3 potential career paths await your next hire

Consultant Angie Herbers says not all financial advisers need to worry about setting up career paths for young recruits — only those who want to expand their businesses.
Ms. Herbers, an expert in human resources for advisory firms, outlines three typical career paths that firms can create to develop young planners. She also describes how the whole firm benefits from mentoring programs, even though it doesn’t happen on Day One.
InvestmentNews: What should a career path look like for a junior adviser?
Ms. Herbers: This is a question the industry has been struggling with for years. All businesses can have different career paths for young advisers, and those career paths are expanding. If you want to map out a career path to bring in young advisers and grow them in your business or grow them in this industry, then it all comes back to your individual organizational chart.
There are three distinctive career paths for young advisers. The first is being an adviser yourself, the second is being a client service person and growing into an operations manager and then [chief operating officer]. And the third is starting as a research analyst and growing up to a portfolio manager. They either want to go the adviser track, the client operations track or the investment management track. So mapping out that career path, you have to determine as a firm what your organizational structure looks like. You have to look at these career paths not as every trained young adviser is going to go the advisory track; there are three different tracks that they can go.
InvestmentNews: Why is it important for a registered investment adviser principal to create a path?
Ms. Herbers: If they are going to hire young advisers, it’s very important for them to have that path, whether it’s one of the three paths or something else that they create in their firm. The first thing when advisers come to me and say, “Everyone is telling me that I need to hire a young adviser, and I need to create this path.” The first thing I ask them is, “Do you want to invest this time into your business to actually make that path work?” If they say no, which might be a highly productive solo practice, I tell them they don’t need to do it. If we have an advisory firm that wants to grow to be quite large, then they are somewhat forced to do it. If you want to continue growing and building your firm, then you need leverage. In order to have leverage, you have to hire people to build that firm up. If you are building a business and the vast majority of your retirement is in that business, you have to have a successor, and to do that, you have to hire and train young advisers. If you don’t do that, you’re not going to get the equity out of your firm.
InvestmentNews: What’s the biggest mistake you see advisers make in approaching this?
Herbers: The biggest mistake I see is that a lot of advisers will hear the industry say, “We have to have this path, you have to hire young advisers.” And they’ll do it and hate it. And if they do it and hate it, it’s not helping the young adviser and it’s not helping them, either; it’s just sucking valuable time away.
InvestmentNews: How should advisers structure mentoring programs for young advisers?
Ms. Herbers: In our research division, we discovered that one of the best ways to train and mentor young advisers is within a diamond team. That is essentially a baseball field of advisers, and on second base, you have a senior adviser. On third and first bases, you have lead advisers, and a lone associate adviser at home plate. That associate’s sole role is to work with the two lead advisers and the senior adviser. All they do within that firm is to go to all the client meetings, take all the client notes and literally shadow them around.
Most young advisers coming out have technical CFP education — what they don’t know is how to speak with people, how to work with people, how to read verbal and nonverbal communication, how to set up a client meeting, how to conduct a client meeting. The cool thing about the mentorship program is that they are seeing such a wide variety of client meetings, client engagements, the work that the two leads and the senior adviser are doing, but they can then customize their own experience at that firm, which helps them develop faster or grow faster because they are catering to their own strength.
InvestmentNews: What are the differences between the career levels of associate, lead and senior advisers?
Ms. Herbers: With a three-level career track, the only difference between the lead adviser and the senior adviser is the marketing role. So if you look at it in percentages, lead advisers spend 90% of their time in a client meeting and doing the follow-up work. The lead adviser spends 10% of their time rainmaking and marketing. The senior adviser is just the opposite of the lead; they spend 90% of their time rainmaking and marketing, and 10% of their time working with top clients.
InvestmentNews: Does everyone benefit from the mentorship process?
Ms. Herbers: When the associate is just being in meetings, it’s giving some leverage to the team, but it’s benefiting the associate more than it is everyone else because that associate is getting educated. The minute that an associate can move to a lead-adviser position, then everybody else can move up. The established goal of these firms is that they have to be able to grow our associate advisers at the rate our firm is growing.
Oftentimes, what I see is, firms are growing faster than they can train. If you have that associate adviser sitting there and growing faster than what the firm is growing, then we can move them into a lead-adviser position very quickly. I’ve seen them become a lead adviser within one year or two years. Once they move to that lead-adviser position, they become very valuable to the firm and everybody is benefiting both in gross and client relationships and specialties.