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Building the Business 101: Building Our Team

The hiring process is crucial to the survival of a small practice.

Veena A. Kutler and Annette F. Simon, 04/24/2008

This monthly series of articles describes the many steps and occasional missteps we have taken in building our financial advisory business, Garnet Group LLC. Currently, Garnet has eight staff members, more than 90 clients, more than $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the managing principals in the Garnet office in Bethesda.

Lately in the Bethesda office of Garnet Group we've spent a lot of time discussing staffing issues. It occurred to us that many of our colleagues with growing independent practices must face the same dilemma.

Large firms have their own problems, but they don't face the ones that we as small businesses do in hiring and retaining staff. For a small planning firm, new hires are made on a one-on-one basis, with considerable time dedicated to finding a qualified candidate. We small businesses are our own human resource centers with the principals generally taking on the role of both screening and hiring. Then, even more time is expended (often by the principals) in training the new staff member. Staff changes, whether additions or departures, are a disruption to the routine of the smaller financial advisory practice. Employee training results in downtime, since the new employee is not yet up to speed while the trainer is slowed down and distracted from regular responsibilities. We estimate that it takes six months to a year for a new employee to get fully up to speed and become a productive team member--a very long lead time for a busy practice.

Our Staff Changes
In November, we brought on a new advisor, Laura, who has been a wonderful addition to our team. Then in January, our paraplanner, moved on--leaving us with three advisors and our client service/administrative manager, Andrea, in our office.

We decided to try getting by without replacing our paraplanner for a few months, by dividing her responsibilities between the four of us. Veena has taken back the job of preparing Morningstar performance reports for client meetings and has resumed trading with help from Laura. Annette and Laura are sharing the task of running MoneyGuidePro projections and preparing customized reports for client reviews. Andrea is now in charge of quarterly billing. We have outsourced some paraplanner functions like entering cost basis information for incoming securities into our database; others we realized were superfluous and have dropped entirely.

How is this working? The truth is, we're getting it all done, but we're all working more hours than we'd like. In March, we had an unusually high number of client meetings. This was followed in April by a flurry of tax-related client activity. Because of this, the three advisors were busy during the day meeting with clients and handling day-to-day work, then working nights and weekends preparing analyses and reports. At the same time, we have been moving a number of accounts to a new custodian, which has created a crushing administrative burden for Andrea and added to the issues we are all juggling. About a week ago, we came to the conclusion that we need help--soon!

Finding the Perfect Fit
Of course, realizing we need help is the easy part--determining what kind of help we need, and then finding a person who fits that description is so much more challenging.

We've had numerous debates about whether it's better to hire a younger person, straight out of college or with just a few years of work experience, versus a more mature person, perhaps someone re-entering the workforce after spending time as a stay-at-home parent. We've also considered whether we should get more-specialized help by hiring a recent CFP program graduate who might be able to hit the ground running. We see pros and cons to each solution.

Thinking long term, bringing in a younger person gives us the opportunity to groom and develop the next generation Garnet advisor over several years. Yet we read and hear (and see with our own children) that today's 20-somethings have very high (perhaps unrealistic) expectations of their employers. Often they are seeking work/life balance from day one yet at the same time believe they are entitled to challenging, mission-critical work with commensurate compensation. Their patience for the more mundane aspects of the business (which are also critically important, just not exciting) is limited.

By hiring a more mature worker we might find an employee who is better able to relate to our clientele and who is more willing to pitch in on unglamorous tasks. But the older candidate probably comes with baggage as well. And hiring employees who are close to our age doesn't provide much of a succession plan for the business.

Although hiring a recent graduate of a financial-planning program seems a tailor-made solution, we are a bit wary of hiring a new CFP or a graduate of a financial planning program. We have heard of bidding wars over these graduates, which would put them out of reach for a small firm like ours. In addition, rumor has it that these young people want to restrict their activities to higher-level planning work and might be unwilling to do any of the grunt administrative work that comprises the day-to-day workload of any advisory firm.

Some of our colleagues have hired summer or part-time interns to fill their staffing gaps. For many, this has been a win-win proposition: The firm benefits from the contribution of an eager young trainee while the student has an opportunity to test the waters by working with seasoned professionals. Moreover, internships are a way of giving back to the financial profession by creating a career path for new entrants. For us, though, as much as we want to encourage new planners, the logistics are an obstacle we can't yet overcome. When the topic came up, no one in the office was thrilled with the idea of a summer intern. Our workload is complex even on the administrative end, and we don't want to spend part of our summer training and supervising a person who will then leave.

Beyond these basic, what-kind-of-person questions, is what we consider the tougher issue--finding someone of any age or previous experience level who can step in and make a difference in our business very quickly. Between the four of us, we see a range of needs to be filled by this new person. He/she should be:

* Reliable
* Trustworthy--our clients are precious and confidentiality about them is crucial
* Friendly (we really need someone who loves to talk to clients on the phone and in person)
* Comfortable in a small office environment
* Willing and able to learn new skills
* Flexible (constant change is inherent in our business)
* Able to function under pressure
* Pragmatic and endowed with plenty of common sense
* Comfortable working with numbers
* Detail-oriented, even a little anal
* Able to write coherently--so much of our communication tends to be by e-mail and/or letter
* Someone who takes great pride in his/her work
* Available immediately
* Interested in growing with us (i.e. not looking for a huge salary right from the start)PAGEBREAK

No problem--right? There must be hundreds of cheerful, hard-working, analytical and slightly anal compulsive job-seekers looking to join a small, but growing company!

We realize that the skill sets that we would love to see may not coexist in one person. Does an extrovert who loves to talk to people also have the attention to detail we require? Perhaps not.

This is a real and current dilemma for us--so we can't yet tell you how we've solved this problem. One possibility we are considering is moving Andrea from her current role, which is primarily administrative, into a junior paraplanner/portfolio administrator role and then hiring a new receptionist/administrative support person. Andrea has many of the qualities we're looking for and already knows our business well.

Larger planning firms we know do this routinely, filling only the entry-level positions and then selectively promoting from within. We are not big enough to employ a farm team of entry-level employees, but we realize that there is a greater chance of success in promoting from within and hiring for generalized skills and more routine responsibilities. We were very lucky with our latest hire, Laura, an advisor with excellent academic credentials and work experience who added value quite soon after starting with us. However, we recognize that Laura joining us was a unique situation and don't except such plums to drop in our laps so readily this time around.

We are beginning the process of advertising and spreading the word that we are looking to hire someone. We have used unconventional sources such as Craigslist with good result in the past, so we will likely go in that direction once again. One enhancement we want to make to our hiring process is to do some skill-testing. This time around, based on advice from colleagues, we have decided that we will incorporate basic testing of math and writing skills in addition to our normal interviewing process. We are also discussing the value of personality testing to ensure a fit with our culture, although we acknowledge that applicants could potentially game the test to skew the result.

While hiring new employees is never fun, finding and developing staff allows a practice to grow and function smoothly and builds additional capacity for the future. In keeping with our mission of sharing our growth with all of its bumps, zigs and zags with our readers we admit there is no conclusion at this time to our current challenge. But stay tuned. In our next column we will explore how other smaller advisory firms deal with staffing, as well as examining expert recommendations on building a staff. If you have any anecdotes or points of view to share with us and with the independent advisor community at large, e-mail us at dc@garnetgroup.com.

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