Tough times like these can also be the best time for well-positioned advisory firms to grow. With the fate of many wirehouses uncertain, and the markets falling, if the past is any indication, new clients will be turning to independent advisors to get a better handle on their personal finances.
To deal with these new clients, or just to better position their practices for growth, some advisors will be looking to hire a young financial planner or two to help them. The good news is that their timing couldn’t be better: with many advisory firms wrestling with declining revenues and consequently curtailing their own hiring plans, the market for young professional talent is very good right now. But be careful—there are just as many pitfalls today as there are during the boom times.
Because there are suddenly so many good young advisors available now, one of the mistakes I see firm owners making is acting too quickly. They often feel that they have to jump at the chance to hire a great candidate before someone else does. But hiring too soon during down markets can be just as big a mistake as hiring too late times are good. With markets down, and revenues depressed, an untimely hit to cash flow, especially one as big as a new professional in a relatively small firm, can really strain a firm’s finances.
What’s more, because they are presented with so many high-quality candidates today, advisor/owners tend to hire way more talent than they currently need. Of course that can be a great investment for the future—if you can afford it. But even the best firms have to exercise some fiscal restraint during down times, at least until the flood of new clients starts to generate some significant cash flow.
So, in your zeal to take advantage of the opportunities presented by these tough markets, be careful not to dig too deep a hole. Better to hold off hiring until you can see the need growing, and then hire a young professional who can hit the ground running and make an immediate impact on your firm.
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Great perspective, Angie.
I would add that it is advantageous for firms to identify potential hires AHEAD of growth and ahead of need. The best managed firms don’t wait until they can afford to hire to then search for qualified candidates.
Strong, capable professionals are out there; they’re active in your local FPA chapter, NAPFA, NAIFA, and other professional organizations. Allowing chance and providence to connect your firm with your dream candidate is not a recipe for success.
Bill
http://fppad.com
Very good news for RIA Independent Advisors and for those joining the industry. Numerous studies that I have read indicate high-net worth and affluent clients leaving the auspices of wirehouse “wealth management” towards RIA Advisors. As the RIA market continues to evolve and grow, I estimate more and more Wirehouse Advisors and their clients will transition.
Frederick
Trade-PMR, Inc.
I believe another area that requires consideration is the quality of marketing materials, engagement standards or client correspondence that advisors rely on.
As clients flock away from the wirehouses to independents, they still expect the same high-quality written materials that they have become accustomed too.
I am shifting my focus as a professional commercial copy and content writer to the advisor segment. Few writers have spent 26 years in financial services and few understand the intricacies of the business.
Regards,
K Richard Douglas
http://www.solutioncontent.com