With the calendar rolling into March, many RIAs are marking a full year of working remotely. While it has been a trying time for everyone, the RIA industry managed to thrive during this turbulent year and many firms reported a record-breaking 2020 in terms of new clients and increased assets under management. We have received many calls from exhausted RIA owners lamenting, “We can’t hire fast enough to manage our growth—we don’t want our client service standards to suffer as we bring on more and more clients.” With a year of remote work under their belt, and demand for talent at all-time highs, many RIAs who had never considered full-time remote employees in the past are now open to the concept. Here are a few things to keep in mind when hiring your first remote employee.
If your new employee is going to work in a state in which your firm previously hasn’t had a physical presence, you may need to register with the Secretary of State and the Department of Revenue in the particular state where the employee resides. If your firm works with a professional employer organization (PEO) for payroll, taxes and benefits administration, check with it before extending an offer to an employee to confirm it covers the state in which the new employee is located. You may want to check with your accountant and/or payroll provider as well to ensure taxes will be handled properly for this new employee. You will also want to check with your chief compliance officer or compliance consultant to see if anything in your compliance manual needs to be updated for the fact you now have employees accessing client data outside the confines of your office location.
Data security is paramount. While most RIA tools and applications are now web-based and can be easily accessed through a browser, you will want to ensure your new employee is using a secure Wi-Fi connection (denoted by the lock emblem next to the network name), and they will need to enter a password when joining the network. You also want to have policies in place preventing the employee from saving files directly to his or her personal computer—all files should be saved in a shared drive such as Box, or if your firm utilizes physical servers, the remote employee should access and save files through a virtual private network (VPN) for proper, secure business functionality. Cybersecurity training is important for all employees but especially remote employees—make sure employees can recognize spam, phishing attempts, malware, ransomware, etc.
Most RIAs discovered over the past year that email is best saved for client communication, and many firms have implemented instant messaging and/or technology tools such as Slack or Microsoft Teams for internal communication among team members. It is paramount that the remote employee feels in the “flow” of information and he or she feels connected to the rest of the team. Project management software or workflows built into CRM that allow employees to check the status of projects without picking up the phone or sending an email can keep remote workers efficient and up to speed. Bill Valone of TriNet points out, “Without clear and effective communication with employees that are not physically in person, the feeling of being part of the culture created by the firm can quickly erode. The impact of this can directly be tied to lack of performance and turnover, which, in my mind, can hurt a company’s bottom line the most.”*
According to the 2020 Evolution Revolution report put out by NRS and the Investment Adviser Association, 57% of SEC-registered firms employ 10 or fewer employees. Adding just one remote employee to a firm of that size can have a material impact on the firm’s culture. For that reason, cultural considerations should be first and foremost on everyone’s mind when considering adding a remote employee. Mark Sinatra of Aspen HR states, “It is critical to pro-actively communicate on a regular cadence with your remote employees. At Aspen HR, what has been successful for us has been our weekly meetups and regular one-on-one check-ins via video. We also track employee engagement through 15Five.” Valone adds, “Increase the quality and frequency of performance reviews for remote employees—they need it more than employees that are seen every day in a traditional office setting.”
With the resiliency and impressive growth experienced by the RIA industry this past year, firms are struggling with a shortage of talent. RIAs can benefit greatly by increasing the talent pool beyond the geographic limitations of the firm’s physical office location, but methodical planning and proper diligence are required to ensure success. By keeping the above considerations top of mind when extending an offer to that first remote employee, firms can protect themselves, their clients and employees as they tackle their next stage of growth.
*This communication is for informational purposes only; it is not legal, tax or accounting advice; this is not an offer to sell, buy or procure insurance.
Matt Sonnen is founder and CEO of PFI Advisors, a consulting firm that helps financial advisors build more impactful and profitable enterprises. He is also the host of the popular COO Roundtable podcast. Follow him on Twitter at @mattsonnen_pf