Our industry is all about encouraging clients to commit to diversified, long-range investment plans and strategies. Ironically, we tend to lose site of the importance of investing organically and wisely in the future when it comes to recruiting.
Perhaps it's the word “recruiting” which focuses on acquiring new advisers and conjures the image of stealing advisers away from the opposing team. Indeed, this is a short-term windfall, but single-handedly, it is not sustaining.
To grow consistently and profitably, firms should look at recruiting as a long-term investment. The ideal strategy should include recruiting, retaining and training.
Recruit
Recruiting experienced advisers with ready-made books of business and client relationships is obviously the quickest way to increase a firm's assets under management. Although the cost of recruiting is anything but cheap, ultimately these wins positively impact the balance sheet. Plus, more advisers added means more clients are being served. Great, your firm has officially grown.
However, getting an adviser to join your firm isn't the finish line; it's the starting point.
Retain
Now, let's say you've overly invested in courting new advisers with red carpet treatment, upfront money and special concessions while neglecting the needs of your current advisers. If they choose to change affiliations and move their assets, your prospects for growth just took a nosedive.
Today's advisers have increasingly complicated business models, especially those with elite practices. These advisers expect their affiliations and custodians to help them manage their practices and grow their books of business.
An adviser often looks to the firm to grow along with them, to offer the business flexibility develop their unique clientele and to provide a completely rounded portfolio. Do you offer an RIA hybrid model, succession planning assistance or options for alternative investments? All of these efforts go will go a long way toward adviser retention.
Train
Recruiting the next generation of advisers is another important long-term investment. It's not an easy task in the face of tightening margins. Firms who are taking on the challenge and doing it well are offering industry newbies a variety of entry-level roles in business development, marketing and operations so the employee can get a flavor for the industry. Eventually those with an interest and an aptitude for client-facing roles can be groomed to become an adviser.
Branches and RIAs often don't have the bandwidth or expertise needed to hire and train effectively. This is a great opportunity for broker-dealers and custodians to demonstrate their ability to provide small business assistance through training tools and programs, advice on grooming a junior adviser and identifying the key support staff to add to their growing practices.
Addressing the needs of your current advisers while recruiting or training those new to the team can be approached as a juggling act or a seamless strategy. However, dropping the ball in any one of these areas can be costly. Avoid juggling.
Tom Daley is the founder and CEO of The Advisor Center, a strategic partner to InvestmentNews and the InvestmentNews Career Center.
