When Junior Grows Up

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When it comes to developing junior advisers, senior advisers have a lot to teach and juniors a lot to learn. Think about all the facets of the business that juniors need to understand:

  • Compliance
  • Products
  • Building and maintaining client relationships
  • Rainmaking and business development, as well as marketing
  • Business realities and budgeting

And, as if that weren’t enough, there are three other key areas in which seniors and juniors need to reach an understanding.

Time. Most senior advisers hire a junior to help them work on their book of clients. If the junior begins working on his or her own book, who will take over the work of helping the senior, who has become dependent on the junior to carry out certain tasks?

Money. Many juniors are paid a salary to deliver on the analytical or customer service tasks the senior delegates. As juniors take on more of their own clients and spend more time rainmaking, how should their compensation change? If it decreases too much, juniors may feel locked in or be unwilling to take the risk of supporting themselves from their own labors. If their compensation doesn’t decrease enough, it’s unfair to the seniors, who get fewer hours from juniors as they spend more time building and servicing their own books.

Ego. When a senior has invested time in mentoring a junior, the senior can feel slighted when, after all that teaching, he or she is left to start over with another junior adviser. Meanwhile, juniors may feel that, after putting in the sweat equity, they deserve to go out and become the adviser they currently support.

It can all become overwhelmingly emotional.

While there are many approaches to dealing with the above scenarios, fundamental to all of them are the need to:

  • Keep the lines of communication open. Talk candidly about the challenges, frustrations, and opportunities for both the senior and the junior.
  • To the extent possible, set expectations before issues arise. This should occur on both the senior’s and the junior’s sides of the relationship.
  • Wherever possible, establish benchmarks. Estimate the timeline for when you will make certain critical changes. For example, when the junior has gathered enough clients on his or her own that a salary is no longer necessary, it may be time to terminate the relationship. Or, when the junior has gathered half the clients (or assets) needed, his or her compensation may be cut in half and another junior hired. This allows the senior to train the next junior before there is a crisis.

What are your thoughts?

Advisers are hungry for ideas on managing the senior-junior relationship. Tell us:

  • What kind of relationship and agreement do you have with your junior (or senior)?
  • How have you transitioned roles, as juniors develop their own business?

Joni Youngwirth
Managing Principle of Practice Management
Commonwealth Financial Network
Waltham, Mass.

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