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We are excited to share a collection of relevant, timely, and insightful articles that can help you grow and strengthen your business. TD Ameritrade and leading industry experts will be contributing their unique perspectives on the challenges and opportunities that RIAs are facing today. Thank you for joining our community and we look forward to connecting with you!

  • by Kate Healy
  • Managing Director, Generation Next, TD Ameritrade Institutional

AdvoKate: Building the Future Is About More than Just Hiring

Freshly cleaned cube: check. System logins set up: check. Tour the break room and share parking info: check, check. Welcome aboard! Good luck and see you at your annual review. Now I can scratch “hire NextGen talent” from my to-do list.

Okay, that’s a bit extreme. But you get my point. We know it’s important to hire NextGen advisors (and I’ll remind you later of a few of those reasons). But developing people — fostering a meaningful, robust career — is a crucial piece of the puzzle that is lacking among RIA firms and I’m going to focus on today.

Why hire NextGen advisors?

Consider that the next generation of investors tends to prefer to work with advisors who are closer to their age. However, there aren’t enough younger advisors out there.¹

To continue to grow your firm, you will need to begin to engage with investors outside of your current “sweet spot” if, like many firms, your clients are close to retirement age. That doesn’t mean you need to change your ideal client profile. Simply consider that investors of a different generation who you have not been focused on may actually fit your ideal profile, or be well on their way to it.

Time is rolling on…many millennials are now in their 30s. GenXers are now in their 40s. And while they may have different ideas about money and investing, they often have substantial assets. They may, in fact, fit your ideal client profile.

Advisors aging out and investors’ preference to work with people their own age, who can relate to their personal situation, become even more powerful when we consider that millennials are facing an estimated $30 trillion transfer of wealth from aging baby boomers.² They are going to need advice.

If $30 trillion is not reason enough, NextGen advisors can be a key to succession planning and improved client service.

New RIA training needs work

But RIAs have a problem. According to Cerulli, newer advisors, especially in the independent RIA channel, often receive little financial planning training. And finding well-trained advisors is difficult.

• New advisors give low ratings to firm-level financial training. And they report that the most important aspect of their personal success is training in financial planning.

• Senior advisors continue to remark that lack of technical knowledge is an issue with their young advisors. In fact, one of their greatest challenges is this lack of industry training in new advisors.

RIAs need to compete for talent with broker-dealer firms who have invested heavily in human capital consulting. Independent advisors must up their game by working with their custodians and professional consultants to leverage resources that help build out training and mentoring programs, and start generating more well-trained future advisors.

You’re hired! Now what?

We know why we want to hire NextGen advisors and we know training is an issue. Once you hire the right person, what comes next is crucial. A failed hire is not only a lost opportunity to develop new talent, it translates into lost productivity. Here are some key steps to retaining and developing talent:

1. Offer a structured career path

Two-thirds of top firms—those posting the highest productivity, growth and profitability — offer career tracks for their professionals and staff. This leads to 9% higher productivity and profitability.³

Why? Establishing a structured career path helps you create and manage expectations. It helps bring a sense of progress to the development process, which can be long. And it also fosters a sense of fairness with individual employees and among your group as a whole.

Here’s what a structured career path might look like for advisors as well as non-advisors.

Source: The Ensemble Practice, G2: Developing Your Firm’s Next Generation of Leaders, Philip Palaveev

2. Provide hands-on experience

People learn by doing. Bring newer advisors to client meetings. Have new advisors join you at meetings and work on your firm’s larger initiatives. It’s never too early to include your team in the big picture and foster a vested interest in everyone’s long-term success.

3. Have a genuine open-door policy

Create an environment with an open-door policy with senior management so that newer advisors are comfortable asking questions to learn, get advice, and receive mentoring. Saying “my door is always open” isn’t enough. It has to be an authentic invitation.

4. Create opportunities to lead

Encourage newer advisors to be leaders. Give them a chance to take over client relationships.
Giving people a chance to lead helps inspire confidence, and it will give a sense of purpose to a long-term development process.

5. Allow permission to make mistakes

In giving people a chance, they will also need permission to make mistakes. This is, of course, not to say you should give newer advisors free reign and not provide guidance or oversight. But at some point, when we start to lead, we will make mistakes. Training and guiding people means having an understanding of that. Newer advisors need to have mentors to guide them to learn from mistakes.

6. Offer feedback

Newer advisors, especially millennials, are accustomed to regular feedback. This means being able to offer praise as well as constructive criticism. People don’t know if they are doing a good job or if you are happy with their performance unless you tell them. Regular feedback and dialogue is an important part of developing talent. When it comes time for performance reviews, if you’ve been offering feedback and communicating well, there shouldn’t be any surprises.

Leverage training resources

I know what some of you are thinking, “I don’t have an HR team and this sounds like a lot.” I’m here to say that it’s an effort worth making and we have resources and ideas to help.

• The Education Center: Through the Education Center you can set up and execute a customized learning plan for new advisors. With more than 3,000 well-organized courses, the Education Center is a great resource covering topics a new hire needs on everything from core skills to deep dives into key areas. Content is geared to both advisor and non-advisor roles.

• Consider a development budget: When you factor in the expense of recruiting and training new hires, you realize the importance of retaining talent. Consider creating a development budget for your NextGen advisors. Allow them to have a say in how this budget is spent. Think about using this fund to let them attend industry conferences and training events. This is where they will learn, create contacts and develop skills.

I know I’ve given you a lot to think about, and I also know our future is in good hands if we can develop the great talent that’s out there. I’d love to hear about your hiring and mentoring successes. Let me know how it’s going: @KateHealy_TDA.

¹InvestmentNews, The Rise of the NextGen Advisor, May 2016

²Wall Street Journal, Preparing Millennials for a $30 Trillion Wealth Transfer, April 27, 2016

³InvestmentNews, The Rise of the NextGen Advisor, May 2016


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