to culture - rather than suppress - these talents. These students may not always have the highest GPAs (but they will still be generally high), but they will have the greatest long-term impact in your firm. If your firm needs to grow, seek out these "5-10 percenters" - and be prepared to pay well for them. They are very valuable!
If, however, your firm already has more work than it can handle, hire those who can write exceptionally well, relate to clients well, and undertake presentations well. After time they too can become "rainmakers" - as they can be cultivated on ways to network within the community and generate clients, over time. Others might be exceptional at writing articles for posting on social media, or even through local or national press, or even writing books.
12) Your job posting goes university-wide.
But the financial planning professors will ensure that the PFP students see it. Universities have policies stating that all job opportunities, and internship opportunities, are posted university-wide. This could bring a lot of inquiries.
But the PFP professors, such as myself, will ensure to reach out to their students who they believe will be a good fit for your firm's needs. We will send out emails to students with job and internship opportunities, announce the opportunities in our classes, and even promote them via social media.
Just email me your job/internship description: firstname.lastname@example.org. I'll make certain it gets out to every student, and especially our Personal Financial Planning program students.
13) Have a great job description or internship description.
If you desire to see job or internship descriptions we've received from others, just email me, and I will forward some to you.
If you are in search of talent - interns or soon-to-be graduates - just drop me a line.
Email me at Ron.Rhoades@wku.edu.
We are proud of the students we graduate.
Not only do they take all of the courses the CFP Board requires, but additional courses in counseling, software usage, advanced investment theory and portfolio management, and three corporate (business) finance courses. And a good dose of general business courses - from accounting to economics to marketing to management. Despite the intensive workload, the average student who graduates from our program as a cumulative G.P.A. significantly higher than the average graduate of our university.
And, we seek to graduate well-rounded students. Students who have expanded their comfort zones, who put away their phones and have meaningful conversations with others, and who possess the ability to connect with others / build relationships / maintain relationships. Students who understand how to work within teams, possess the skill of empathetic listening, and who have practiced counseling others.
We have students who are trained to be willing and able to tackle new challenges. Students who we know will work well in teams - because we train them in team dynamics, and give them lots of practice in different teams.
We graduate students who possess a great desire to assist their clients, in a highly ethical and professional manner. Our graduates know they are entering a profession where - each and every day - they get to help others.
Thank you! - Ron