Developing NextGen Advisors

Developing NextGen Advisors

Forget Training Programs, It's About Opportunity and Observation

Training new advisors traditionally meant pairing them off with so-called "less important" clients - the ones that require little hand holding, don't have much money with the firm and aren't neccessarily complicated planning clients.

But that's a mistake, according to Michael P. Grossman, president of AdviceOne. “It doesn’t develop them. It prevents them from ever developing as people in this industry.” Why? Because they’re only exposed to low revenue-generating clients, rather than the ultra-high-net worth clients they will be reaching for in a few years.

Instead, Grossman recommends older advisors train young employees in a new, different way. He calls it "osmosis training." At Grossman’s firm, young advisors are hired right out of college. They are easy to find and easy to fire if it doesn’t work out, he noted. At the same time, “by starting people without experience, you get to mold them in your image,” Grossman says. They don’t have bad habits an advisor needs to break, so in essence, they're a blank slate.

Over the course of 25 months, Grossman uses a team approach to train young advisors to the point where they are taking on their own high-net-worth clients and acting as a full-time advisor earning commissions. Recent graduates start in the firm as associate advisors, with the first three weeks at the firm spent primarily learning how to electronically operate in the firm—using the firm’s systems,  technologies and setting up client meetings.

After three weeks, the associate advisors are thrown into the deep end, starting to attend client meetings and taking notes for the senior lead advisor. Typically young advisors will do about eight client meetings a day, giving them a chance to learn firsthand investment products, proper client interaction and advising strategies. Giving the next generation a chance to interact with clients from the start is a motivation tool, but it also develops their confidence. “If they’re constantly talking to people with that [high] net worth, they’re just comfortable,” Grossman says. Once they start attending client meetings, Grossman’s young associate advisors also start to take over the paperwork from transactions, a process Grossman calls team guided transfer. 

A year into the training process—which also includes role-playing and core value exercises—the associate wealth managers will begin to complete fact-finding on prospective clients, at first observing and then eventually taking over the process. “They sit in countless fact-finding before they have to do it themselves,” Grossman says.

While the firm doesn’t give specific product or advice training, recruits are constantly observing and learning these aspects of the industry. “Nobody fails in this business because their inability to sell product, they fail because they can’t speak,” he says. When they’ve gained the requite experience, Grossman says the young advisors are given the opportunity to lead the first 30 minutes of a client review, with a lead advisor taking over the second half of the review session. Grossman explains that the beginning portion of client reviews are focused on updating accounts and going over account performance—tasks the younger advisor is perfectly trained to handle.

And then a little more than two years after hiring a young advisor, the firm starts to hand over prospective clients for these advisors to work with.  All they’re focusing on is clients who are large enough to be at our firm—these are not small clients, Grossman says. It’s been a fairly successful approach, he says, noting that his turnover rate, unlike many other advisor-training programs, is fairly low—with the firm turning over only three people over the past six years. And clients are satisfied as well, despite the general consensus that a 58-year won’t listen to the 28-year old. That’s not the case, Grossman says. “Age is not really a factor, it’s how you comport yourself.”

While you can’t suddenly expect a 23-year-old recruit to talk to 70-year-old client, it can be accomplished through an incremental process, Grossman says. You’re constantly pushing and furthering their development until they're ready to go it alone. “We have to create an environment that they can grow,” he says. 

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