Last month we discussed what expectations are generally unreasonable for a new planner hire and this month we look at what firm owners SHOULD expect from their new planner. As I mentioned last month, not all new financial planners are equal. Also I have previously written on how the educational experiences between CFP Board registered programs can vary widely. http://bit.ly/NewPlnrExppart1
Nonetheless it’s reasonable to have some solid, but realistic expectations for a good candidate that you might hire. A few items to screen for include:
- Have a general familiarity with how financial planning firms serve clients and earn revenue – Most can do this, but just like with the American consumer there is some confusion here among new planners as well.
- Describe the steps in the financial planning process – These are covered in their course curriculum and as part of the CFP® certification examination review materials. If they are dedicated students and serious about becoming a CFP® certificant, they will have a grasp of these.
- Awareness of profession related terms, legislation, and acronyms such as ADV, Fiduciary, Broker/Dealer, FINRA, SEC, Dodd Frank, the 1934 and 1940 Acts – They are generally familiar with these terms, but few can go into great detail about them.
- Grasp economic concepts and have awareness of global and domestic implications – In today’s media driven, sound bite world, new planners are likely to have to face client questions in this area early on.
- Develop an initial financial plan from Excel spreadsheets or third party industry software – Recent changes by the CFP Board requires all students who matriculate after January 2012 to complete a full financial plan prior to graduation as part of the new Capstone course.
- Perform basic Time Value of Money calculations – using a handheld financial calculator and/or Microsoft Excel.
- Understand the differences between active and passive investment management philosophies – They will have been presented both sides. However, there are many practitioner faculty members, and be aware that the practitioner’s biases often sway new planners in one direction or another.
- Create a reasonable investment allocation given a set of client facts and a risk tolerance – They should have had the opportunity to complete this exercise throughout their core curriculum in various projects and case studies, and finally with the final capstone financial plan as mentioned above.
- Answer basic planning questions such as when a client or prospect asks, ‘what type of life insurance policy do I have?’ – A new planner should be able to generally recognize the documents a client reveals during the data gathering process and identify initial planning opportunities.
- Correspond with vendors and outside professionals to gather information for a client’s plan and/or assist in recommendation implementation. – Once they know the client situation, they should be able to figure out what basic questions need to be asked in order to get the information they are seeking.
- Communicate internally and externally what their role is, what the firm’s value proposition is, why they work there, and why they are a financial planner. – This can only happen if you hire with clear purpose and position your new planner correctly in the eyes of your existing employees and clients.
If you find yourself struggling with your new planner and frustrated that they don’t seem to be on the level you would like them to be, first step back and try to picture where your skills really were at that age/stage in your career. Second, recall the steps you took to improve your skills and discuss these with your new planner. Third, have patience and confidence that if you have hired the right candidate, are motivating them appropriately, and providing an opportunity for them to truly succeed, they can develop into what you ultimately envision for the future.
- Michael recently spoke for the NAPFA iConference on August 1st
- Caleb will be speaking to the National Capital Area NexGen Chapter August 8th
- Caleb will be attending the CFP Board Registered Program Directors conference in Washington D.C. August 9th-10th
- Michael will be delivering the opening keynote session for the PortfolioConstruction Forum in Sydney, Australia on August 22nd.