The Financial Advisor’s Complete Guide to Retention and Growth
Building a long-term firm requires determination, patience, a little bit of luck, and a lot of planning.
One of the top ways you can work toward building a long-term firm is by hiring long-term advisors and employees. The longer people stay with a firm, the more loyal they become. There are countless positive benefits of building a solid hiring and retention plan.
Impact of High Financial Advisor Turnover Rates
The cost of turnover can be anywhere from 50% to 200% of an advisor’s annual compensation. Losing employees is hard for any firm, and losing highly skilled employees can have ripple effects throughout your company long after someone leaves.
So how can you create a firm that attracts the right advisors and once you’ve done that, keeps them there?
Answering that core question is exactly why we created this guide. Read on to learn more!
Step One: Create a Positive Culture at Your Firm
People aren’t staying at the same job their entire career like they used to, and it’s becoming increasingly uncommon for workers to devote their professional lives to the same organization even for 10+ years. And that’s true for advisors too. The first quarter of 2021 saw the most advisor movement between firms ever.
Why is that?
While there are many factors involved in an employee advisor’s decision to part ways with a firm, more often than not—and increasingly so in today’s workplace—it comes down to culture.
In fact, nine out of ten CFOs believe improving company culture will increase their company’s business value and performance, according to Harvard Business Review.
So, the million-dollar question becomes, how do you create a culture that attracts and retains superstar advisors?
We have four recommendations:
1. Open communication
First and foremost, you want to provide clear goals that everyone can strive to achieve.
When the entire team recognizes the ultimate purpose of their work and has a common milestone to work toward, the members know how they can help one another out and are more inclined to feel a sense of purpose.
It’s important to note that communication loses its importance and credibility when it’s not honest. Owning up to your mistakes or shortcomings may be difficult, but it lets your colleagues and employees know that you’re genuine and realistic.
2. Value your people
If you want your team to take pride in what they do, provide a culture that gives them something to be proud of.
That doesn’t mean you have to drop $10,000 on a company party every other month—although that does sound fun. What it means is that you need to come up with ways to make your employees feel appreciated and connected.
At Asset-Map, we offer engaging opportunities on the clock and outside of working hours to give our team members the chance to bond with one another and build camaraderie.
During the pandemic, we created a company cookbook and encouraged all of our employees to contribute a recipe. Not only did this give us the opportunity to learn more about each other, it was also a unique project that got our juices flowing and contributed to a sense of unity, even though we weren’t physically together in the office.
3. Adaptability
If we’ve learned anything over the past year, it’s that adaptability is the name of the game.
Remote work isn’t going away anytime soon and companies that embrace it are already seeing the benefits. From virtual client meetings to telecommuting, adaptability has been the lifeblood of the past 16 months.
Offering a hybrid working option or giving employees the chance to work fully remote (given they can keep up with their responsibilities) can improve morale and productivity.
Flexible hours are important too. As much as you’d like your employees to schedule their doctor’s appointments and dental check-ups during their lunch breaks or after hours, those time slots fill up fast and don’t always work.
4. Positivity
It may seem basic, but positivity is an undervalued characteristic.
You could have the most innovative firm in the nation with $20 billion AUM (Assets Under Management), but if you show up to work every day complaining about the latest news or making people feel bad about themselves, then your firm’s success will be overshadowed by your poor leadership.
That doesn’t mean you should fake a smile or show blind positivity, but you should let your passion for your work be evident through your behavior.
Remember why you do what you do and don’t let setbacks distract you from your practice.
Praising people for their efforts, expressing excitement for upcoming initiatives, and embracing learning are three simple ways to show that you care and want what’s best for everyone.
The easiest way to determine whether your firm has a positive company culture is to ask yourself two questions:
Is this the kind of company I would want to work for?
Am I addressing my employees’ needs to the best of my ability?
If you answered no to either question, it might be time to reevaluate how your firm operates and create a plan to help you get to a place where you can say yes to both questions.
Once you’ve built a positive culture at your firm, you want to make sure you can offer advisors an attractive compensation package.
Step Two: Offer Benefits that Attract and Keep the Right People
Building the best team means keeping the best team members.
Turnover is expensive and time-consuming—the average new hire costs a company over $4,000 and takes 42 days to fully onboard, not to mention the extended learning period that can often take a year or more.
Let’s look at how you can go beyond salary alone to keep your team happy—and create a workplace that fosters loyalty in your team.
Build an Attractive Culture
The most important element of keeping your team happy—even more important than high salaries—is building a culture that is both healthy and transparent.
How can you tell if you have built the right kind of culture?
Ask yourself this question: What happens when someone on your team makes a mistake? Are they afraid to admit it, or do they come to you immediately to tell you what happened?
The answer will tell you if you have the right kind of culture or not.
The right culture begins and ends with a company’s leader(s). Are you a living example of the kind of openness that you want to foster in your team? Don’t underestimate the impact your attitude can have on your team.
Encourage Your Team to Take Ownership
Taking ownership doesn’t have to mean a path to partnership (although it certainly can).
More realistically for everyone in your company, it means allowing them to own their area and have real responsibility.
Advisor-owners can struggle to delegate tasks and make the necessary hires, often feeling it’s faster and “easier” if they just do it themselves. As a result, even after hiring someone for a job, they often hold onto control of the area the new person is expected to oversee.
No one likes having the boss looking over their shoulder. If you build the right hiring process, then you should be able to trust the process and trust your people to do what you hired them to do.
Trust Your Team Enough to Let Them Work from Home (at Least Sometimes)
Part of trusting your team is giving them flexibility.
Chances are you let them go to doctor’s appointments and pick up their kids when they need to, while still trusting that they’ll get their work done.
If you trust them to run errands throughout the day, then it’s probably not much of a stretch to give your team the option of a hybrid work environment.
Of Course, Traditional Benefits are Pretty Important, Too
In the modern age, it’s easy to get focused on everything you can offer your team and forget what you should be giving them.
We said earlier that culture is more important than salary, and that is very true, but the reality is that anyone on your team will have a very hard time turning down a job that offers more money and better benefits—no matter how much they like working for you.
Check industry averages to make sure your salary and benefits are competitive enough. But don’t settle for the status quo. Be generous.
In the end, if you take care of your team, they’ll take care of you.
Step Three: Find the Right Fit for Your Firm
Hiring is expensive, intimidating, uncertain, and time-consuming. According to the Society for Human Resources Management, the average cost of hiring someone in 2021 is $4,129, and takes around 42 days just to make the hire.
Let’s look at four questions to help you find the right fit when expanding the team at your firm.
1. What Are the Essentials of Your Firm’s Culture?
Are you tired of us talking about culture yet? :)
As we said before, culture should be priority #1 when hiring. Even the top rainmakers won’t last long at a company if they don’t get along with their coworkers.
That’s why step one is to sit down before you even share your job listing and identify what makes your firm your firm. What are the essential elements of the people you work with (and want to work with)? What is it that makes your firm run smoothly?
On the opposite end, identify characteristics that definitely would not fit in at your firm. Try to avoid obvious ones (no one wants to work with someone who is rude or aloof) and drill down to see which qualities would specifically be a bad fit at your firm.
Maybe your firm has a casual feel, so someone who is super buttoned-up might be a bad fit (or vice versa). Maybe your firm is especially progressive and tech-focused, so someone who is heavily invested in doing things the “old way” would be out of place.
2. How Much Time and Energy Are You Willing to Put in to Training a New Hire?
Every company has its own way of doing things, so every new hire will need at least some training. But just how much training do you expect to have to do with this new hire?
For example, if the majority of your firm’s workload and information is kept in Redtail, are you willing to hire someone who has never used it before?
Having to train a new hire isn’t a bad thing. In fact, teaching hires new skills means they don’t come with excess baggage about the way they did things at their old job.
In addition, every skill you add to your job listing means you should be prepared to pay more for someone who matches it. Hiring someone without looking for a super-specific skillset is typically much more affordable.
Of course, training comes with a downside: time. Everything takes longer when you’re training someone else to do it, plus until they’re fully trained (which can take a while) you’re basically paying two people to do one job.
If your firm has a unique tech stack and a particularly special way of doing things, then the amount of time you have to spend training may not matter as much—just make sure you commit to doing it right.
3. How Flexible (or Rigid) Will the Position Be?
Think of your job opening as a hole that you need to fill. Is the shape of that hole super clear to you or is it the kind of position where the new hire can push and pull at the sides a bit to determine the scope for themselves?
If it’s the former, then you should have no problem finding somebody who will happily sit in a chair and do what they’re told. These are valuable positions, and our industry would fall apart without them!
But if you’re looking for someone who will really take ownership of the new position and define much of the role themselves, then you’ll want to keep that in mind when interviewing applicants. You’ll want to look for someone who is willing to speak their mind and push back when they see a better way to do things. Ask for examples like that when considering applicants.
You may also want to look for someone with experience at smaller firms, where they had to fill several roles. These kinds of “Swiss Army Knife” team members can be invaluable additions to any firm.
4. What People Skills Can You See in Your Candidates?
Of course, you want someone with the skills you need to fill your position. But someone can have an incredibly impressive resume and still not be a good hire.
As you interview the person (in-person, if possible) watch for cues about the type of person they are. Are they giving you honest answers or just saying what they think you want to hear? Do they strike you as a kind person? Are they quick on their feet? Does the conversation flow easily?
People skills are just as important (if not more so) as job skills, so keep an eye out for them.
With the right set of qualifications in mind, you can beat the dreaded, expensive “curse of the new hire” and grow your team the right way.
So, now you’ve developed a good company culture, built the best benefits package around, and hired the right fit—now how do you make sure they’ll stick around?
Step Four: Develop Your Team into Real Leaders
There’s an old story about a business owner who is afraid his team will inevitably leave his company, so he never bothers training them. What if he invests all of his time and money in training them and they leave? At the end of the story, the flip side of the coin is revealed when his mentor asks him, “But what if you don’t train them and they stay?”
The moral of the story: If you want to build a lasting advisory firm, you have to train your team (and advisors) well.
And training isn’t just about teaching them to do their jobs well. The best firms are built around a culture of developing leaders who can be proactive and take initiative.
Here are three tips to help you develop leaders at your firm.
1. Share Your Knowledge
Too many leaders think that if they share all their secrets, their new talent will surpass them. It's simply not true. Sharing your “secrets” communicates that you trust your team, and recognize that you can help them advance and succeed in their careers.
The better path? Being open-handed and sharing your knowledge. The benefits far outweigh any downside. It encourages open-mindedness and collaboration—important qualities at any great firm.
Development can’t happen unless you share your vision and give your team what they need to become better at their jobs.
When you treat your “secrets” as secrets, your team will be behind the curve every step of the way because they will rely on you to carry them.
Leaders often pay lip service to hiring the right people and then getting out of their way so they can do their jobs, but the reality is often much different. If you can be the kind of leader who says that and actually does it, you’ll be a step ahead of everyone else.
2. Learn to Delegate Effectively
One of the greatest things you can do for your team may seem antithetical: Allow your team to fail. If you sit on their shoulder and edit every email they write or piece of advice they deliver, they may come to understand the how, but they’ll never come to understand the why, which is an essential building block of any leader’s knowledge.
Learning by doing is the #1 method for growth among your team members. In order to gain knowledge, you want your people stumbling through the process themselves.
You’ll be tempted to correct them along the way, but if you never let them stumble through it and figure it out for themselves, they will always be dependent on you. People often find it difficult to retain a new skill or piece of knowledge if they are not able to use it in some way.
Delegating responsibilities and tasks may feel a bit like self-sacrifice at first, but your team will help you to lead by example. If the people on your team see that you are willing to take on responsibility and do whatever needs to be done to make your company successful, then they will want to step up as well.
3. Work on Improving Yourself
A lot of leaders think the best thing they can do is encourage their team to work themselves ragged in pursuit of increasing AUM and growing their firm. They applaud team members for staying late and coming in on the weekend, and they make sure they’re the first to come in and last to leave every day.
The unspoken message in these environments is that maintaining a healthy work-life balance will prevent them from getting ahead. Whether the leader says it out loud or not, their team carries that weight around every day.
That’s a perfect formula for burnout. The good news is that you can help turn it around.
Love him or hate him, look at Elon Musk. It’s widely documented that he was working 60 hours a week and sleeping under his desk in the early days. He would take amphetamines to keep going.
Then, when he finally started to show signs of burnout, he pulled back on the number of hours he was working, took better care of himself, and made sure that everyone around him was on the same page when it came to their own responsibilities.
If you want your team to improve themselves and avoid burnout, you have to do the same. Take care of yourself. Get some sleep, exercise, and eat a healthy diet. Find time for hobbies and relaxation.
Then go further than setting the example with your work-life balance. Tell your team about what you’re learning and where you’ve failed recently. Tell them about the books you’re reading.
Your passion for growth will rub off on your team, and you’ll reap the benefits down the line in the form of a team of people you can trust to carry your firm forward into the future—and stick around for the long haul.
Conclusion
That’s it for our guide to retention and growth for advisors! We hope you’ve found this resource helpful as you look toward growing and improving your firm.
One of the top frustrations advisors encounter that makes them want to leave a firm is outdated, time-consuming technology. At Asset-Map, we’re dedicated to making sure the best firms have the best tech available.