Throughout my career I have witnessed firm owners’ frustrations with new planners they have hired or were interviewing. Their frustrations stem from lack of clarity on what type of education a new planner receives and what can be expected of them. Also, firm owners sometimes don’t know what role they are trying to fill so they are left with trying to hire for a catch-all position resulting in unclear roles and responsibilities, and unreasonable expectations.
We will start this two-part discussion with an examination of what firm owners should NOT expect from their new planner. Next month we will conclude with a discussion on what firm owners SHOULD expect from their new planner. Keep in mind every new planner has a different personality, skill set, motivation, confidence level, communication abilities, etc., so your own staff mileage may vary. My focus is on a “typical” new planner. It is obviously favorable if your new planner is delivering on all of the skills discussed below, which is a testament to you making a great hire.
So without further ado, my list of what firm owners should NOT necessarily expect from their newly minted planner:
• Know precisely what questions to ask at just the right time – This is probably the most critical skill new planners struggle with. New planners might know what to say, but most are not far enough along in their professional development to know when and how to ask something, which is just as important.
• Frame client situations, issues, and solutions in the same manner a firm owner might – It takes many years of practice to be able to put yourself in a client’s shoes to anticipate, and guide them to a smart decision.
• Read the firm owner’s mind and do things exactly as they would – In most cases there are several ways to come to the same conclusion, so strive for some flexibility here. If you catch yourself thinking, “it’s just a given, it’s so obvious and they should have done it this way” consider taking a step back to see it from a different angle.
• Lead client planning meetings and phone calls independently – Taking a client’s financial life in one’s hands as their trusted advisor is a major responsibility which most new planners are not prepared for following “just” the culmination of their formal CFP curriculum education. However, as I have discussed in the past, giving new planners the opportunity to work with clients and showcase and develop their skills immediately will better position those firms to attract the top talent. On the other hand, the situations need to be calculated and low risk due to possible legal and/or financial ramifications a firm could incur if something went awry.
• Understand the pros and cons of every investment vehicle in the investment management universe – New planners’ education tends to focus on mutual funds, ETFs, stocks, and bonds. While they might have heard of MLPs, REITs, CDOs, CMOs, limited partnerships, etc., these are not the primary focus in the investment management curriculum.
• Answer complex higher level planning questions such as when a client or prospect asks, “Should I convert my entire IRA into a Roth IRA?” – New planners may have an understanding of the technical rules for IRAs, Roth IRAs, and some of their tax implications, but developing an integrated recommendation that synthesizes together the client’s income needs, unique tax situation, and other factors, is a skillset that takes time to develop. Fortunately, it’s also a skillset that can be developed effectively with guided practice!
• Be an expert in a third party software suite – New planners have exposure to popular third party financial planning software programs, but do not necessarily reach full immersion in their coursework. Just because younger planners may be “tech savvy” given how integrated computers have been in their early lives, does not mean they know how to apply sophisticated software to complex client situations on the first try. Developing an expertise with a particular program can take years and the completion of several dozen plans.
• Necessarily subjected to the same compensation and career path as a firm owner – Try not to get too caught up in the old adage of ‘how you trudged up the hill in snow’. The reality is that the state of the financial planning profession is different now, and today’s young planners will have different hardships and challenges to reach eventual success. All new planners need to pay their dues in some respect, but keep in mind their dues might be different than yours.
• Bring in multi-millionaire type clientele, at least initially – If you are hiring a new planner to do this, consider rethinking the roles and responsibilities closely. New planners out of degree programs are typically in their twenties and usually don’t have (m)any contacts that an established high-net-worth financial planner would deem as an ideal prospect. You might have better success with a career changer out of a certificate program if you are expecting your new planner to develop business from day one.
Stay tuned for next month’s post on what firm owners CAN expect from their new planner.
- Caleb is speaking to the Oregon & SW Washington FPA & NexGen chapter on July 17th and 18th
- Michael will be speaking on “Cutting Edge Tax Planning Developments & Opportunities” for the NAPFA iConference on August 1st.
- Caleb will be attending the FPA NexGen Gathering Conference in Minnesota on July 27th – 29th
- Michael is speaking to the Australia Portfolio Construction Forum August 22, 2012 on Modern Portfolio Theory 2.0
I hope you enjoyed celebrating America’s 236th birthday! I am thankful for all of those in the past and present who have fought and died for the founding of our country and protection of the freedoms we enjoy today. It is because of these Americans that I get to do what I love every day, not the other way around as so often portrayed. A special thanks goes out to all of the veterans and current service members who are currently or aspire to be financial planners.