Associate adviser brings growth to practice
September 25, 2014 by Pamela Koehler-Zastrow
Many financial advisors feel comfortable hiring support staff for their practice. They understand the importance of an office manager or administrative assistance. However, when it comes to hiring a junior or associate representative, many advisors are not as versed on sourcing, interviewing or utilizing this type of team member. Bill S., owner of a wealth management practice, understands this dilemma well.
“I had reached a point where I was comfortable with my business, but my growth was limited because I had more on my plate than I could handle,” says Bill. “I wanted to help everyone, but I also wanted to slow down.”
With this in mind, Bill made the decision to seek out an associate representative to join his practice.
Bill’s scenario is not new.
According to Tom Daley, Founder and CEO of The Advisor Center, many advisors seek out an associate advisor for one of three reasons:
1. It is part of a succession plan strategy.
2. It offers the firm operational leverage in efficiencies.
3. It is a way to bring more revenue into a practice.
“Understanding why this individual is being brought into the practice is step one in any discussion,” says Daley. “The firm needs to define how this individual will contribute to the team and understand expectations not only in the immediate, but long-term as well.”
“After a representative defines the type of personality and traits they are looking for in a potential hire, they need to be very proactive with their mass networking activities,” Daley continues. Explore social media and let your clients know you’re looking to expand as they may help spread the word.”
Bill reached out to Jason K. who operated an insurance office in a building shared with the wealth management firm.
“I was very content with my insurance business and I wasn’t looking to change careers,” says Jason. “I was a captive agent, but my book of business was always going to belong to the insurance company.”
Bill and Jason learned about one another through their clients.
“People spoke highly of him. We would refer clients to each other, and I was comfortable with his character and work ethnic,” says Bill who also knew Jason was a dedicated individual just through observations. “When I was leaving for the day, Jason’s car was still in the parking lot. There was a comfort with that.”
Two years later, discussions surrounding a partnership became a reality.
“I was very attracted to the idea of a book of business and potential ownership,” says Jason. “With insurance, I did home and auto, but I really enjoyed the fixed annuities aspect of the business and I didn’t have the moral struggle between claims and doing what is best for the client.
When an ideal individual has been identified, the shareholders involved need to outline compensation and benefits for the new hire.
“Address the elephant in the room,” says Daley. “It’s a selfless task to bring this new person on, and the senior advisors need to be willing to bear the financial obligation.”
Daley continues that it’s a very different time for new advisors in the financial industry. Long gone are the days of cold calling to build a client base and senior advisors need to bear financial obligations while the acclimate to a new representative to the firm.
“Advisors need to think long-term in the investment with a junior representative,” he says. “Bringing on a junior representative requires a commitment to help that individual succeed. If you’re not ready to commit the time, then don’t travel down this path.”
Time is exactly what Bill committed. The first year of the partnership was in 2008, and Jason shadowed Bill in client meetings and studied for the Series 7, 63 and 24 registrations. Jason worked with the office administrator to learn all aspects of the office. The year was devoted to learning the business rather than bringing in new business.
“I was able to hear what Bill was telling clients, especially with the drop in the market,” says Jason. “It also gave Bill the opportunity to introduce me to clients and discuss the new team approach to the practice.”
“Because of the drop in the market, many clients were calling and coming in concerned about their portfolios,” says Bill. “I told Jason this was a wonderful experience seeing stressed out clients and the market at its worst.”
Bill and Jason also share there were some challenges along the way.
“I thought clients would be very accepting of me when I first started,” says Jason. “I wasn’t used to hearing ‘I’m not working with the new guy’, but Bill emphasized the team approach with every meeting.
In addition, Bill supplied Jason with a fixed salary and together they determined how to handle new business and client ownership. Within the plan, there is an agreed upon transfer of business ownership and timeline as Bill approaches retirement.
“Many senior advisors know they want to retire someday, but it’s important to define what that means when entering this type of partnership,” advises Jason.
Six years later, their partnership continues and both individuals are doing well within the practice.
“After two years, I was able to spend my winters in Florida,” says Bill. “I take client review calls twice a week and have complete trust in Jason.”
Jason believes the clear expectations set out prior to the partnership set them up for success.
He continues that the client service has been split between the two advisors, with Bill handling more senior accounts. In addition, Jason handles most of the quick questions that come in from all clients regardless of status. The practice has excelled with its addition of an associate representative, and the team is in discussions about adding additional staff to help manage the new growth.
“Bill had a lot of patience and the trust was built through the training process,” says Jason. “Our goal here is we want clients to see us as one team who is on the same page, and we’ve made that happen.”
Pamela Koehler-Zastrow, is a Marketing Communications Specialist at SII Investments, Inc.