Mentoring the next generation

The answers came from the owners of Cherry Financial Services Inc. of Saskatoon, where Schock now works as an associate financial advisor. The practice’s co-owners and senior advisors, Dean Owen and Ian Colborne, run their practice with an eye to the future. In addition to emphasizing the importance of client service, the partners also make mentoring their less experienced colleagues a priority.

It is becoming increasingly important for senior advisors to incorporate mentoring programs into their practices, says George Hartman, managing partner with Elite Advisors Canada Inc. in Toronto.

“[Rookie training] is not being addressed at any global level,” Hartman says. “So, it really is falling to the individual advisors.”

Many veteran advisors began their careers by working for firms that provided thorough training programs, Hartman adds. Twenty or 30 years ago, insurance companies, for example, had large, captive sales forces. These companies provided extensive training for new salespeople, who could expect to spend lengthy careers with their respective firms. Large mutual fund and securities dealer firms also used to have substantial training programs for rookies.

Today, firms in the financial services sector that do provide training have cut back significantly, largely because fewer firms have captive sales forces and budgets are being reduced in the face of increasing competition.

“We no longer have the major career sales forces that we once had,” says Greg Pollock, president and CEO of Advocis in Toronto. “We have a lot of independent financial advisors. They need assistance in terms of how to find younger advisors and how to [transfer ownership of] their businesses.”

This “rookie education gap” presents a problem for both new advisors and sector veterans. If newcomers are not receiving the training required to help them to develop successful careers, senior advisors will have difficulty in finding successors to take over the practices when it is time for those senior advisors to retire.

Formerly reported to a manager

Owen can attest to the benefits of advisors maintaining mentoring relationships within their offices. He started his career 24 years ago with Canada Life Assurance Co., where he was able to speak regularly about his business development with a manager.

“When I joined,” Owen says, “I was brought in with a bit of a salary and training three times a week. I had a sales manager to whom I reported every Monday morning, and he kept me accountable.”

Owen and his manager would discuss the number of phone calls Owen had made, the meetings he had had with clients and what was on his agenda for the coming week.

It was these real-life experiences that helped Owen to develop his career. Today, he and Colborne use similar methods to educate the less experienced advisors in their practice. The partners discuss client situations and how an advisor chooses to progress.

For example, Cherry Financial’s team recently discussed the possibility of providing insurance coverage to a woman who had experienced breast cancer. Less experienced advisors might think clients who have had cancer are uninsurable, Owen says, and may not even suggest insurance to such a client. However, by asking the right questions, the team determined that this client, whose disease had been in remission for five years, could be insured.

This kind of on-the-job training is critical for rookies. While novice advisors may have a higher level of formal education than today’s senior advisors had when they started, Pollock says, the former group do not have the practical experience in dealing with clients and running a business that their senior colleagues now have.

“A lot of young advisors are pretty good on the technical end,” Pollock says. “But they don’t necessarily think like entrepreneurs.”

Many younger advisors do not know how to develop a business plan and establish relationships with clients, Pollock adds. Mentors can play an important part in helping their protégés develop those skills.

These topics can be discussed during regular mentoring meetings. Senior advisors can provide guidance and share their experiences regarding continuing education, networking and joining professional organizations.

A mentoring relationship presents a good opportunity to help novice advisors develop and review their business plan, which should document goals regarding marketing, communications, client meetings and expenses, says Joanne Ferguson, president of Toronto-based Advisor Pathways Inc. These goals, she adds, must be specific and measurable.

For example, it is not enough for a junior advisor simply to say he or she wants to increase the size of his or her prospect pipeline. The junior advisor needs to explain how this increase will be accomplished and how many people will be added to the pipeline. The monthly goal might be to communicate with 10 new prospects whom the advisor has met through community and networking events.

To help a junior advisor learn more about successful client relationships, invite him or her to sit in on some of your client meetings. Also, make yourself available for some of the junior advisor’s client meetings – always with the client’s consent.

Says Hartman: “To learn that part of the job, you need to be in the job.”

Follow up those meetings with feedback on what worked and what could have been improved upon. Use your years of experience to help junior advisors break down the technical jargon of products and planning so that their clients can understand and relate to the discussion.

Inviting a junior advisor into your own client meetings is a particularly good idea if you plan to have this rookie eventually take over your practice, Pollock says. You can introduce your clients to the junior advisor, who will be looking after their accounts some day.

Pollock suggests you introduce the junior advisor by saying: “I want to retire at some point, and it’s important to ensure that there’s someone to take care of your financial needs. So, we’re bringing in this associate. He is young but also knowledgeable and has the energy and desire to help you and my other clients.”

Mentoring also means providing feedback when the junior advisor is working with clients on a more independent basis. Schock still runs some of his ideas and plans by Owen, for example. Schock values the time Owen and Colborne spend to let him know if a certain solution will work or whether it can be improved upon.

While junior advisors can learn from your positive experiences, negative experiences also can be of value, says Owen: “You learn more from these mentors in bad times than you do in the good times.”

So, share your encounters with irate clients, networking blunders and missed business opportunities – and how you learned from them. Also, lend an ear and be willing to support other advisors when they are experiencing problems of their own.

Support from mentors

Schock says the support he has received from his mentors has helped him get a strong start. When Schock joined Cherry Financial, Owen and Colborne passed some of their clients over, so that Schock could develop relationships with individuals who were already familiar with the practice. This was a great help to the younger advisor, who did not have to rely on friends and family as his only source of initial clients.

“That’s the really difficult thing when you’re starting,” Schock says. “You need to develop [a client base], and it takes time.”

Owen and Colborne’s decision to share clients has helped the firm overall. The partners were continuing to grow the practice and finding it difficult to connect with every client themselves. So, they chose to have Schock work with clients whom he could relate to, such as new business owners and young families.

This strategy, Ferguson says, could be considered as a way to retain, even increase assets under management: “If you haven’t talked to clients in a year or more, you have no idea what has happened with them. If this young advisor calls, he or she might get new dollars. [The junior advisor] might get clients [buying] insurance or a financial plan.”

Another way in which Owen and Colborne have helped Schock to get established in the practice was by releasing him from any financial obligation to the practice in his first year. Schock was told that he could keep all his upfront commissions and bonus compensation, and that the team would discuss new arrangements in the second year. This allowed Schock to focus on developing client relationships.

After speaking to peers at other firms, Schock learned that some new advisors were required to pay a sizable portion of their revenue to the principals in their practice. Says Schock: “The mentor shouldn’t really expect monetary compensation. That puts a lot more pressure on the new advisor.”

This “year of grace” was established to keep the younger advisors in the business, Owen says, which ultimately benefits both the rookies and the senior advisors. “We see it as an opportunity to grow just as much as he does,” Owen says. “When we bring in new people, it’s an opportunity to have more people eventually contributing to the firm.”

While there may be some short-term pain in the form of higher expenses for the practice, Owen says, the firm will come out ahead when the junior associates bring in new clients and more business.

Senior advisors also benefit, Hartman says, from the introduction of the new perspective that a young rookie can bring to the practice.

“[The rookie] might challenge some of the ways the practice has been doing things,” Hartman says, “which is always a good thing because it causes advisors to review.”

Learning by teaching

You must have the humility, Owen says, to appreciate that there always is lots to learn, regardless of how many years you have spent in your industry.

For example, Owen has been learning from younger advisors about the power of social media as a marketing tool.

“I’m not interested in [social media],” Owen says. “But if I see results, maybe I should be learning something from it. We, as experienced advisors, don’t think we can learn any more – but we certainly can.”

And just as learning is an ongoing process for advisors at all levels, the mentoring process should follow a similar pattern. Do not assume the questions will stop when your associate advisor has been practicing for a few years. Mentors should be willing to continue to assist their junior colleagues.

“There will be things that come up over time as the new advisor deals with clients,” says Schock, “and [the junior advisor] is going to need help in determining what is best for the clients.”

Pollock agrees: “Great advisors aren’t born overnight. It takes time to develop the required skills and confidence to ensure [advisors] are successful.”

Coming soon: Advocis mentoring program

In an effort to bridge the growing gap in rookies’ education in the financial services sector, Advocis has created a new training program that launches this September. The program, called the Financial Advisor’s Practice Development Program, includes a course for new advisors called Getting Established, which has a strong mentoring component.

Advocis members who register for this course will learn, through online resources, about getting started in the financial services sector, connecting with clients and developing relationships.

Students will have access to a mentor, says Kathy Kaskiw, vice president, education and member services, with Advocis. Mentors must be qualified advisors who have experience in coaching other advisors. Mentors will have access to resources and training to help them to guide their junior advisors.

The mentoring course will focus on activities in the junior advisor’s everyday practice, such as the connections they are making with prospects and the work they do with clients. Students will submit reports on these activities online and receive feedback from their mentors – in person, by phone or online.

Mentors are expected to spend at least an hour and a half per month with their junior advisors.

This focus on practice development is filling a void in the sector, Kaskiw says. Existing training programs for the life insurance, mutual fund and securities licences do not address practice development strategies.

“Somehow, by osmosis, ” Kaskiw says, “the poor new advisor is supposed to get it. It’s not happening, and it’s very frustrating for them.”

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