A lot of advisory firms begin with just one advisor who wants to serve a small roster of clients really well. Their goal is to have their hand in the dirt and be in close relationship with those clients.
But something happens along the way. As they provide that great service, others hear about it. And slowly but surely, they begin to grow. Before they know it, they have an advisor with a support staff and a handful of advisors by their side.
They’re still a small team, but all of a sudden that advisor owner needs to be intentional about the way they build the rest of their team. They have to move into recruiting so they can build their firm the right way.
If you’re a smaller firm and you want to begin building your team by recruiting, where do you start? I’ll give you the answers to where you can find success in this article.
Why Do Firms Recruit?
There are three core reasons why advisory firms recruit: To fill a role, increase profitability, or to plan for succession.
Reason No. 1: Filling a Role
Recruiting for a particular role is perhaps the most common reason advisory firms need to recruit in the first place. If you need someone with a particular skill, it’s better to intentionally go out and find them than to simply publish a job posting and hope that you find the right fit for your company.
Advisor owners have to wear a lot of hats and as their firms grow, they lost the capacity to do everything. As such, you may need to find an advisor to handle the financial planning for your clients as you grow. Or, if you’re more of an investment-centric advisor who doesn’t enjoy sales, you need a rainmaker with a different skill set than you so you can continue to grow.
Reason No. 2 - Profitability
The second reason why you may need to recruit is for revenue profitability. In the case of an RIA firm, you may be able to add an advisor who can bring clients with her, and then be able to make a portion of revenue on the assets that she brings to your firm.
Or, if you’re an OSJ at an independent broker-dealer, you can recruit and make a point differential on the new assets you bring on. Either way, revenue and profitability can increase by recruiting the right person.
Reason No. 3 - Succession Planning
The third reason why firms recruit, and perhaps least used so far but most important going into the future, is for succession planning.
Recruiting for succession is more difficult to prove out than the first two reasons because tapping an heir to a business is a much larger, more intimate engagement than simply hiring an advisor for other purposes. However, if you do not have an internal successor, the recruiting process can bring the right candidates to your door.
How to Start Recruiting
Once you’re determined your reason for why you need to recruit a new advisor, it’s time to move onto how to move forward.
1. Traditional Recruiters
The shortest line to getting started, of course, is to reach out to a traditional recruiter for help. But when you’re a young firm bootstrapping your success, the most common response you might receive is “You’re too small.”