Head back to school to find a successor
Scott Johnson’s registered investment adviser firm is enjoying a period of rapid growth, and when it comes to hiring the next wave of junior advisers, he is looking exclusively at recent graduates from a collegiate personal financial planning program.
“They are light years ahead of their peers that are graduating with other types of degrees,” says Johnson, a CFP and a senior vice president at Arista Wealth Management, where he runs the Mesa, Arizona, office. "For a firm like ours, we wouldn't even consider looking outside these PFP programs, because we would view that as a lot of work."
Johnson has developed a deep connection with Utah Valley University, which offers a well-regarded planning program that counts CJ Harrison, a 27-year-old CFP and senior associate in Arista Wealth Management’s Arizona office, as an alumnus.
Johnson speaks warmly of Harrison and describes his time working with the younger associate as an intensive mentoring program, with the two traveling as a pair and spending upward of 40 hours a week together.
“I view it as a true apprenticeship, and you've got to teach these kids everything that you've learned in 25 years for them not only to be successful but to operate independently of you and to operate at a very high level,” Johnson says.
When Johnson was interviewed, Harrison was in Spokane, Washington, to close a $21 million deal with a retirement plan.
Duncan Williams, a planning professor at the University of Georgia, says that the typical academic program emphasizes a holistic approach to planning and wealth management, which tends to produce graduates who are a natural fit for a full-service advisory firm.
“Our programs are very culturally aligned with RIA business models,” he says.
If collegiate planning programs are producing smart, eager, technology-savvy graduates with a commitment to fiduciary principles, how can RIAs tap into that recruiting channel as they contemplate their internal succession plans?
“The first thing that an adviser should do is look around their own backyard and identify which schools offer the PFP program, do a little research and reach out to that university. Many times, they’ll be invited to social engagements,” Johnson says.
“They might be invited to teach a class,” he says. “That's a great opportunity to get to know the students."
Williams suggests that firms try a variety of avenues to connect with a college or university. Some schools might have a planning professor who operates as an informal liaison with the business community, whom an RIA could contact directly.
Alternatively, advisers could contact a college career center or student groups, such as a business council or finance club.
Williams also notes that large custodians such as Schwab and TD Ameritrade have been very active in encouraging collegiate recruiting with efforts such as bringing planning students to their conferences.
At the same time, some firms might still need to work past a longstanding industry stigma when it comes to hiring younger.
“You don't have to have any gray in your hair to do this business,” Williams says. “You can start to delegate more of the services to younger generations, and you're going to have to because so many of the baby boomers are retiring, it’s not practical for people in their 80s to rely on people in their 80s, at least not exclusively.”
It is an approach that Johnson swears by. He expects that Harrison will be able to take over the practice one day, but in the meantime, with annual assets under management growth of 25% to 40%, he is actively looking to hire recent graduates from planning programs, many of whom he has gotten to know through his engagement with Utah Valley University.
“Several have already graduated and are working for other firms that we have our eye on, and one is doing an internship for me this summer,” Johnson says.
“There’s a tremendous opportunity for senior advisers like myself who are in their late 40s, 50s even 60s, to hire these kids out of these personal financial planning programs, train them for 10 or 15 years. So when the time comes for them to retire, these junior associates have not only had 10 or 15 years in the business, but they are very familiar with the firm’s clients, so it’s a very easy transition,” Johnson says.
This story is part of a 30-30 smarter succession planning.