As the first wave of baby boomers turns 65, everyone in the industry is talking and thinking about succession.
Unfortunately, far fewer are doing anything about it. To help ensure a smooth transition, it is best to start succession planning well in advance, especially if you are thinking about hiring and training a junior financial adviser to take over the business.
Let's look at how to go about finding a capable junior adviser, and some of the challenges to expect.
Here are several tips that may help you locate qualified candidates:
To find candidates who are already on the certified financial planner track, try posting on the electronic career bulletin boards that many CFP programs maintain. You might also consider advertising through the Financial Planning Association, which offers a residency program for advisers who have passed the CFP exam. In addition, many state and local FPA chapters publish newsletters where you can place an ad seeking a junior adviser.
Use online listing services. Some advisers have wooed licensed support staff from wirehouses by listing positions on popular online services such as CareerBuilder.com, Craigslist.org and Monster.com. Joinafirm.com is a new website that connects firms with advisers who are seeking to join a practice and vice versa. Placement agencies are another possibility, but they aren't widely used for junior-adviser positions.
Old-fashioned networking is likely one of your best bets when it comes to finding potential successors. Your broker-dealer may know of junior advisers who are looking to join forces with another adviser. Networking with wholesalers, who often are familiar with the advisers in a particular region, is another viable option. Talking with other advisers, and even friends and family, can yield promising leads. (Although some advisers put the word out to clients when they are looking to hire support staff, it isn't a good move when you are seeking a potential successor.)
Before you begin your search, it is important to be clear about what you are looking for in a junior adviser. Unless you set some parameters, any adviser could be a possible match.
To streamline your search, set some decision criteria. For example:
Education: Are you willing to take on a novice without credentials or a specific educational background, or do you want someone who already has certain qualifications?
Years of experience: How much industry experience should the junior adviser have: no experience, two to four years, five to 10 years or 10-plus years?
Type of experience: How closely should the junior adviser's experience reflect your business model? If you are a registered investment adviser, is broker-dealer experience acceptable? What if the junior adviser's experience is in the qualified-plan arena and you work solely with individual clients? Also consider the specific nature of the junior adviser's experience: Performing investment management duties and providing support service differ greatly from rainmaking and managing relationships.
Timing: When do you wish to exit the business? It is important to align your anticipated retirement date with the junior adviser's expectations for stepping into your shoes. If you don't indicate a time frame, the junior adviser may envision stepping up in six to 12 months, when you may be thinking more along the lines of five to 10 years. If succession is part of the plan when hiring a junior adviser, either be specific or don't bring it up at all.
Chemistry: Will the junior adviser's style mesh with yours? Will he or she fit in with clients and support staff? Consider what type of personality you are looking for.
First impressions: Does it matter how youthful the junior adviser appears? Right or wrong, clients often make assumptions based on how old an adviser looks.
As you begin your search for a junior adviser, be realistic. Don't expect to find the “perfect” person to take over your business or to hit the jackpot with the first candidate you come across.
Even when you think that you have found a great fit, the junior adviser may change his or her mind about taking over the practice, or you may change yours about leaving it. Patience and flexibility are key for both parties.
Even with your tutelage, it will take time for any junior adviser to be ready to take over the practice. You didn't develop your level of expertise and professionalism overnight, and a junior adviser won't, either.
For these reasons and more, it is impossible to overstate the importance of starting your search early.
Joni Youngwirth ([email protected]) is the managing principal of practice management at Commonwealth Financial Network, a registered investment adviser.
