The right hires -- made in the right way, and at the right time -- are critical to retaining talent and fueling growth for financial advisory firms.

That’s according to three innovative advisors who shared some of their human capital secrets this week at the FPA’s annual conference and via a new white paper.

One key data point to keep in mind: The cost of employee turnover is usually between one and three times the employee’s salary, according to Mark Johannessen, managing director of Harris SBSB in McLean, Va., who spoke earlier this week at the FPA conference in Orlando, Fla.

What’s more, a valuable employee nearly always results in new business for the firm, Johannessen said. Because the investment in a new employee usually pays off in the long run, Johannessen said his firm -- which started life as Sullivan, Bruyette, Speros & Blayney before being acquired by Harris Private Bank -- tends to hire “before we can afford it.”


To attract top talent, advisor Norm Boone told the FPA audience that he made a point of being accessible to all employees, cross-training new hires in all areas of the business.

That tactic helped attract Sabrina Lowell, a planner and associate advisor who joined Boone at San Francisco-based Mosaic Financial Partners at the beginning of her career.

“I wanted to be with a firm where I had access to the owner who could also be a mentor,” Lowell said. “At Mosaic I was able to wear different hats, learn different parts of the business, have flexibility and a great work/life balance.”

Indeed, feedback is critical for employee morale and retention, according to Johannessen, a former FPA chairman and president. His firm not only has formal reviews, but solicits feedback from employees via anonymous surveys and questions, both public and anonymous, that are answered at the firm’s annual retreat.

Making sure employees have good benefits, even though they don’t work for a large corporation, has also been helpful, Boone said. Mosaic works with a professional organization that gives the firm access to corporate benefits it wouldn’t have otherwise, he said -- adding that although the cost is higher, it pays off by making Mosaic a more competitive employer.


A smart approach to staffing has also been key to the growth of 11-year-old Beacon Pointe Wealth Advisors in Newport Beach, Calif.

The firm has grown to $5.6 billion in client assets with more than 40 people and teams dedicated to investment manager research, financial and strategic planning and marketing and online strategies.

Yet while getting the right people to staff and run those teams has been critical to the firm’s success, “hiring was never easy,” according to Beacon Pointe president Matt Cooper.

The impact of poor hiring decisions “is magnified for RIA firms, and the detrimental impact on margins, income and workload can be significant,” Cooper pointed out in a new report issued by the Alliance for Registered Investment Advisors (aRIA), an advisory firm study group.

One case study cited in the paper involved Beacon Pointe’s decision to hire a high-level planner to build the firm's planning department. The decision was particularly challenging because planning was seen as a major cost center and not scalable. “Over time we could end up with an ineffective 20-person dedicated planning team if we failed to hire correctly for this critical first planning role,” Cooper wrote.

Beacon Pointe saw three options: hiring a certified financial planner currently working at another firm; training an advisor who already worked for the company or outsourcing the planning work to a third party.


The firm went after an experienced planning professional outside the company and made two offers, which included six-figure base salaries and incentive compensation plans based on new assets and number of clients served. Both candidates thought they were worth more money, and neither offer was accepted.

“Our primary mistake was we made this process about the compensation and compensation structure versus the opportunity to develop a best in class planning platform,” Cooper said in the report. “We had it all wrong!"

The approach was in conflict with their existing rule, he added: "Hire the best person and let them grow into the role. Don’t pay up for the story about years of experience. Find someone who loved the work regardless of the compensation plan.”

As it happened, Beacon Pointe executives knew a woman who ran an advanced markets estate planning team at a large insurance company. She was an estate planning attorney, not a CFP, but loved creating, and loved the idea of building a department, working with clients and advisors.

“She was young, bright and clearly the best person we knew,” Cooper recalled in the report. “Not exactly what most advisors would have looked for when filling the position, but the best and brightest person. She also understood sharing the risk.”

The woman accepted the Beacon Pointe offer  -- which was significantly less than what she could have earned at a large company, but also offered her complete control over her schedule.

“She grew into the role and became a great client-facing planner,” Cooper said in the report. Today Beacon Pointe’s financial planning team brings in more than $100 million in new client assets per year, according to the white paper. Cooper noted that the planner "developed our entire planning process and platform of segmented, scalable deliverables for clients. We hired the best person and she grew into and beyond what we originally defined the role to be.”

One final piece of advice: Boone counseled patience when working with new hires.

“It took me 10 years to get really good at this, and it takes about 18 months for a new employee to become productive and pay for their salary,” he told attendees. “So take a step back, don’t be in a rush and think ahead.”

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