Financial advisory firms that have experienced growth say staying ahead of the curve from a staffing perspective is the best way to be prepared for new assets and clients, which tend to come in spurts. But knowing which area to make the first hire in is a common dilemma.
Growth-oriented advisers are mainly looking at hiring three positions this year, according to a recent TD Ameritrade survey of registered investment advisers. About 32% plan to bring on new junior advisers, 28% expect to add to the back-office staff and 21% will hire new lead advisers.
The right strategy will depend on the size and structure of the advisory firm, but having people in place who can handle the extra administrative workload additional clients will trigger should be a priority for many firms, experts said.
“Very little will help you more than becoming more efficient as a business and leveraging the advisers' time,” said Andy Klausner, founder of adviser consultancy AK Advisory Partners. “At the end of the day, you want senior advisers to be able to focus on acquiring new clients, networking and serving current clients,” he said.
At Roof Advisory Group, when an adviser appears to be at capacity, its leaders look deeper at how he or she spends his or her time and analyzes whether there is a function that can be removed to free up more of their day, said Jeff Roof, president of the firm. His company has about $400 million in assets under management and has grown at about 20% or more per year for the past five years.
“Looking at where we want to be, and then developing the appropriate capacity and staff before we need it allows for smart growth,” Mr. Roof said.
For instance, the firm supplies all clients and their accountants with tax gain/loss reports. Instead of having an adviser involved with this, Roof Advisory has a person in its operations department prepare and disseminate these studies.
The firm also has staff from its operational and investment departments communicate directly with clients so advisers aren't the only people at a firm clients reach out to with problems or questions, Mr. Roof said.
Some firms plan to hire young advisers to prepare their businesses for growth, but not all experts believe this is a sound plan. Mr. Klausner said he doesn't think this will work for most RIAs, especially the smaller ones, because of the amount of training such employees are likely to require.
He points out that even wirehouses have trouble training junior advisers, so the owner of a small RIA can hardly be expected to do it well, along with the myriad other business responsibilities he or she faces.
The best option may be to bring someone young into a back-office role and slowly groom them for a junior advisory role, he said.
Libby Dubick of Dubick Consulting, however, disagrees. She said bringing on a next generation adviser can help a firm grow and connect with a new client base, namely, a younger one.
“I have found the most successful firms hire younger advisers and then listen to their recommendations or their concerns and how to grow and reach new markets,” she said.