Five Steps for Indy Advisors to Retain Fresh Talent and Build Succession Plans

Five Steps for Indy Advisors to Retain Fresh Talent and Build Succession Plans

Senior advisors should spell out to new recruits a reasonable career path they can expect to progress through as they advance over the course of many years.

Throughout the industry, we continue to hear about the impending difficulties that will result from the graying of the independent financial advisor population. Make no mistake, these concerns are more than valid.  Absent the successful recruiting of fresh faces and young blood to established independent advisory practices, it's questionable whether middle class and mass affluent Americans can continue to enjoy access to affordable, personal and objective financial guidance over the long term.

But despite the obvious need, all too often our industry unwittingly fails many of those young advisors who choose to come into our industry and serve as the foundation for its future.  As an industry, we are seeing new recruits every day among talented and ambitious young professionals who are eager to find a place for themselves as independent advisors and join a practice that offers them a clear professional path forward. 

Unfortunately, and all too frequently, advisory practices, and the senior advisors leading them, are unaware of some of the basic steps necessary to make sure these new advisors are properly on-boarded.  As a result, new advisors can often feel lost, overwhelmed, discouraged, frustrated or misled – which can cause them to jump ship or simply leave in dissatisfaction. Proper onboarding is critical to ensure that they will remain on the job and in the industry.

In the process, these senior advisors are doing themselves and their clients a disservice by reducing potential homegrown succession plan solutions in the form of talented younger advisors who can someday purchase their practices from their current owners - and offer a seamless legacy of intergenerational client service to the people they advise.

Fortunately, all of this can be addressed with the following five key tips for how senior independent advisors can help new advisors in their practices become grounded in their careers and committed to the business:


Decide Which Tasks to Delegate and Determine Whether you are Actually Ready to Delegate Them  

Many established independent financial advisors are accustomed to performing a range of tasks by themselves and are often not very good at delegating portions of their own work to others. Delegating tasks will not only free up precious time but will also help newer advisors participate in the life of the firm and learn the ropes in a meaningful manner, while allowing the senior advisor to pass along his or her beliefs in how the firm should be run.

For instance, I recently spoke to an advisor who was disappointed with the performance of a younger advisor in his office. Upon further digging into the situation, I discovered that the problem was not that the young advisor did not rise to the occasion, but rather, she wasn’t being given the opportunity to do so because he wasn’t comfortable giving up anything. If people are continuously denied the opportunity to take ownership over their work or processes, they realize they have no control and stop thinking for themselves.  At this point, many financial advisors decide the younger advisor has no drive.  They begin to question the newer advisor’s ability to take over their practice one day, when in reality the senior advisor’s inability to give up control may have been what led to this perceived lack of ambition in the first place.   

Articulate a Clearly Defined Career Path for New Advisors 

Senior advisors should spell out to new recruits a reasonable career path they can expect to progress through as they advance over the course of many years, from starting out as fledgling support advisors who perform the duties of a paraplanner to perhaps someday reaching the level of a senior advisor and owner.  Without a clear path, and the chance of advancement, many young advisors find other opportunities.

As an example, a few years ago, I conducted a workshop with young financial advisors who had already been named as the successors for their practice.  However, there was a lot of frustration in the room because they weren’t sure when or if the transfer would ever happen; some had been the heir apparent for 10 and 15 years with no idea of when they might reach the next level.  There was an incredible amount of talented people in the room who had ambition, drive, skills, education and experience who felt “stuck” because they couldn’t see the light at the end of the tunnel. 


Communicate the New Position’s Particular Roles and Responsibilities 

Starting in the interview process, each potential new hire should have a clear understanding of the specific duties of the position. For example, in a business that grows largely through personal referral, new advisors – starting fresh with very few contacts, much less with contacts among people with substantial investable assets – will need to understand how they are supposed to go about making themselves productive and useful to the firm.

Similarly, as they start out, they need to know what can reasonably be expected of them and what may be beyond their reach.  Too often, young advisors are left to their own devices and can be found sitting sit at their desks, wondering what they are supposed to do and how they are to go about it. 


Create a Compensation Design that Incentivizes the Behavior you are Looking to Encourage

Many young advisors begin their careers still burdened by tens of thousands of dollars in student debt and are highly sensitive to their potential earnings trajectory.  As an industry, we need to create compensation systems that do more than set the newly minted financial advisors up for failure and a diet of ramen noodles. 

Yet instead of doing this, too many advisory practices simply tell new junior advisors that they will “eat what they kill” by giving them a percentage of what they bring in, and nothing else.  And when a majority of new clients in the financial advice business are derived from referrals from existing clients, this is a losing proposition.

The solution is to create a clear, standardized formula for compensation that will allow the new advisor to earn enough to take care of essential needs, while giving them incentive to perform the duties we need them to perform.  This formula will be determined by the position for which you are hiring.  At some firms, it may be based on rewarding the paraplanner for supporting the senior advisors.  At others, it could be an incentive for bringing in new business. The important thing to remember is that your compensation plan should align with what you want to achieve strategically for your practice.


Work with a Coach to Help You Through the Transition  

Taking the above concepts one step further, senior advisors must also begin to position themselves not only for delegating tasks, but for delegating authority over the business and passing the baton to the next generation. This may be easy to say, but it is often difficult to accept. As much as young advisors are brought in to help the business grow and expand, they are also a harbinger of that perhaps uncomfortable future time when senior advisors will see the younger professionals as their inevitable replacement. This is never a seamless and easy experience.

One good way to prepare for this is to work with a broker-dealer with a good coaching program.  This will help advisors handle the eventual hand-over, in whatever form it may take, whether it may be an outright sale or a more phased transition. The key is to enable the senior advisor to fully embrace the future and gain the most rewarding outcome for all concerned.

Despite today’s market volatility, and the many regulatory and technological changes causing disruption in our industry, the independent financial advice model continues to be a strong and successful business for eager, entrepreneurial advisors. The test for senior advisors is to create structures and procedures that can enable their firm to continue to grow, increase the opportunities it creates for its next generation of advisors, and produce lasting intergenerational value.


Dawn Drewitz, MBA, CFP®, ACC is a Senior Business Consultant of HD Vest Investment ServicesSM (, the Irving, Texas-based independent broker-dealer

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