Investing in People: An Adviser’s Most Important Asset

Journal of Financial Planning: April 2013


Financial advisers know that this profession is not just a numbers business, the people make the difference. Whether a financial advisory firm is small or large, the people working there create the client experience. Unfortunately, some advisers just want to “fill a seat” and do not put the necessary time and effort into identifying the right person for the role and for their firm.

According to the U.S. Bureau of Labor Statistics, about 50 percent of all employees leave their jobs within the first six months of being hired. Different experts who have analyzed employee turnover say it can cost employers between eight and 20 times a worker’s salary if he or she leaves within the first two years.

Often, an employee does not succeed in the role and leaves, either by their choice or the adviser’s because there was a mismatch between what they do well and the requirements of the job, or the role was not clearly defined and employer and employee didn’t agree on what was expected.

If an advisory firm has felt the pain of a bad hire, there are seven steps to consider for success with new hires and existing employees. I call this the 360 degree hiring process because it is holistic and looks at components of employee success that often are overlooked and misunderstood:

Step 1: Be Clear about Success for this Role

In too many firms, especially the smaller ones where the adviser needs employees to be Jacks and Janes of all trades, there often is confusion about what the employer expects, and what the employees think they are doing. While a job description alone is not a magic bullet, defining in writing what an employee in the position would need to do to succeed is key. The job description you write should include:

  • people with whom the employee will be involved (stakeholders)
  • major areas of accountability
  • how performance will be measured
  • working conditions and other requirements unique to this position
  • actions and behaviors that are critical for success
  • skills and knowledge required for the position

And make sure you write a job description for the need, not designed around the person.

Step 2: Match the “Carrots” to Business Objectives

A common mistake employers make is coming up with a salary and benefits package based on what the candidate needs or expects, or what the firm can afford. If you are driving the employee toward a certain set of deliverables (client retention, new business development, client satisfaction, quality control, team orientation, etc.), be sure the compensation structure aligned with the job reflects this.

We often see a straight salary for someone who is expected to bring in new business. If there are no incentives and no rewards, why would the employee step out of his or her comfort zone to do additional work? Instead, consider what the firm needs to accomplish and requires of this position, and then design compensation to specifically address your company’s objectives.

Step 3: Develop an Interviewing Strategy

People often hire people they like. And, in a small advisory firm, the people interviewing the candidate could be anyone who is available the day the person comes in. Instead, know in advance who will be involved in the interviewing process and how much weight each person will have in the final decision. Have a common set of interview questions so you can compare notes. Create guidelines for collecting feedback so the post-interview meeting does not devolve into decisions based merely on “like” or “dislike,” but is instead an objective review of the candidate for the role.

Step 4: Know What Behaviors Will Succeed in the Role

Every person has natural behaviors, and every job has behaviors it requires. If you hire a sales type into an analyst role, it won’t work. If you ask a compliance person to be more salesy, they may not even know what you are talking about. Don’t take a candidate who is an aggressive driver and gets frustrated when they can’t get things done, place them in an administrative role and expect great results.

When writing the accountabilities for the role, take time to identify the behavioral style this job requires. Your assessment of the job (and of the candidate) should take into consideration how he or she will need to manage problems and challenges, interact with people, handle a steady pace, and deal with rules and procedures set by others. Think about what someone in this job needs to do on a day-by-day basis, and talk with the candidate about the expectations.

Step 5: Fit Candidate Motivators to Company Motivators

Even the advisory firm with two people has a culture. Often the culture is a mix of the leader’s (or leaders’), behavioral style, value set, and philosophy.

Think about your advisory practice. Is the atmosphere relaxed, social, and highly collaborative? Or do people work independently, driven by a competitive pace? Are things fast-moving and in fire drill mode, or are things slow to change and slow to implement? What do you believe about serving clients? How proactive or reactive is your firm? Look honestly at how someone new coming in might see the culture and describe it to a candidate. Make sure those descriptions are a fit with your practice’s beliefs and philosophy.

Step 6: Ask Probing Questions

Review the accountabilities and expectations for this role. Think about the stakeholders—the people the person in this role will interact with regularly. Look at the necessary behavioral needs of the role. Review the alignment of compensation with your business goals.

Once you have considered all of this, develop interview questions that are specific to this job. Ask probing questions that force candidates to think and paint the picture of their past roles and behaviors. Don’t read the résumé and assume that if this person did operations management at a small advisory firm like yours they can do it for you. Remember, culture, management style, and expectations in your firm for a similar role could be different.

Ask candidates why they succeeded or didn’t in past roles and ask them to give you a clear view of how they succeeded—what they did first, next, and last. Ask about their favorite employer and why. You want to be able to feel as if you are watching the person in action.

Step 7: Establish Ongoing Feedback and Communication Checkpoints

Advisory firms move quickly. Advisers will say they don’t have time to give employee feedback on a regular basis. But if people are the backbone of the firm’s success, how can an adviser afford not to give regular, clear, and effective feedback?

Feedback should happen spontaneously in real-time, and also at regular intervals such as monthly, quarterly, or yearly. Be sure to have reviews when employer and employee discuss specifics of the role. What is the person doing well? Where do they need to improve? Be as clear as possible about what you observe and what you need. Give examples such as, “When you did this specific behavior, it was excellent support for our clients. Please continue doing things like that.” Don’t wait for an end-of-year discussion; keep the dialogue open and ongoing.

Some advisers may read these steps and think, “It’s too much work” or “I just need to get a person in and get going!” But most advisers would not haphazardly choose a stock and throw it into a portfolio, or hire a money manager without looking at his or her track record, management style, etc. So why take less time with the most important investment your firm will make—its people?

Beverly D. Flaxington is principal of The Collaborative, which, along with its division, Advisors Trusted Advisor (, is a consulting, coaching, and training firm exclusively serving the financial industry. 

Practice Management