FA Magazine – The Best Mentoring

October 2015

When independent, entrepreneurial advisors want to expand, they often bring on associate managers. Sometimes it’s necessary to handle a ballooning client base.

But there’s always a trade-off. Junior staffers may be able to relieve some of the workload, but taking them on is a risk and can be draining.
“It can be tough because our business is so focused on revenue,” observes Kevin Guth, a partner, director and private wealth advisor at New Haven, Conn.-based Snowden Lane Partners. “We aren’t paid salaries. We’re compensated based on the revenue that our team produces. So when we bring someone new on board, we know there is going to be a cost.”
He points out, however, that it can also be an investment, especially if the associate has a way with clients or comes with a book of business.
Finding The Right Person
On the other hand, some financial advisors prefer to hire newbies. Jeff Gitterman, co-founder of Gitterman Wealth Management in New York and Edison, N.J., recruits three to five graduate or even undergraduate finance and economics majors for summer internships. Of those, usually only one makes the grade.
To screen recruits, Gitterman conducts multiple interviews, a personality-assessment questionnaire and a homework assignment. “A lot of times we’ll ask for writing samples,” he explains. “It’s a rigorous vetting process.”
Then, each intern chosen is assigned to a specific senior advisor. “That gives the advisor two or three months to spend with this person and see not only if they get along together but if the intern does well out in the field in front of clients,” he says. “It has to be a fit between the associate and the senior advisor as well as between the associate and the type of clients that the senior advisor typically works with.”
Trainees may get to work with more than one advisor, but each advisor will provide feedback. “The first question is: Is there an advisor in our firm who wants to pair up with the intern on a longer-term basis, because the senior advisor pays for that position? The second question is, do I as the senior partner approve?” Gitterman explains.
It’s been a successful process, he says, but it was developed after some spectacular failures. Originally, Gitterman had the senior advisors handle their own hiring of associates. “Senior advisors in their 30s may be very analytical but sometimes lack hiring know-how,” he reflects.
Hire Slow, Fire Fast
One common mistake: hiring somebody just like you. “I’ve learned that when you have two people who are alike, one of them isn’t necessary,” says Gitterman. Instead of “clones,” he says, he prefers “complementary styles”—matching a strong salesperson with an analytical whiz, for instance, to fill a deficiency and enhance the senior advisor’s business model. “The junior person has to have a different skill set so the senior advisor can spend more time doing what he or she is best at,” says Gitterman.
Even with this intensive process, you can’t completely rule out the occasional failure. “In the past, we might find two weeks in that all of a sudden the trainee isn’t shaving before coming to work, or the suit he or she wore on the interview is the only suit that person owns,” Gitterman says.
Rather, what you want is someone who fits with your firm’s culture and is motivated to become a full-fledged team member. Needless to say, these qualities don’t necessarily show up on a résumé—or even in a few initial interviews. “Ideally, it’s someone who understands our business and gives us a strong feeling that he or she is committed to it,” says Stephen Fordyce, another partner/director/advisor at Snowden Lane. “We need to know that the person is on board with our work ethic, our thought processes.”
A Learning Curve
It’s different for small firms than it is for their Wall Street counterparts. Snowden Lane’s Fordyce and Guth used to work together at Merrill Lynch. “At the Merrills of the world, the office manager has a budget that he or she is tasked to spend,” says Guth. “There’s really no penalty if a new hire doesn’t work out. For us, though, bringing somebody on is a huge risk.”
No matter how experienced the new employee, expect to devote time and resources to training. “Advisors should not assume that the people they bring on are fully trained or even have the same work habits,” says A.J. Sohn, managing director at Antaeus Wealth Advisors in Boxborough, Mass.
This may sound obvious, but Sohn contends that advisors are busy people and may be impatient. That’s why they’re hiring someone new, after all—to help with the workload. “We might want to offload things quickly, but it’s crucial to plan for training,” he emphasizes.
For Sohn, the best way to introduce associates to his firm’s standard of excellence is to pair them with senior advisors. “The trainee will go to every meeting with that senior advisor for at least six months and often a year,” he says. An added benefit: It enables you to introduce your clients to the trainee, to ease a future transition.

A clear plan for advancement to a more senior role should also be in place. It gives the junior person a path to follow, a way to benchmark progress and a series of goals.
But overall, keeping junior people properly motivated may not be as easy as it sounds. “You have to offer a competitive package so you get the best people, but not so much that your firm is getting nothing out of it,” says Sohn.
In addition to a percentage of revenue, Antaeus gives bonuses for particular accomplishments. “For instance, when the person achieves an advanced designation, we’ll increase the pay,” he says, adding that these are incentives that aren’t necessarily related to revenue generation. “If you’re always in revenue-generating mode, you might not be consistently doing the right thing for your clients,” says Sohn. “You want to reward the advisor for things that make him or her a better advisor.”
Not Just About Money
Sohn acknowledges that there’s nothing wrong with being “interested in the financial package,” but for his ideal candidate that’s not the primary motivation. “The kind of people we like get excited when their clients are able to achieve their goals,” he explains.
That’s a theme that runs through many advisors’ experiences with associates: It’s not just about the money. Ellis Liddell, president of ELE Wealth Management in Southfield, Mich., who started his career as a junior manager himself, tells the story of one trainee who did not work out. “I gave the young man a choice between being a junior staffer who earned 40% of his business and worked alongside me, or a sort of independent contractor who earned 80% but worked alone, generating his own leads,” Liddell recalls. “He opted for the 80% option, and six months later he had not generated a single penny. I gave him a chance to change his mind.”
When Liddell had been presented with the same opportunity himself years earlier, he chose the 40% option. “I learned so much from the guy I was working for,” he says. Before a year was out, Liddell had generated more than $250,000 of business, of which he took home just 40%. “I chose the lower pay, but got so much more out of it,” he asserts. “I was motivated by watching him, wanting to show him what I could do to earn his trust, and I was happy to be affiliated with someone who showed me the ropes.”
What he learned from this experience is that junior people are motivated more by the desire to succeed than by the desire to earn more money. “Reward junior executives for a job well done by taking them to your country club or favorite restaurant and letting them know, ‘I’m here to celebrate you tonight,’” he says. “Those simple things that you would do for your own family are what really count.”
A Professor-Student Relationship
In many ways, the relationship between a senior and junior advisor should not be that of boss and employee, he says. Liddell prefers a professor-student relationship. “As the professor, you have to have a curriculum. You have to know where you plan to take these people. You have to educate them because they don’t know it all in advance and aren’t going to learn it through osmosis,” he says.
This educational arrangement should last at least 18 months, he holds, and sometimes as long as twice that. “By that time, the student should understand why he or she is partnering,” he says.
That may sound like a long journey, but it’s not entirely a one-way street. Professors often learn from their students, Liddell points out. A young person might help the senior advisor with technology and social media, for instance. “It may not be acceptable in corporate America for a trainee to outdo a superior, but you should always be open to taking advantage of the younger person’s talents,” he says. “If you don’t allow the student to impress the professor, you could be losing out.”

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