“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.

> Internships In Financial Services

Advisor: This past October, I attended the Financial Planning Association’s annual meeting in Denver and was quite impressed by the number of attendees, the quality of the speakers and the opportunity to meet financial planners from around the world. Some of the educational sessions did not directly apply to my practice; however, one thing I was surprised to learn was how many financial planners, particularly in the U.S., have “articling” or “interning” advisors in their practices.

These advisors are typically young people, often recent college graduates, who have completed formal studies in financial planning and are working with veteran advisors in much the same way aspiring lawyers and doctors have to put in their time at the beginning of their careers to apply what they learned in school to real-life situations.

It got me thinking that perhaps I should look for my own intern to help me with my business — someone I can train and coach. My practice has been at the limits of my personal capacity for a couple of years now, but I want to continue to grow my business. So, adding a bright, keen younger person with more energy to do some of the less productive things that take up my time might be a good thing to do. What do you think?

Coach says: I have long been a fan of the FPA, and its annual meeting in particular, for the reasons you state: education and networking. In fact, I have not missed a meeting in more than 15 years. I am not surprised to hear that the concept of articling or internship caught your attention. It is a frequent topic of both formal presentations and cocktail-hour conversations. There is further evidence of its popularity in the growing number of U.S.-based colleges and universities with financial planning curricula that are sending contingents of students about to graduate to this meeting so they can meet potential employers.

Unfortunately, this concept not as well developed in Canada, although that is changing. I am happy to say that several of my financial planning-firm clients have successful programs in place to develop their next generation of advisors. In addition, a number of major community colleges across the country and more than one university now offer programs from which students graduate with at least their basic licences and certifications in hand and a good grounding in the principles of financial planning.

If you actually decide to pursue this option, I encourage you to search out these schools and approach them to see what they are doing to help place graduates into financial planning positions. Before you get to that stage, however, there are a few questions you should answer.

The first is obvious: What do you want your junior associate to do? Are you looking for a “Mini Me” to do all the things you have to do, from sales to service, perhaps with lower-value clients? If that is the case, the intern will have to be qualified in fact-finding, making planning recommendations, implementing product solutions and providing followup.

Or perhaps you want someone who can take on a narrow role — for example, as a “paraplanner” who may require more specialized knowledge of financial planning strategies. This person also would need to become familiar with your financial planning software and the generation of client presentations.

Perhaps you simply want to hand off specific aspects of your job you don’t value. (As I believe you suggested, when you indicated you wanted someone to “do some of the less productive things that take up my time.”) If that is the approach, what exactly are those tasks?

Another important question: would you expect your intern to develop his or her own book of business? If so, will you start the intern off with some of your existing clients, or will the intern have to find his or her own clients through prospecting? How much of your intern’s time will you permit that person to devote to building his or her own business vs acting in support of your activities?

Are you looking for a potential successor to take over your practice when you decide to retire, fully or partially? If so, you may require a different candidate than one who will simply back you up on the service side of the business.

In the legal and medical communities, candidates in an “articling” or “intern” role traditionally work long hours – 60 to 70 hours a week is not uncommon. I do not believe the opportunities in the financial advisory business have yet become so well known that many newcomers would be willing to put in such long hours as a “price to be paid” for their entry into the profession.

The bottom line is that it’s important to have a clearly defined job description that includes: the primary objective of the job; the knowledge, skills and abilities required; a list of the essential job duties; and your expectations regarding time and effort.

You’ll also have to think carefully about how you will pay your intern. Develop a compensation plan that encourages the type of behaviour you want from the intern. A potential successor needs to experience the ebb and flow of income in a typical practice, so that intern’s income might be geared more toward actual results, whereas someone who is simply working on tasks such as data entry, client service and so on should probably be salaried. If you hand off some of your existing clients to your new charge, do you retain some portion of the revenue those clients generate? If so, what’s fair to both parties?

Permit me to offer a caveat around hiring any junior associate — which has to do with loyalty. I have seen several instances in which an advisor spent two or three years (or more) inducting, training and supporting a new person into his or her business, only to have the intern leave, either to start his or her own practice or to join another advisor who had offered a more attractive opportunity.

In other words, the intern “graduated” right out the door. That is always a risk. The best insurance against that happening is a relationship built upon mutual trust and respect, accompanied by a long-term career-development plan that strengthens the bond between you and your protegé.

Clearly, there are many decisions to be made before you add a junior associate. A well-defined role matched with a carefully chosen candidate, however, can be just the thing to enable you to expand your business without having to extend your own time working in it. Good luck.

> Prospecting For Clients

Advisor: I was recently approached by a firm that “guaranteed” it could get me new client leads through its direct-mail prospecting system. The firm makes this process sound too good to be true. Do you know advisors who are using programs like this successfully?

Coach says: You know the old saying: “If it sounds too good to be true, it probably is.”

Although I am occasionally surprised at the success some advisors have with certain tactics they use to attract potential clients, I admit that I am not a big fan of anything that sounds like it is mass marketing, even if it is directed at a specific demographic.

My feeling is that the same amount of time, energy and money you might spend on these activities will yield better results if applied in a more personalized manner. By that, I mean a strategy that’s employed in a way that appeals specifically to your target market.

For example, high net-worth individuals generally do not respond well to invitations to seminars. They prefer to meet someone with whom they might do business in a more intimate way — say, through a personal introduction from a trusted colleague or through involvement in charitable events. Middle-income retirees, on the other hand, often welcome seminar invitations as both an educational and social opportunity.

So, the message is: match the activity with the market. If you think your target market will react favourably to a direct-mail campaign and the cost per lead makes sense to you, go for it. Otherwise, look for more appropriate prospecting methods.

In closing, we’d be delighted to hear from any advisor who has an articling or internship compensation program that is working well or from anyone who uses an external prospecting program with success, so we can pass the information along to others. IE

George Hartman is president and CEO of Market Logics Inc. and a senior coach and facilitator with the Covenant Group. Send questions, comments and opinions to george@marketlogics.ca.