As recruiting continues to intensify, firms and advisors face an increased risk of being caught up in a “numbers game,” where certain firms exclusively emphasize recruiting volumes versus a “quality over quantity” approach, with “quality” being defined as advisors who are the best long-term fit possible with the firm’s platforms, service model, advisor community and culture.
Firms seeking quality advisors as defined above must first clearly articulate the qualitative traits—beyond just production and assets—that are part of this picture. From there, firms need to go the extra mile in conducting due diligence to ensure that advisors who look great on paper actually pass muster in real life, while ensuring that the firm is able to meet the business and cultural expectations of those advisors they hope to recruit.
Accomplishing all three of these tasks demands a level of “know thyself” honesty that not every firm is ready to embrace, but the pressure is rising to do so. Successful and experienced advisors who have already been through past recruiting cycles are increasingly looking past the numbers alone, and diving deep on other criteria that directly support a long-term fit.
Clearly Articulate The Qualitative Traits
While high production and client asset levels are always welcome, independent firms need to go further in pinpointing the mix of services and clients with which its ideal advisors will have expertise. And for some firms, the advisor’s geographic location is also a key factor.
For example, a healthy combination of commission and fee-based business may enable an advisor to serve the full scope of potential clients with long-term financial planning that features individual securities, mutual funds and ETFs, insurance and annuities, as well as retail alts and lending solutions. Additionally, firms that prefer advisors serving specific client types—for instance ultra-wealthy and multigenerational families, or domestic clients without any assets held abroad, should be clear on asset minimums and other such restrictions.
Then of course, there are the character and personality traits that can make or break an advisor-firm relationship, even if everything else fits perfectly. As one instance, advisors who perform securities transactions only when prudent and as part of the client’s broader financial plan should be more sought after than mavericks with a professional record that suggests unnecessary yet repeated risk-taking.
Due Diligence Goes Both Ways
Conducting due diligence on promising advisors should involve more than a couple cursory face-to-face interviews. It’s incumbent upon a firm to have several trusted decision-makers spend time with the advisor in settings where the potential recruit feels at ease. This allows the advisor to speak naturally and share business practices that can help the firm better understand the advisor’s perspectives and stylistic approach.
If the advisor is overly vague or feels insincere to the members of the firm who are part of the due diligence process on the prospective recruit, then it’s reasonable to assume that certain clients might have similar reactions.