Transitioning New Recruits

Over the past year, branch managers have kicked their recruiting efforts into high gear as more financial advisors looked for new homes. But successful recruiting also requires making sure that new hires do a good job once they take their seats. A smooth transition for the recruit can involve everything from facilitating the transfer of accounts to keeping existing advisors happy. “I see managers recruiting more people than they have in years,” says Stewart Lee, a former branch office manager who heads Lee Training, a consulting and practice management firm in Wellston, Okla. “But integrating all these people successfully is a lot of work.”

Over the past year, branch managers have kicked their recruiting efforts into high gear as more financial advisors looked for new homes. But successful recruiting also requires making sure that new hires do a good job once they take their seats. A smooth transition for the recruit can involve everything from facilitating the transfer of accounts to keeping existing advisors happy. “I see managers recruiting more people than they have in years,” says Stewart Lee, a former branch office manager who heads Lee Training, a consulting and practice management firm in Wellston, Okla. “But integrating all these people successfully is a lot of work.”

For best results, you need a continuous system that begins as soon as the recruit agrees to join the firm and lasts through the first few months. Some firms map out the minute details of this process. Lee points to one firm that has a “leather-bound recruiting book” that includes an explicit timeline for the execution of each activity, including what kind of welcome celebration to hold. (They suggest bagels and donuts). Here’s more about how to make your system work:

Start well before the recruit’s official first day on the job. One of your highest priorities is making sure new advisors can transfer client assets to your firm as quickly as possible. Doing that requires everything from ensuring that the right forms have been filled out ahead of time to seeing that recruits have a phone. And if there’s a looming TRO battle, “be prepared to have legal on standby,” says Mindy Diamond, president of recruiting firm Diamond Consultants in Chester, NJ.

During your preliminary meetings, find out whether the recruit has any accounts that also do business with existing advisors in the branch, then figure out how to handle this potential conflict on a case by case basis. For example, if the existing advisor has a better relationship with the client, then offer to merge the accounts and give the recruit a payout. Or, says Lee, “Tell him or her that the next good client who walks in the door with a large asset base, you’re going to get it.” Of course, the advisor will have to approach the client about the change. But, you want to have the details nailed down before anyone makes that call.

You should also go over the money managers and investments that the recruit uses to head off conflicts with firm policy. If, say, there are products that can’t be transferred, you have to figure out what to do about it—for example, what it will cost the client to divest and who’s going to pick up the tab.

Address space issues. Crowding can be a problem if you’re substantially increasing the number of advisors in an office or bringing in a whole team with a lot of assets. The solution is usually kicking some advisors—generally, the least productive—out of their space.

The key to doing so without creating hard feelings is to address the move in a straightforward manner and to offer the evicted advisors help boosting their production. Take Steven, a branch manager for Crowell Weedon in California. Six months ago, he hired five new people for his now 16-person branch. After the hire, he moved his two lowest producing advisors out of their offices and into a bull pen. He handled the change by being very honest with the reps about his reasoning and offering to provide them with additional resources so that they could raise revenue. “They weren’t happy about it, but they know how this business works,” he says.

Don’t play obvious favorites. If you give a new recruit a better deal than your current advisors got, be prepared for the consequences. While that’s not likely to be the only factor in an advisor’s departure, “It might be the straw that broke the camel’s back, “ says Diamond. Of course, you often have to offer a high-producing recruit attractive terms. In that case, your biggest mistake would be asking the recruit to keep the new terms of employment secret. Word will get out anyway, and you’ll just look bad—or worse.

Focus on the first few days on the job. For one thing, you need to be there on the first morning to welcome the recruit. In fact, Lee recommends meeting the advisor one or two times the week before, then having breakfast together the morning of his or her first day. Diamond points to a recruit who recently moved to a new firm on a Monday morning and “By that afternoon he had moved back to the old place.” Why? Not only had the branch manager failed to appear that day, but he hadn’t appointed anyone to show the recruit around in his place.

The first one to three days will also be the busiest in terms of handling new account paperwork, since anywhere from 20 percent to 40 percent of recruits’ accounts are likely to come with them immediately. That means your operations staff needs to be ready for the influx. As a result, unless you manage a very large office, don’t start multiple advisors on the same day.

Supplement your firm’s services. Of course, most firms have established transition teams that swoop into action on the recruit’s first day and stay for anywhere from three weeks to three months or more. But you may want to augment those services, especially if you think your operations are significantly different from those of the recruit’s previous employer. At Crowell Weedon, for example, all recruits meet key department heads at the Los Angeles office and attend regular, quarterly new broker training. But, Steven, the Crowell Weedon manager, makes sure all recruits also have separate meetings with those department heads who work in areas of importance to them. For Steven, the process is especially vital for advisors coming from bigger wirehouses who may not be used to dealing directly with department heads. “The structure here isn’t as rigid and it’s a big adjustment,” he says.

Use a team. At Raymond James & Associates, for example, branch managers coordinate the efforts of their sales assistants, operations managers and other team members, and make sure everyone knows what everyone else is doing. “They act as the quarterback, directing the work flow,” says Tom Walrond, senior vice president and North Atlantic complex manager. Similarly, last year, expecting a big influx of new blood, Steven created a new four-person management team, assigning each person duties based on their strengths and making sure all recruits understand whom to go to for, say, compliance or new account processing. He also meets daily with his team to discuss, among other things, new advisor needs—say, getting help with a new license or addressing paperwork. “I saw the changes coming,” he says. “Now we’re better prepared.”

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