Financial Advisors Dust Off ‘Help Wanted’ Signs

By Staff Report

Aug. 19, 2009

A few early-bird financial advisors are starting to make plans to hire new employees.

In the past few weeks, 50 to 75 percent of the financial advisors talking to Mark Palmer, managing director of business consulting at The Charles Schwab Corp. of San Francisco, have expressed an interest in hiring new employees, he said.

“A lot of plans are being made, and I think we’ll start to see something happen, although it’s likely to be spotty at first,” he said.

Ken Robinson, an owner of Practical Financial Planning in Cleveland, wants to hire an employee dedicated to screening the three prospects who contact the firm each week.

“At the moment, I talk to every potential client, and it’s not the best use of my time,” said Robinson, whose firm manages about $25 million in assets. “At some point, I want someone else to do the screening.”

John Burns, founder of Burns Advisory Group, which manages $300 million in assets in Oklahoma City, wants to add a junior advisor before the end of the year to free up the firm’s principals to work more closely with key clients. He also wants to hire someone in operations to work with the firm’s chief compliance officer.

“I don’t want to say we prepared for the downturn, but we’ve definitely prepared for building scale and capabilities, so our margins were in good shape,” Burns said.

Kevin Reardon, president of Shakespeare Wealth Management Inc. of Brookfield, Wisconsin, which manages $50 million in assets, is looking to hire another employee in the next few months. The addition will be a paraplanner who will help him prepare for follow-up meetings with clients.

But before financial advisors start searching for help, they should create a hiring strategy and think through what the new hires would do to increase revenue or boost efficiency, practice management experts said.

Too often, financial advisors don’t give new hires clear instructions, said Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network in Waltham, Massachusetts.

Before hiring a marketing executive, for example, a firm should outline the attributes of the target prospects that the executive will be responsible for bringing in.

“The game plan is critical,” Youngwirth said. “Unless it’s articulated, a firm is being really unfair to the person they’re hiring.”

Even with a plan, the current business environment may not be right for hiring, said Art Grant, chief executive of Cadaret Grant & Co. of Syracuse, New York, a broker-dealer and investment advisory firm with more than 900 affiliated financial advisors.

“It may be too early. A lot of reps have realized they don’t need to pay someone to come in and water the plants—they’ve realized that unless an expense produces a return on the investment, they shouldn’t do it,” Grant said.

An advisor should expect revenue of $2 to $3 for each dollar spent on a new employee, Grant said. If an advisor pays an administrative assistant $50,000, revenue of $100,000 to $150,000 should be generated.

Another way to determine the potential return on the investment is for financial advisors to calculate how long it will take them to break even on the cost of a new hire.

If financial advisors can reach that point in a matter of months, then it might be something to consider, said Mark Matson, founder and chief executive of Abundance Technologies Inc., a Cincinnati-based investment advisory firm managing more than $2.1 billion.

However, before they even consider hiring, firms should have $1 million to $3 million in cash reserves, he said.

“Advisors as a whole are very stingy about hiring,” Matson said. “They’re so dramatically understaffed. Most financial advisors look at employees as expenses rather than investments.”

Many financial advisors aren’t preparing for growth, because they have ruled out adding employees, said Mary Dunlap, whose eponymous Pottstown, Pennsylvania-based consulting firm works with about 50 financial advisors.

“They’re just saying they can’t afford it,” she said.

Lou Stanasolovich, president of Legend Financial Advisors Inc. of Pittsburgh, said he believes it is important to invest in strong staff members. While his firm is under a hiring freeze, its revenue is up, and he would like to add two administrative positions.

“We’re hoping we can afford [to bring them on],” said Stanasolovich, whose firm manages $360 million in assets. “We won’t rush into it. If we find the right candidate, we’ll hire them. If we don’t, we won’t.”

Filed by Lisa Shidler of Investment News, a sister publication of Workforce Management. To comment, e-mail

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