Leave a comment

It’s Not Just About Salary: Purposeful Staffing

I routinely get calls or questions from advisers about compensation for a staff position or junior adviser. Whether it involves hiring/retaining a junior person, or a staff member trying to make a case to their firm about how underpaid they are, the conversation is less about salaries (although it does come up) and more about incentive or variable compensation and bonus. Instead of providing a number or formula, I’ve been asking what would it take that person to leave your firm and why are you doing things? If you know what kind of firm you’re running, and what your goals are, you can be purposeful with compensation.

What Behavior Do You Want?

Over the years, I have lived by a simple rule when it comes to compensation: compensation, especially with variable comp, should be used to drive better behavior. More importantly, advisers shouldn’t have to stick with the same variable comp structure every year as priorities and goals may change. I ask the adviser to think about the goals of their firm, more importantly the leading indicators of success and tie the metrics around those indicators.

As I said, the conversations are changing lately—they are becoming broader. Today, we start with a conversation about work environment. We answer and discuss:

  • Is there a clear vision and purpose for the firm (Do you know where you are headed)?
  • Does the employee have/want the opportunity to grow and is the path laid out for them?
  • Is there a sense that the employee is fulfilled?
  • Is the employee valued?
  • Is compensation really the issue you are trying to solve for?

In my mind, staff more often leaves a business for reasons other than compensation. The biggest reason is always around the vison of the firm and where they fit.

Purposeful Staff

In our most recent paper, “The Purposeful Advisory Firm,” my co-author Raef Lee and I discussed the concept of value engineering for advisory firms. The idea was that an advisory firm has a few levers they can pull that can determine the firm’s direction. Moving a lever in the right direction can propel the firm toward successful enterprise or to a lifestyle firm. I think the people (staff) lever is the most important.

How you use talent can be the key to your success, so it is critically important to understand, communicate and plan for the direction of your firm before you discuss variable compensation with the staff. How can you decide on a number if you don’t know what you are paying for or the direction that the compensation will take your firm?

Lifestyle Versus Enterprise: Questions for You

Before you get into the dollars and cents of a compensation plan, I think it is important to ask questions that can help move that value lever:

  1. Do you aspire to take your firm to the next level? (In addition, can you define what that next level looks like?)
  2. Do you have the appetite for adding (and managing) more employees?
  3. Do you have it in you to fire yourself as adviser and hire yourself as CEO?

If you answer yes to all three of these questions, you are heading down that enterprise path. You will be busy with defining roles, job descriptions and creating a path for all your team members to grow within your firm. Yes means looking at a team approach to the client service model and possibly a chief operating officer hire. The enterprise variable compensation will look at the big picture of the firm and how you are building it for the future.

If you answer no, then the lifestyle approach may be calling you. And figuring out that variable compensation is going to be even more important. You should create a plan that reinforces longevity, continuity and service. The lifestyle firm cannot afford huge turnover that will force the adviser back in the day-to-day operations of the practice. Morale and culture are very important to retain existing clients and strengthen the brand of the no-doubt personality driven firm.

Consequences

Not having a purposeful compensation plan in place leads to employee retention issues. A purposeful plan leads to maximizing the hire for the future direction of your firm. I am often accused of sounding like an attorney (or an economist). When someone asks me about compensation, instead of a direct answer, I now say, “It depends on you.” What kind of firm do you want to be?

Editor’s Note: Join SEI and FPA for a webinar titled, “The Renaissance in Charitable Trust Planning,” at 2 p.m., Eastern, April 18. Register for the webinar here. Also, a version of this blog post first appeared on SEI’s practice management blog, Practically Speaking.

John Anderson

John Anderson is the managing director of Practice Management Solutions for the SEI Advisor Network. He is responsible for all programs focused on helping financial advisers grow their businesses, create efficiencies in their operations and differentiate their practices. He is also the author of SEI’s practice management blog, Practically Speaking.

 


Leave a comment

What We Can Learn from Career-Changer Advisers

Do you know a career-changer adviser or have one on your staff? They bring a certain skillset that many lifelong financial advisers may benefit from.

One individual I know retired from the military and began his career as a financial adviser when he was in his 40s. He was quite comfortable in his role as leader of a growing ensemble firm. He was adept at enhancing efficiency through the use of consistent processes, attending not only to the firm’s top line but also to margin and profitability, delegating to staff, focusing on teamwork, mentoring young advisers and building a culture of camaraderie. These aren’t usually the responsibilities advisers say they excel at; instead, most say they much prefer spending time with their clients than managing the business.

Can we assume, then, that some career-changer advisers are better business managers than financial advisers who have spent their entire careers in this industry?

What Career Changers Bring
There is no actual data to validate my hunch, but if you think about it, there are a few reasons why an adviser who came from the military, engineering, health care or some other industry would find success as a business owner. Let’s look a little closer.

Lifelong financial planners often have no formal business training; after all, you don’t get CE credits for learning how to be better businesspeople. In fact, at conferences, there’s a built-in incentive to go to the sessions offering CE credit and a built-in disincentive for the practice management sessions. Consequently, developing or enhancing leadership and management skills or business acumen in general plays second fiddle.

When an individual starts a second career, however, there is an opportunity for a do over. You get to assess the new industry you are joining and learn best practices to apply from the get-go? (if you had the chance to start your financial planning career over, wouldn’t you do some things differently?) Plus, those who change careers have often learned from their earlier experiences and know how to avoid certain bad habits the second time around.

Of course, career changers are often older and more mature. That maturity may also be accompanied by greater financial stability than a newbie adviser just entering the industry would have. For example, instead of taking on every client to make ends meet, the more established individual can select the clients who best fit his or her niche and how he or she wants to present the firm to the public.

Last, there is something to be said for bringing external knowledge into this industry. That’s probably true for any industry. It’s not a leap to suggest that prior experience leads to increased wisdom.

If This Is True, What Difference Does It Make?
If you have a career changer in your firm, perhaps that individual has insight that could be useful to you as the leader of the firm. If you are considering a career changer as a successor, that individual may possess some valuable skills less commonly found in the financial services industry. Consider also that, as our industry shrinks, perhaps we need to recruit from non-traditional niches.

If it’s logical to assume that career-changer advisers often possess better business management skills, then it follows that financial planners who switch industries might be observed to have exceptional relationships and, of course, financial planning skills. It’s just that financial planners seldom move on to a second career. Why would they, when this one is so gratifying?

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.


Leave a comment

What Comes First—Changing the Tech or the Staff?

Firms are struggling with technology adoption because they believe their executives or staff can’t change or learn new methods of operating. So they stop implementing the tech (aka the change) and instead start interviewing potential hires to replace their current staff who appear unwilling to change and learn. This stoppage and hiring effort creates a dark cloud over the mood of the staff. It sends a message that the firm isn’t prepared to improve nor invest in change management. Rock star-quality staff take this stoppage as a sign and ultimately stop recommending improvements and cease their championing of change. If the stoppages happen often, your best staff might even start interviewing at other firms or start their own firm.

How do I know if my staff are able to learn new systems?
The easiest way to test the team’s ability to learn is to sell the change before implementing it. As the firm owner, you must believe in the change, know the benefits, and persistently encourage productive feedback. Remember that the administrative person might care about reducing data entry work, while the adviser will want this change to help them onboard a new client more efficiently. Staff that can’t adopt the change will stand out immediately. If they are your key team members, have your executive team talk with them and explore why they are resistant to the changes. Then, and only then, will you know if it is time to search through the resumes and start to recalibrate the staff with a new hire.

Do I lay off a loyal staff person when they can’t learn?
We all know it is very expensive (money, energy, time) to lay off and hire someone new. Any new hire requires you to use energy and time to train them on your firm’s method of operating, philosophy regarding client service and expectations. It is best to NOT lay off those who seemingly can’t embrace change and instead invest in training and change management first. Training can be in the form of scheduled weekly webinars, paying an outside expert or software provider to provide customized training, or having a staff person train his/her peer. Change management comes from the top. If you are not sure you are managing change properly, you can hire a coach to learn how to do this effectively now and in the future.

While you invest in training and management, you should also be scouring the earth for potential hires. A great employee, successor, or partner hire won’t fall into your lap the minute you decide you want to re-calibrate your team. It is never too soon to start networking and doing informational interviews and building your pipeline of candidates. If the training and change management does not produce the results you want, you know you can call upon a pool of qualified candidates.

Change isn’t easy—if it were, everyone would be doing it! Remember that any meaningful technology change—even implementing a new software program—takes more than 66 business days to adopt. Give your staff time to embrace the new tech and provide continuous training, positive reinforcement and examples of the long-term benefits. Most importantly, be sure to give yourself time to lead the troops with a positive attitude and realistic change management goals. Progress may be slow but as long as you’re seeing change transpire, rest well knowing your firm is on the right track.

Jennifer Goldman

 

Jennifer Goldman
Founder
My Virtual COO
Boston, MA

Editor’s Note: FPA members receive a $500 member discount on a My Virtual COO consulting engagement. You can find more information here


Leave a comment

The W’s of Successful Outsourcing

There was a time when the word “outsourcing” was barely mentioned. Today, outsourcing is as common in the office as a laptop or smart phone. Outsourcing has allowed companies of all sizes to grow quickly while reducing costs—which only adds to the bottom line.

Professional outsourcers can handle virtually every type of task, from answering emails to marketing and website development. It doesn’t stop there and can include compliance, reporting, ghost writing and much more.

WHEN do you make the choice to outsource?
When your firm experiences the following:

  1. You need a quick turnaround time on certain projects
  2. Staff is overloaded
  3. There is no time, ability or resources to train the staff on a specific skill
  4. Staff has no interest in doing certain types of work

WHAT do I outsource?
The easiest items to outsource are non-client facing, back office work or repetitive, non-technical work. The favored outsourcers currently are: bookkeepers, portfolio reconcilers, compliance firms, website designers and virtual planners. We believe these are the favorites as they have clearly defined roles and are not client-facing. Managing a person with client-facing responsibilities can be nerve wrecking for a newbie manager. Also, client-facing staff members are valuable and should be part of your core team. Your clients value your staff and the personal relationship your firm offers with them.

HOW can I outsource while remaining compliant?
We recommend following these five steps to remain compliant and operate effectively:

  1. Seek vetted, experienced experts in the industry
  2. Establish CRM processes and repeatable tasks with instructions for the outsourcer to complete and you to monitor
  3. Use secure communication platforms such as document management systems, CRMs and encrypted email
  4. Sign a formal contract with the outsourcer that protects your data, your documents, your proprietary business procedures and your clients
  5. Schedule a biweekly call with each outsourcer to review outstanding tasks, answer any questions and provide overall guidance on how you would like them to operate

Finding and onboarding the right outsourcing company takes time. Be patient, ask peers for recommendations, and remember that the first few months are always have a learning curve for you and the outsourcer. Also, you will want to carve out time to monitor their work closely for the first 60 days and confirm they possess the skills and ability to deliver. After 60 days, you should be able to trust their work and method of delivery and more easily manage them.

The W’s of outsourcing don’t have to be overwhelming. Your staff, you, and clients will feel the positive effect of hiring an expert outsourcer. So try one out, follow the five steps, monitor the work and enjoy the newly reclaimed energy and time.

Jennifer Goldman

 

Jennifer Goldman
Founder
My Virtual COO
Boston, MA

Editor’s Note: FPA members receive a $500 member discount on a My Virtual COO consulting engagement. You can find more information here


Leave a comment

Fundamentals for Success: 4 Practice Management Themes for 2016

Every March I host the Independent Advisor’s Implement Now Practice Management Virtual Summit. I interview about two dozen industry thought leaders to crystalize the key how-to advice they have to offer to propel advisers to their next level of success. This year’s content reveals four practice management themes that entrepreneurial advisers must pay attention to if they want to achieve their full potential.

Here are the four fundamental focus areas for  advisers that surfaced from my conversations with the 24 entrepreneur industry experts who participated in this year’s summit, which was held on March 14.

1. Personal Brand: What is the story you want to share with the world? How do you relate and connect with people? Clever marketing tactics, fancy web sites, high quality video and daily social media blasting will not help if you are not 100 percent clear on who you are as the leader of your firm, what defines your value system, and what you want your audience to appreciate and understand. When you bring to life your personal brand and reinforce it consistently over time, you will stand out, especially in the digital arena. Personal and professional are no longer separate worlds. The intersection of the two is where most clients live, and you need to show up.

2. Technology to Scale: Technology for technology’s sake can be cool, but you should care about the innovation that occurs because it will allow you to scale your business. You can impact a greater number of people whom you want to help when you leverage technology to support you. Open your eyes to what’s possible now, learn and apply the tools you already have, try out new solutions to improve your service delivery, stand out against robo-advice, streamline your practice operations, support healthy habits, increase productivity and upgrade your overall lifestyle.

3. Build Teams and Systems: Michael Gerber’s The E-Myth Revisited is the most referenced book in Implement Now. Are you working “in” the business, mired in the technical or administrative day-to-day work? Or do you approach your business thinking in systems and processes that free up more of your time, money and energy to focus on leadership? Whether you offshore tasks to a virtual assistant, hire a part-time HR consultant or expand your firm with more advisers, you need to define clear systems and processes, be willing to delegate, and find the right kind of people for the job or jobs at hand. This will not only improve efficiency and increase the value of the firm but it’ll improve your life and relationships outside the office.

4. Financial Planning: With more low-cost money management solutions on the market and a growing consumer desire to address basic every day cash flow management both in Gen X and Y and the retiring boomer segments, financial advice cannot rely on the retirement portfolio. The financial planning element of advisers’ service offerings must take the lead. How are you helping your clients navigate the complex trade-offs and decisions they make to create a fulfilling life? When you are their go-to resource to make emotionally powered choices, your clients will stick with you in the ups and downs and happily spread the word about you.

The wrapper around all of these essential areas is clear, consistent and frequent communication with your prospects and clients both in a public domain and in one-to-one outreach. With a clear personal brand, technology and teams to support you and a focus on the planning your clients need, you will achieve more success—whatever that means to you—this year.

To learn the recommended actions behind these themes and view all the expert interviews, visit http://implement-now.com for participation details.

 Kristin Harad 2014Kristin Harad, CFP®
Marketing trainer for advisers
www.kristinharad.com
implement-now.com
San Francisco, Calif.

Editor’s Note: The following related Financial Planning Association content may be of interest to you:


1 Comment

Avoid the Self-Fulfilling Prophecy: “I’m Not Good at Managing People”

I’ve often heard advisers say that they are not good at managing people. I want to shake them and scold, “Don’t say that!” When you make such a declaration, you are doing nothing more than creating an excuse for not improving your skills. You may even be creating a self-fulfilling prophecy, in which your assumption that you aren’t good influences your behaviors and actually causes you to be less of a good manager than you naturally would be.

What Do Employees Want from Their Manager?
You can make a huge improvement in your self-perception, as well as in the perception of your employees, by focusing on some basic employee needs. Among the things employees want, there are two items that stand out, according to research by Gallup: knowing what’s expected of them and how they are doing in meeting those expectations.

These are fundamental needs of employees. That’s why human resources departments tell managers to have up-to-date job descriptions (to define what’s expected) and give employees performance reviews at least annually (to check in about whether expectations are being met). These two actions are not much to ask of an adviser and require that you learn just a couple of skills:

  • How to work with an employee to create a job description
  • How to have a meaningful conversation with an employee about his or her performance

Investing in Your Employees
A little time spent defining roles and responsibilities can go a long way for an adviser who wants an employee to be an important part of the future of his or her organization. Existing employees can be asked to do much of the task.

If you start with an employee who does not have a job description, give him or her a template that asks the employee to outline the key five to eight responsibilities of the job. You can make your own list for that position and then compare the two lists together to create an official description. From there, you can add the values you want to drive internally among everyone who is associated with the firm.

Use the description as the basis for performance reviews. A job description, although not perfect, is a good benchmarking tool and certainly better than using nothing. Again, work from a template to give employees the opportunity to outline how they think they have done in fulfilling their position’s key responsibilities over the past six months or year. If you do the same thing, comparing assessments will give you the fodder for great conversations regarding each employee’s performance.

Half the battle is making this investment in employees a priority and taking the time to do it. Based on the above approach, the time investment is really only a few hours per employee. That’s a good return on investment for employees whom you want to be part of the future of your firm.

Is that all you have to do be a great at managing people? No, but it’s a good jumping-off point. Above and beyond defined expectations, employees are highly influenced by the culture of an organization. We’ll talk more about that next time.

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.

 

 

 


Leave a comment

3 Keys to Creating an Engaged Workforce

What does it take to have an engaged workforce? Is it a ping pong table in the breakroom and unlimited vacation and sick pay? Is it a flexible work environment allowing employees to set their own schedules?

If your eyes were rolling and you were wondering just how you were going to make that happen, worry no more. According to research conducted by Gallup®, these types of fringe benefits are not what make an engaged workforce. The things that do will cost you less in hard dollars yet require you to engage with people, who are often confusing and sometimes overwhelming. Engagement in the workforce is the same as the romantic engagement, it happens between people.

There are three keys to creating an engaged workforce:

  1. Selecting the right people seems so obvious, yet all of us have either hired or had to work with someone who just wasn’t the right fit. Good hiring goes beyond the ability of someone with the skills to perform the job. Mindset, attitude and culture also play an important role. Beyond the initial hiring process, what weighs more heavily in employee engagement is selecting the right managers. More often than not, people don’t quit jobs, they quit the manager. When you consider the process by which most managers get selected, they are either star performers or have been with the company the longest, so it’s easy to end up with managers not prepared to manage others. When selecting a manager, focus on their ability to get to know and develop others while keeping an eye on the metrics that drive performance.
  2. Developing employees’ strengths will be one of the most productive roles your manager performs. According to Gallup®, employees who have the chance to use their strengths every day are SIX TIMES more likely to be engaged on the job. Remember what the lack of engagement can cost? Managers are uniquely positioned to come to know and develop the strengths of the people on their team. Using a tool such as the Clifton StrengthsFinder® assessment will help both the manager and the team better understand the unique talents of each individual as well as the potential that lies within.
  3. Enhance employees’ well-being. This at first glance appears to be a rather large undertaking. If we break it down, we can see how a company and its great managers can influence well-being. Most people spend at least one-half of their waking hours in the work environment and we know that work influences home and personal life and vice-versa. In studies conducted among its client groups, Gallup® has found that engaged employees are generally in better health and have healthier habits than those not engaged. In turn, these engaged employees have fewer chronic health problems and miss fewer days of work. These are also the same employees likely to participate in a company-sponsored wellness program. Well-being also includes community and social involvement as well as financial well-being. An entire book could be written on just this topic, and it has! Well-Being by Tom Rath and Jim Harter is a great compliment to the StrengthsFinder 2.0 book and the assessment.

So where should you start in engaging your employees?  A conversation focusing on strengths can go a long way in engaging your workforce. Take the Clifton StrengthsFinder® assessment for yourself and discover your strengths. You will see just how empowering this knowledge can be. If you would like a plan for implementing strengths or either of the other two keys in this article, connect with me at barbara@acceluspartners.com.

Barbara StewartBarbara Stewart
Coach to financial advisers
Owner and founder
Accelus Partners
Houston, Texas