According to a Cerulli report, nearly 110,000 advisors are likely to retire in the next decade. If you’re one of them, or even if your timeline is further down the road, now is the time to consider how you can recruit associate advisors to solidify your legacy and ensure a seamless transition to the next generation.
Who’s Your Ideal Candidate?
Before you begin your search, ask yourself whether your goal is business growth or longevity. The answer may help inform which of the following pools you tap for talent:
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.
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.
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 find, attract, and retain the right candidates.
Where Will You Find Them?
There’s a range of options and resources you can use when trying to find and recruit associate advisors.
Develop an organic talent pipeline with an internship program. Partner with local higher education institutions, especially those offering business, finance, or CFP® certification classes. Work with their career centers to add your internship program to their job board.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.
Check into the CFP® Board Career Center. Based on program graduate demographics, 55 percent of graduates are younger than 35, and 30 percent are women!
Pursue rookies looking to leave captive environments. Network at industry events and on social media to identify advisors who have been in a rookie program for a few years. 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.
Ask your firm partner for help.
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.
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. Wesley Botto, a Commonwealth-affiliated advisor and managing partner at Hillcrest Financial Group, has found that “young job seekers want to make a difference in people’s lives. As independent advisors, we are well positioned to do that.” 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.
Many job seekers 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.
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-ups, 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.
How Will You Train Them?
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.
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).
How Will You Retain Them?
Training and development are a crucial step to attract and recruit associate advisors as it gives them 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.
Ensuring Your Firm’s Legacy
It’s important to recruit associate advisors today to help ensure the future of your firm tomorrow. By providing the right training and support, understanding what the next generation wants, and communicating your values, you can attract and keep top talent to help preserve your legacy.
This post originally appeared on Insights, a blog authored by subject-matter experts at Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.
