Staffing: The Most Important Questions Are the Ones You Ask Yourself

By Amy McIIwain, President, Financial Social Media on Thursday, June 23rd, 2011

In my last blog, I mentioned how I’d been listening to advisors talk about what they considered the top three challenges they faced. However, in spite of these challenges, I got the sense from the advisors’ remarks that they felt positive about where things are headed in the industry. According to them (and many industry watchers), the advisory market is showing stability and RIA firms are growing.

That’s good news, right?

Well, hold off on the champagne and caviar for now. The fact is, this growth presents some significant questions and challenges (I always prefer the word “challenges” to “problems”—a tad more positive, don’t you think?). For example, one advisor I spoke to last week—let’s call him “Jim” (I changed his name to protect the innocent, as you’ll understand when you read on)—told me he’d read my blog and had a fourth top challenge to suggest. “How does an advisory go about staffing to meet its growth?” he asked. Jim’s question leads to several related questions, such as how does an advisor…  

1. Decide which duties to delegate?

2. Find the right person to take on these duties?

3. Mentally prepare himself or herself to relinquish these duties, and then actually do it?  

All good questions—with no set answers. But perhaps as a starting point, rather than trying to formulate an answer that may not apply in all cases, let’s recognize the importance of asking the questions in the first place. Just being aware that you need to ask yourself these questions, regardless of how you answer them, will help you in the hiring process.

When you wear many hats, why do they all seem to fit?

The reality is that most advisors are used to doing everything themselves without much help from anybody else, whether it’s advising clients, running reports, taking out the trash, or scheduling.  It goes with the territory. When you first start on your own, it’s expected that you wear many hats in the firm: CEO, CFO, CCO, COO, CTO, FA, Rain Maker, handy man, water cooler jockey, janitor, etc. 

Case in point: Jim, whom I mentioned earlier, is with a new RIA in the Midwest. He left a wirehouse 18 months ago, where he had what he viewed as too much support . Jim was quite colorful in how he described the support situation—how does “%$@!!” sound as an exact quote? But that was then, and this is now. Now Jim has no support and is having some difficulty deciding which hats he should give up if he hires someone.  Taking the trash to the dumpster in the parking lot was an obvious choice to “sub-out,” but when he started crunching numbers on time, he realized that he already walks by the dumpster when he’s going to his car, so he really wouldn’t be saving anything at all. I was amazed that he actually thought through this particular task in such minute detail, but it raises a good question: will you find it difficult to give up even the most insignificant responsibilities?

Are you in the know if you go with a pro?

Jim then brought up bigger questions such as: does he pay someone to answer phones and push paper, or does he hire an experienced registered assistant?  The paper pusher can help him reclaim some time as they take care of the minutia of running a small business. But will Jim save enough time to continue growing his practice at the rate he wants?  On the other hand, does Jim have the cash flow to hire a registered assistant who can do more than answer phones?  How long will it take for this new investment to pay a dividend? Do some rough calculations—even if they’re “blue sky,” they’ll help you plan.

When you hire a friend, are the days of your friendship numbered?

How do advisors recruit the right person for the job?  Do they start with someone they know?  That can be a sticky situation if it’s not a match made in heaven, or if the practice doesn’t grow at the rate the advisor expects.  If it’s not the right person, and you have to terminate them professionally, what does that do to your personal relationship?  Or if the business doesn’t continue to grow, and you can’t really afford to continue paying this person, won’t it be embarrassing for you to let the employee go? 

If you take the other route, and hire someone you don’t know, where do you start looking?  Craigslist, Monster, LinkedIn, the local paper?  The problem is: Advisors who have a good staff usually see the value of their employees. And chances are, they’ll go to great lengths to keep members of their staff from leaving. So, typically, there isn’t a large pool of experienced advisory staff to select from. It means you’ve got to have patience that a suitable hire will eventually become available, and be persistent in your search.

What’s the ultimate test for judging a potential hire?

Suppose your practice continues to enjoy significant growth. Also suppose that your new staff is the right fit for you—professionally and personality-wise (aren’t you lucky?).  It’s all good, but how will you react when you give up certain tasks that are vital to the success of your practice?  For example in Jim’s case, he’s gotten used to doing everything in the firm himself, and he expressed concerns to me that he was a control freak. So again, the question is: how do you balance the need to be in control with the need to relinquish? Your sanity may depend on how you answer this question.

It’s a problem that isn’t specific to advisory firms alone, but rather to all growing small businesses. To answer it, I tried, as always, to put myself in Jim’s shoes. And I told myself that I wouldn’t give cheap advice, but that instead, I’d simply share ideas.  I told Jim that I, too, want things done my way on my schedule. I suggested that he be picky when hiring and to do a simple exercise: think about his most touchy or difficult client, and imagine whether he would feel comfortable entrusting that client to his prospective employee. And I suggested he ask himself: if he couldn’t trust the employee to work with the difficult client, could he really trust them to work with any of his clients? 

To me, that’s the critical test. When you can answer, “yes, I’d trust them”—then you’ve (hopefully) found the hire you’re looking for. If all goes according to plan, you’ll be able to off-load responsibilities onto them, and even if you’re as big a control freak as Jim, you’ll be able to rest easy that lots of work has been taken off your shoulders.  

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