Grooming a young successor

I think this is a huge opportunity for the right person. I can tell you that I wish someone had offered me a similar opportunity when I was starting out in the business. It would have saved me a lot of trial and error and helped me to earn a decent income much sooner.

Here’s my problem: I have interviewed several potential candidates, all with good education and apparent interest in becoming advisors. But I get the real sense that these youngsters are not nearly as motivated and committed as I was when I started. They don’t seem willing to put in the long hours, do the work or take the chances and “pay their dues” to become competent advisors. The “fire in the belly” to bring in new clients also seems to be missing.

I am concerned that my plan is misguided and I can’t count on a Gen Xer to be part of my succession plan. Are my expectations too high?

Coach says: congratulations on starting your succession plan with a 10-year time horizon. Most financial advisors think a year or two is enough to develop and implement a succession plan, but the best ones I have seen evolve over a five- to 10-year period. And thank you for being willing to bring someone much younger into the business and mentor them through their development. The industry is woefully short of veteran advisors ready to take on that role.

I also have some sense of your frustration as a result of a recent experience with an established advisor with whom I am working. He works in a fairly large branch office of a national firm. After we had finished our session, he was walking me to the front door just after 5 p.m., when I looked around and realized that we were the only ones left on the premises.

“Where is everyone?” I asked.

He just shook his head and said: “These young guys just don’t get it. They haven’t figured out that this isn’t a nine-to-five job. They think like employees, not entrepreneurs. They’ll stay up late into the night socializing, but won’t spend an hour or two after the market closes calling prospective clients to try to develop business.”

His comments got me thinking about generational differences and, more specifically, how they apply to the financial advisory business. Being an “old guy” myself who paid his dues to build a practice, it would be easy for me to jump on the “they don’t get it” bandwagon. Fortunately, instead, I have tried to put myself in the shoes of one of these younger advisors and ask myself a number of questions, such as:

– Why must I do things the same way as the veterans? How do I know their way is the best way?

– Do I really need to put in such long hours if I am more efficient, thanks to today’s technology?

– What if my target market would prefer to meet me socially before we get down to business?

Our profession has evolved. Technology has improved productivity. The people who are potential clients of the younger-generation advisor are different. They do much of their own research to gather information about financial affairs. They are influenced by online opinions first and the experience of their peers second. They have lived through the experience of having their boomer parents devoting themselves to their work – and the younger generation doesn’t want that lifestyle. They are less motivated by money, and the word “commitment” has a new definition.

Of course, these are generalizations and I have met some great young advisors who are prepared and motivated to do whatever is necessary to build great businesses. Perhaps you will be lucky and eventually find someone like that. In the meantime, I don’t want you to give up on your vision of mentoring someone into the business – because it is so important to the long-term vitality of the industry. Here, then, are a few things I have learned that help me manage intergenerational relationships – first, at an emotional level; then, more practically:

– communicate your purpose

Feeling that the work we do is, in some way, important and meaningful is a powerful motivator. Financial advisors have a positive impact on clients’ lives and their future generations. Because you, as a result of your tenure in the business, know this, it is easy to assume that everyone around you knows it too and shares the same psychological reward. However, most younger advisors haven’t yet had the benefit of seeing their clients achieve their financial objectives as a result of the financial and investment plan the advisor has designed for them, so these younger advisors can’t fully appreciate your contribution to someone else’s financial well-being. The more you can transfer your passion for your clients and the good work you do for them, the more committed you’ll find your new associate will be.

– offer autonomy

We each have our personal creative process and way of taking action. Giving people permission to work in their own way without imposing a particular method or process takes patience but definitely helps to create a positive, motivated associate. Micromanaging is out. Flexible hours and working from home are in.

– encourage self-development

While you may have your own ideas about how the business should be run, accept that the desire to grow and continually learn has redefined “commitment” for younger people. A work environment that doesn’t appear to provide opportunities for personal growth won’t engender long-term loyalty. Whether the learning is directly related to your associate’s work or somewhat tangential, it is important for him or her to feel he or she is moving forward – or your associate will move on.

– solicit input and provide feedback

Younger team members provide a new perspective and fresh ideas. Give them permission to challenge the traditional way of doing things and make suggestions for improvement. Be open-minded and, where feasible, assign them responsibility for implementing change.

– compensate appropriately

While money is less of a motivator for younger generations, you still must offer fair compensation for the work to be done and offer rewards for superior performance. In an advisory practice, the best incentive is based on top-line revenue because it is transparent and easy to track. A results-oriented work environment is stimulating – provided it doesn’t go too far and become the sole reason for being.

– invest in technology

Making use of technology that increases productivity and eases workloads shows a commitment to improve. Younger associates are far more familiar with modern-day applications and better able to adapt to new capabilities. In fact, they expect that your investment in technology will be ongoing and timely.

– match strengths with roles

There are many hats to be worn in a progressive financial advisory practice, and not all of them fit everyone. While you may be tempted to hire someone “just like me,” the more productive approach might be to hire someone with different, complementary skills. (See story on page B9.)

In today’s world, you’ll probably need to rethink some of your long-held beliefs about what it takes to be a great advisor. You still will want to choose your successor carefully, but perhaps with a more open mind.

“Coach’s Forum” is a place in which you can ask your questions, tell your stories or give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.

George Hartman is managing partner with Elite Advisors Canada Inc. in Toronto. Send questions and comments to ghartman@eliteadvisors.ca.

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