ENHANCING PRODUCTIVITY THROUGH SUPPORT ADVISOR/ ASSISTANT EMPOWERMENT

Transcription

1 ENHANCING PRODUCTIVITY THROUGH SUPPORT ADVISOR/ ASSISTANT EMPOWERMENT

2 Introduction While markets continue to provide a largely supportive backdrop for the financial advice business, competition and technology as well as changes in clients investment preferences and desire for transparency are putting pressure on margins. Fortunately, with greater advisor revenue now coming from fee-based accounts, market appreciation in recent years has produced gains in advisor revenue that have often offset or obscured margin compression. But since these favorable market conditions may not continue, and because margin pressure is likely to increase, it makes sense for thoughtful advisors to put in place programs and procedures that will lead to better performance. One way even small advisory practices can increase their profitability and efficiency is to follow the lead of the nation s most profitable and largest advisory firms. Specifically, this whitepaper will focus on the benefits of hiring or enhancing the job functions of a nonrainmaker administrative person whose superior skills free advisors to focus on attracting and retaining business. Many advisors already employ such a person, and this whitepaper will suggest that the person s job description be upgraded and the person possibly provided with additional training to make them more productive and to create a true career path that will encourage long-term commitment. While seemingly an increase in cost without an immediate increase in revenue, hiring and/or empowering support advisors or assistants has been a proven way to enhance productivity, bring in more business and, ultimately, profitability. 2

3 The Problem: Capacity Limits Nearly 90% of firms participating in InvestmentNews latest Compensation and Staffing Study reported that they are at or near capacity and may not be able to add new clients as a result. THE MAJORITY OF FIRMS ARE APPROACHING CAPACITY Advisors are over capacity and the firm needs to hire. Advisors capacity is underutilized and the firm could operate with fewer advisors. 11% 20% This has led to a slowdown in growth across the industry: In 2016, for example, median revenue at independent firms grew at a rate of only 5%, down from 8% in 2015, 14% in 2014 and 16% in The top-performing* firms in the industry, however, are often outperforming their peers because they are investing in their team structures and personnel before they experience such constraints. This allows top performers to always position themselves for growth and the addition of new clients and also assures that they will never deliver a lower level of service to their existing clients at the expense of new ones. In addition, these top firms are taking a different approach to the types of individuals that they are adding to their organizations to improve productivity and growth. Instead of adding experienced advisors or rainmakers, top firms are adding so-called nonprofessional staff para-planners, client service associates or administrative associates at a lower cost. While not producers, these people were sought for their superior administrative or support skills so that current team producers and business developers, and especially senior advisors, could become more productive and effective. 69% Advisors are near capacity, but there is room for more growth without adding another advisor. The top-performing firms in the industry, however, are often outperforming their peers because they are investing in their team structures and personnel before they experience such constraints. The efforts work: As an example, by hiring support personnel, lead advisors at the most productive and profitable advisory firms spend 75% of their time interacting with clients and prospects, compared to 52% for the average firm. The revenue per professional in the leading firms is also $150,000 greater than at the average firm illustrating the clear return top performers are generating on the investments in support roles. This strategy is not limited to large, multiprofessional firms. Top-performing solo practitioners are also finding ways to leverage their current administrative staff to serve more clients and create deeper client relationships, according to the latest InvestmentNews Compensation and Staffing Study. Survey data shows that top solo practices have clients whose portfolios are more than twice the size of those served by their peers. These practices generate double the revenue as well. *Top-performing firms are defined as the leading 25% of firms in a metric of the combined areas of growth, profitability and productivity. 3

4 Making the Right Hiring Decisions For advisors who don t currently employ an assistant who does some of the higher-level administrative work previously alluded to, hiring such a support advisor or assistant can be nerve-wracking. Not only are many advisors unsure of the precise nature of the work such a new hire will actually perform, they often aren t sure what kind of training such a person should have, the best personality fit for the job or where to find such people. The first step in hiring the right person is defining the job. All too often, many advisors believe that if they find the right person usually one with a people personality who is cheerily positive and has sales experience everything will fall into place and the new hire will figure out what to do for himor herself. Unfortunately, this kind of optimistic nonplanning (a characteristic of many successful advisors, if they are honest) is the reason for many poor hires and unsuccessful outcomes. Comprehensive Job Description Developing a comprehensive job description, therefore, comes first. Perhaps the best way to think of the position and the person filling it is first to define what the position/person is not: a jack-of-all-trades the advisor relies on to take care of everything the advisor doesn t want to do himself or herself. If anything, the new job should be positioned as the administrative manager of the business, carrying out workflow procedures already in place (or helping to develop them if sufficiently experienced). In an important sense, the administrative advisor/assistant is the lead advisor s co-equal in carrying out the work of the practice. In fact, unless the advisor recognizes the value in ceding some measure of control to a person and position managing the administrative work of the business, many of the advantages of having such a position will not be realized. It is this team-based approach to supporting clients and accomplishing the work of the firm that is a key contributor to success among top advisory firms, according to InvestmentNews most recent Elite RIA Study. At these top firms, a support advisor or assistant functions in the same capacity for all client relationships and essentially handles administrative and/or transactional inquiries and requests. The role of the lead advisor is to manage the relationship, serve as the primary decision-maker and look for new client engagements. The role of the lead advisor is to manage the relationship, serve as the primary decision-maker and look for new client engagements. For the support person/assistant, the job description that is developed should be specific to the advisor s practice. Some suggestions include: Maintaining client investment records Creating and maintaining communication records and setting up appointments Other regular client communication Ongoing education and upgrading skills regarding broker/dealer/custodian technology Ongoing training in financial planning, investments and elder fraud Ongoing training in technology and cybersecurity Whatever is determined should be written out, discussed and periodically reviewed by the advisor and the assistant. 4

5 Candidate Requirements Once a job description is completed, looking for the skills and personality attributes to fulfill the job s requirements effectively becomes the key task. Since interviewing and hiring personnel may not be an advisor s strong suit, he or she may find it helpful to ask for assistance from the firm s broker/dealer in reviewing the completed job description and then screening candidates. If your broker/dealer supports an internal organization of support advisors/administrative personnel, they also may be a resource that can be asked for assistance. Advisors probably should look for candidates who possess the following requirements: An understanding or familiarity with all firm systems and technology. If candidates do not possess such understanding or familiarity, there should be a reasonable timetable established for a new hire to acquire the necessary knowledge. A detailed understanding of the advisor s particular workflow patterns (which should be written and documented) for everything from account opening, to reporting, to communications, to account closing. If such documentation does not exist, it should be created before anyone is hired. The appropriate securities licenses. Financial planning knowledge and familiarity to the degree the advisor believes is appropriate for the nature of his or her practice. Demonstrated evidence of a service orientation in previous work. Demonstrated evidence of a preference for and satisfaction derived from administrative, detail-oriented, process-driven work. Where to Find Suitable Candidates For advisors seeking to hire a capable support advisor/assistant, the first step probably should be to consult your broker/dealer to learn if they may be a resource. They may be aware of advisors who are planning to retire or change their work arrangement in other ways and may be able to help. Other advisors you know in your area may be helpful, as may centers of influence such as accountants and attorneys who may know of advisory administrative experts who may be open to a change. Another good source of appropriate personnel can be colleges and universities in your area that have financial planning programs. More young people than ever are taking courses in financial planning and seeking a career in the area. Another good source of appropriate personnel can be colleges and universities in your area that have financial planning programs. More young people than ever are taking courses in financial planning and seeking a career in the area. While many want to become financial advisors themselves and are not looking for a career in administration, there are those for whom an administrative position is exactly what they want. Check out the list of schools offering board-registered certified financial planning programs at InvestmentNews at 5

6 Training and Empowering For many advisors, fortunately, there is no need to start an extensive search to find the right support advisor or administrative assistant. That person may already exist in the form of the registered assistant or other assistant already working for the advisor in a job that has a large administrative component. To reap the full benefits of having a true administrative partner in that all-important support advisor/administrative position, however, the role most likely will need to be upgraded and the person moving into it is likely to require additional training. As much as this should happen, however, ongoing training and career development are woefully lacking at most advisory firms. In fact, only half of the 353 firms that participated in the latest InvestmentNews Compensation and Staffing Study said they had formal training or education programs in place to develop client-service skills. And if it s any consolation, the statistics on business-development training and imparting leadership skills were even worse. Industry experts agree that a strong training program should involve a range of experiences, including on-the-job activities, mentoring and job shadowing, as well as formal training through continuing education and attending industry conferences. While job shadowing certainly isn t an issue for long-time assistants, it s the formal training, continuing education and interaction with other industry professionals that is most often missing from the training of today s advisory assistants. Just as important as the actual training is the culture of the practice and the advisor s commitment to training and professional development. Particularly for a long-time employee who may be skeptical about an advisor s new commitment to expanding and empowering the current role and creating a professional administrative career path, it is imperative that career development be taken seriously and become a long-term priority. Nothing is worse for morale or long-term success than if an empowerment effort is seen as merely a management fad. Training, after all, is not just a perk for the person receiving it, but an investment in the future of the firm and the lead advisor as well. What Type of Training? Consult your broker/dealer to determine whether the firm has best-practices suggestions for assistant/support advisor training. Broker/dealers also may be aware of vendor-sponsored training programs that provide product-specific and general training. Industry experts agree that a strong training program should involve a range of experiences, including on-thejob activities, mentoring and job shadowing, as well as formal training through continuing education and attending industry conferences. If the advisor and the assistant agree, there also may be value in supporting the efforts of the assistant to become a Certified Financial Planner. The training is rigorous and time consuming, but the designation is widely recognized, and holders are generally esteemed for their knowledge and professionalism. 6

7 Conclusion As the financial advice business becomes less about products and more about service, the ability to deliver a wide range of financial services efficiently has become the key to the business profitability. Running an advisory business effectively and efficiently, therefore, is more important than ever, with the administrative functioning of the operation central to its success. In the current competitive environment, even one- and two-advisor businesses must maintain administrative competency in order to remain viable. For that reason, upgrading the administrative functioning of the small advisory practice by employing a support advisor or an administrative assistant who functions as the practice s chief administrative officer is central to long-term advisor success and profitability. This represents a sea change from the belief that simply adding more and more revenue solves the growth and profitability challenge. Smoothly functioning operations that free advisors to be more productive in attracting and retaining clients are the key determinant of success, as study after study of top advisory firms reveals. As the most recent InvestmentNews Elite RIA Study found, 83% of the top advisory firms ranked client satisfaction as the primary strategic priority of the firm. That compared with 72% of all other participants. Firms of all sizes, regardless of the regulatory channel in which they operate, should take heed. As the most recent lnvestmentnews Elite RIA Study found, 83% of the top advisory firms ranked client satisfaction as the primary strategic priority of the firm. The best firms in the business have activated internal strategies to enhance the satisfaction of their clients and, ultimately, retain as many existing relationships as possible. By putting client satisfaction first, top firms commit themselves to the adoption of changes that individually may not contribute to short-term performance, but which ultimately will lead to long-term differences that cement their dominance. One of these differences is service that is fast, comprehensive and knowledgeable. Having the proper administrative support is the only way to deliver service of that caliber. 7

8 About this Research ABOUT INVESTMENTNEWS RESEARCH The mission of InvestmentNews Research is to provide advisory firms with the industry s most comprehensive and informative practice management resources, benchmarking reports and targeted research studies. Our benchmarking studies and tools are a leading source of strategic intelligence for the industry s top advisory firms, custodians, broker/dealers, consultants and professional organizations. InvestmentNews Research is a dedicated business unit of InvestmentNews, which officially launched in 2009 with the acquisition of the former Moss Adams LLC benchmarking studies. The business now offers, in addition to the legacy benchmarking studies, a subscription-based research dashboard, custom research services, dedicated research webcasts, national and regional workshops and in-person presentations. For more information about InvestmentNews benchmarking and custom research, please contact Mark Bruno at mbruno@investmentnews.com ABOUT CADARET, GRANT & CO., INC. Cadaret, Grant & Co., Inc. is a privately owned independent broker/dealer, based in Syracuse, New York. We have been servicing over 900 independent financial advisors in branch offices nationwide for more than 30 years. As a leader in the broker/dealer industry, we offer advisors stability, tools to grow their practice, unparalleled customer service, and the best technology in the broker/dealer world. We make decisions based on the needs of advisors and the way they want to serve their clients. We have found that advisors today are looking to re-declare their independence. And, they are doing it at Cadaret, Grant. Please contact Cadaret, Grant Recruiting for more information at or visit us at Cadaret, Grant is a member of FINRA/SIPC.