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It’s Not Just About Salary: Purposeful Staffing

I routinely get calls or questions from advisers about compensation for a staff position or junior adviser. Whether it involves hiring/retaining a junior person, or a staff member trying to make a case to their firm about how underpaid they are, the conversation is less about salaries (although it does come up) and more about incentive or variable compensation and bonus. Instead of providing a number or formula, I’ve been asking what would it take that person to leave your firm and why are you doing things? If you know what kind of firm you’re running, and what your goals are, you can be purposeful with compensation.

What Behavior Do You Want?

Over the years, I have lived by a simple rule when it comes to compensation: compensation, especially with variable comp, should be used to drive better behavior. More importantly, advisers shouldn’t have to stick with the same variable comp structure every year as priorities and goals may change. I ask the adviser to think about the goals of their firm, more importantly the leading indicators of success and tie the metrics around those indicators.

As I said, the conversations are changing lately—they are becoming broader. Today, we start with a conversation about work environment. We answer and discuss:

  • Is there a clear vision and purpose for the firm (Do you know where you are headed)?
  • Does the employee have/want the opportunity to grow and is the path laid out for them?
  • Is there a sense that the employee is fulfilled?
  • Is the employee valued?
  • Is compensation really the issue you are trying to solve for?

In my mind, staff more often leaves a business for reasons other than compensation. The biggest reason is always around the vison of the firm and where they fit.

Purposeful Staff

In our most recent paper, “The Purposeful Advisory Firm,” my co-author Raef Lee and I discussed the concept of value engineering for advisory firms. The idea was that an advisory firm has a few levers they can pull that can determine the firm’s direction. Moving a lever in the right direction can propel the firm toward successful enterprise or to a lifestyle firm. I think the people (staff) lever is the most important.

How you use talent can be the key to your success, so it is critically important to understand, communicate and plan for the direction of your firm before you discuss variable compensation with the staff. How can you decide on a number if you don’t know what you are paying for or the direction that the compensation will take your firm?

Lifestyle Versus Enterprise: Questions for You

Before you get into the dollars and cents of a compensation plan, I think it is important to ask questions that can help move that value lever:

  1. Do you aspire to take your firm to the next level? (In addition, can you define what that next level looks like?)
  2. Do you have the appetite for adding (and managing) more employees?
  3. Do you have it in you to fire yourself as adviser and hire yourself as CEO?

If you answer yes to all three of these questions, you are heading down that enterprise path. You will be busy with defining roles, job descriptions and creating a path for all your team members to grow within your firm. Yes means looking at a team approach to the client service model and possibly a chief operating officer hire. The enterprise variable compensation will look at the big picture of the firm and how you are building it for the future.

If you answer no, then the lifestyle approach may be calling you. And figuring out that variable compensation is going to be even more important. You should create a plan that reinforces longevity, continuity and service. The lifestyle firm cannot afford huge turnover that will force the adviser back in the day-to-day operations of the practice. Morale and culture are very important to retain existing clients and strengthen the brand of the no-doubt personality driven firm.

Consequences

Not having a purposeful compensation plan in place leads to employee retention issues. A purposeful plan leads to maximizing the hire for the future direction of your firm. I am often accused of sounding like an attorney (or an economist). When someone asks me about compensation, instead of a direct answer, I now say, “It depends on you.” What kind of firm do you want to be?

Editor’s Note: Join SEI and FPA for a webinar titled, “The Renaissance in Charitable Trust Planning,” at 2 p.m., Eastern, April 18. Register for the webinar here. Also, a version of this blog post first appeared on SEI’s practice management blog, Practically Speaking.

John Anderson

John Anderson is the managing director of Practice Management Solutions for the SEI Advisor Network. He is responsible for all programs focused on helping financial advisers grow their businesses, create efficiencies in their operations and differentiate their practices. He is also the author of SEI’s practice management blog, Practically Speaking.

 


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4 Steps to Use Public Speaking to Attract More Clients

Financial planners are always looking for a way to find new clients. However, many people fail to find effective marketing methods to do that.

This situation does have a solution. As a public speaking and marketing consultant, I find that most financial planners can become more successful by using public speaking in their marketing plan.

Here, I’ll outline the many speaking opportunities that you can use to attract more business. There are thousands of groups in need of a guest speaker at their meetings and conferences. A few examples include: business groups, charity groups, associations, corporations, conferences, conventions, organizations, schools and colleges, professional groups, churches, special interest groups and many other types of groups and organizations.

Now, let’s take a look at an example of a possible small marketing plan that uses public speaking. Imagine if a financial planner started by giving a 30-minute speech each week to different groups with an average attendance of 50 people per group. In a period of 50 weeks, you would have spoken to 2,500 people. Also, you would have the chance to answer their questions and shake hands with them. Just imagine how many potential new clients and customers you might attain from giving 50 speeches each year about your products or services.

Also, you might acquire many referrals as you start speaking to a variety of groups and organizations. Furthermore, this is just a starting point. Many ambitious financial planners with large financial goals can start giving 50 to 200 speeches each year and they can start speaking to much larger groups.

So, you might be wondering, why isn’t everyone using public speaking to get more business? Well, there are two main obstacles that keep people from using public speaking. First, public speaking is a very common fear for most people. The second obstacle is that most of us were never told that public speaking is a great marketing tool for attracting new customers. So, as a result, we never bothered to learn how to use public speaking to gain more clients.

But, there is good news. We can learn to conquer these two obstacles.

When I coach many kinds of business people in my seminars and teleseminars, I use what I call the “Four-Step Plan.” All four steps are very important if you want your public speaking to be successful.

Step No. 1: Know Your Reason or Goal for Becoming A Public Speaker. Think about the specific goal that you want to achieve by giving speeches. For example, you might want to get 100 new clients or earn an extra $100,000 in the next year. Now, each person may have their own goal, but make sure that you have a specific goal to aim for. Having a specific goal will motivate you to put in the effort required for making your public speaking successful.

Step No. 2: You Must Have a Slow and Safe Way To Practice Public Speaking. Since public speaking is a very common fear, you’re going to need a slow and safe way to build our confidence as speakers. This can be accomplished in small supportive groups or seminars, where people can practice giving speeches at their own pace.

Step No. 3: Be Willing to Use Public Speaking All The Time. Here, you have to decide if you’re willing to use public speaking on a regular basis. For example, if you give one or two speeches each week, you’ll discover that you have given between 50 to 100 speeches in a 50-week period. It’s this kind of commitment that will make public speaking an effective marketing tool for getting new clients and customers.

Step No. 4: The Business Side of Public Speaking. This involves learning how to make public speaking profitable by: getting paid to speak, giving free lectures in order to get new clients and referrals, getting speaking engagements at local community groups, business groups, associations, corporations, conferences, conventions, organizations, schools and colleges, professional groups, churches and many other types of groups and organizations. You will also start developing a strong “pitch” that will get groups interested in having you speak on your financial topics.

Overall, it’s important to know that public speaking can make you a well-known financial planner. It is also a great way to put you in front of many potential new clients. Finally, you will also have the chance to speak at a variety of groups and organizations that have the ability to make many referrals to you.

Edward Martin

Dr. Edward Martin is a public speaking and marketing consultant. He offers seminars and teleseminars on, “How To Attract New Customers And Clients By Using Public Speaking.” For more information, call Dr. Martin at 818-314-2054 or email him.

 


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Walking the Client Demographic Tightrope

There are moments throughout my day as a financial adviser when I feel like a tightrope walker performing a delicate balancing act.

On one side, I have my baby boomer clientele who expect a high level of personalized service, one-on-one meetings, retirement planning advice and general counsel whenever it comes time to make an investment decision.

I’m comfortable working with these clients, who I’ve primarily served throughout my 28 years in financial planning. This demographic has also had a lifetime to build up investable assets and possesses a willingness and ability to compensate their adviser.

On the other side, I know I have to start catering my services to a younger clientele if I want to be in business 20 years from now. However, this demographic comes with an entirely different set of demands and expectations. For the most part, they’re less interested in face-to-face meetings, they are just starting out in their careers and possess minimal investable funds and they are quick to do their own research and make their own decisions. This is where the balancing act comes into play.

Advisers today are stuck between a rock and a hard place. They’re comfortable serving their baby boomer clients, who also happen to be much more profitable than their younger counterparts. Yet over the next several decades, this generation is going to transfer more than $30 trillion in assets to their children, and our industry must begin to pivot our services in favor of a younger clientele if we wish to survive. However, while we know this demographic is the future, they do not exactly represent a profitable business opportunity today.

So what can we do? For starters, it’s important to remember that your career as a financial planner is a marathon, not a sprint. No one is advocating for you to completely revamp your business and cater exclusively to millennials. But here are a few steps every adviser should consider as they begin to reposition their practice for the great wealth transfer.

  1. Hire younger advisers with the wherewithal to understand and utilize the electronic forms of communication favored by Gen X and millennial investors today. These younger advisers not only bring a fresh perspective to your approach to financial planning, but will be able to counsel more senior advisers on new communication tools enabled by technology.
  2. Consider charging younger clients in a different fashion by utilizing consulting or hourly fees and establishing small account offerings with lower fee arrangements. Millennials specifically are not accustomed to paying a 1 percent management fee like your older clients, nor do they possess the level of investable assets to make this fee meaningful for the adviser. Get creative in your compensation structure, and find a way that serves both parties’ best interests.
  3. Partner with a broker/dealer that offer investments products with low minimums. These broker/dealer partners can also counsel your team on how to best put these products into the hands of your younger clients.

At the end of the day, the long-term financial needs of Gen X-ers and millennials are very similar to those of their parents, and in many ways the actual planning process will largely remain the same. However, reaching and interacting with this demographic will require a much different approach. Hang on to that balancing pole and continue to walk the tightrope. It will pay off in the end.

Beth Richardson
Beth A Richardson, CFP®, is a financial adviser at Maleta Wealth Management, a Kestra Financial-affiliated firm. She specializes in wealth management, concentrating in retirement and estate planning for senior corporate executives and high net worth individuals.