Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.
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Dear Bev,
How can we ensure cultural fit when bringing on a junior advisor to help with succession planning?
We are three partners, and two of us will be retiring in the next two years. Our third partner is in her late 50s and is an amazing rainmaker. She has her own very large client base and brings in four to five new clients every month. She doesn’t want to take on more clients, because she is tapped out. We started to seek a successor in the form of a junior advisor starting five years ago thinking a seven- to eight-year runway would be perfect for learning and transitioning. It sounded like a good plan, but we have brought in three different potentials who have not worked out. Two quit and went for other opportunities, and we had to manage the third out of the firm for many reasons. In each case, when we looked at what went wrong, we landed on the fact it was not a great fit for our firm and the way we do business.
We are very heavily focused on the asset management side rather than planning where we know most of the profession is trending. We all have backgrounds on the institutional side of the business and have migrated over to wealth management over the years.
When we interviewed the potential successors, they talked about their knowledge of the investment aspect. But then they joined us and we found they relied on models, a more standardized approach to investing or on an investment committee.
How can we ensure the people we would consider having work with our clients are actually aligned to who we are so the clients are not getting some completely new experience? We market ourselves well, tell a good story and follow through with outstanding client service that aligns with the expectations we set in the sales process. It concerns me that we are turning over people we have introduced to our clients as potential successors, and we are not in sync with how the business works and what the clients expect with the people we are bringing in.
K.L.
Dear K.L.,
There are a number of aspects to the process you have experienced to consider going forward. I imagine some of these things you may have tried. But you don’t go into enough detail for me to know what you have implemented and what’s missing so I will bring up as many points as I can:
1. I’m scratching my head that your entire storyline for the firm has been built around the investment piece – you are all investment-oriented partners, and you all come from the institutional world to underscore what a key focus this is – yet you have brought on junior people who do not share this aptitude and interest. Something is wrong in the process, and I’m wondering if it are picking people based more on likability rather than pushing hard to find out their competency (and interest) in what you do. Are you are picking them because they have a strong background in our business and have worked at other advisory firms and maybe hold credentials such as a CFP, but they haven’t been doing the type of investing you do? Perhaps you aren’t drilling down on this in the investment process.
2. Assuming one or both is possible, there are two areas to focus on. Make sure you are not interviewing and hiring because you like someone and you got along with them in the interview process. Surprisingly this is often what drives an ultimate hiring decision! Instead, you test the candidate and make sure they have the skills and focus you need for your firm. I would create a real-world client scenario, take off the client names of course, and give this to candidates in the process. Have them come back with not only what investment recommendations they would make but how they got to these answers. Have them “show their work” so you can see the depth of their knowledge in the investment area. You might want to have them present their analysis to you all to ascertain how much they know and how deep the knowledge is.
3. What background you are seeking and how you have been directing the recruiter (assuming you are using one) to find candidates? For example, it sounds like you would want an advisor who perhaps also has worked in the institutional side of the business and probably who holds a CFA. If you have junior people coming in who are more focused on planning, this would not likely be their background. Investigate whether you have given good direction to your recruiter so they understand the profile of the person who would fit.
4. You have been at this for five years with no success, and you have two years left before two of you want to retire out completely. You want to have an all-out marketing campaign (from a recruitment perspective) about who your firm is, what you do well and why you are different from most other advisory firms. In other words, raise your profile and put your firm in situations where junior advisors who are investment oriented could learn more about you. You need to be more aggressive about putting yourselves actively into the market and telling your story more widely.
5. Leverage your custodial relationship management in the process. You are an independent advisory firm, so I assume you are working with one if not more of the major custodians. They often know of advisors who might have the sort of background you are looking for. Discuss what you seek and engage them to be another force for you in the marketplace.
I don’t see your problem as “cultural fit.” This is more to do with the values of the firm and how you deliver your client experience. I see this more as a search, selection and integration problem. You somehow are not identifying the right people during the interview process who know how to do what you do (and want to do it) and then you are going one step further and hiring the wrong background. Then, you are putting them in a position to meet your clients before you have vetted their capabilities to do what your clients need them to do and have come to expect. You even say these candidates have talked about using models during the process so somehow you are overlooking what I call “the flags.” I think you need to revisit your process and put more rigor and testing into it.
Have the candidates research your firm and how you tell your story and ask them how their background and interests going forward align with this. Before you go further, take the step back and make sure you have the necessary rigor in place. It would be better to delay retirement than to move fast and make another decision that will not work out.
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry, in 1995. The firm also founded and manages the Advisors Sales Academy. The firm has won the Wealthbriefing WealthTech award for Best Training Solution for 2022 and 2023. Beverly is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. She is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
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Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here. 
