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Turning Rookie Advisors Into Rainmakers

By Murray Coleman February 23, 2015

Rookie advisors may have great personalities and a go-getter attitude, yet still fall short when it comes to bringing in new assets. To get them over the hump, advisor Andrew Ahrens has a formula. On the one hand, he spends considerable time working with the three new FAs at his Lafayette, La.-based practice, helping them build their professional networks. At the same time, he hands over some of his own clients to the newbies.

That accomplishes two things. The financial safety net boosts the young advisors’ confidence, because they’re not worried about where their next meal is coming from. And giving them a base of customers lets them focus their prospecting on the types of people they want to cultivate as future clients. “I’ve found that you’ve got to be willing to give up something of yourself, not just in terms of time but also in terms of money,” says the founder of Ahrens Investment Partners, which manages $750 million.

Not that he’s being entirely charitable. Six months after turning a local entrepreneur’s $100,000 portfolio over to one of his recruits, Ahrens got a call. It turned out that modest account was just a small chunk of the longtime client’s $3 million in investable assets — which he now wanted to bring over to the firm. “He’d been working with several different managers around town, but none had kept in touch with him as much as our young advisor,” Ahrens says.

Grooming the next rainmaker in an industry notorious for its dismal training record can be frustrating, advisors say. New advisors need strong financial incentives to succeed, but they also need time to grow and leeway to make mistakes along the way.

“The key in working with new advisors is to be transparent up front in setting goals,” says Russ Hill, chief executive at RIA Halbert Hargrove in Long Beach, Calif. “You’ve got to balance making sure they’re accountable in their actions to the firm with being sensitive to their own particular financial situations.”

Russ Hill

Halbert Hargrove, which manages about $4 billion, starts advisors on a salary. Their compensation shifts gradually until it’s 100% fee-based. But the firm tries to be flexible. For example, a few years ago a young woman learned right after entering the firm’s sales track that she was pregnant. Knowing a new family member would put pressure on her household finances, the firm’s managers kept her on salary longer than usual.

Today, the woman has built a healthy client base and become a top producer. “We don’t just look at a person’s aptitude to do client-facing work in determining fee schedules,” says Hill. “We also consider how much financial risk someone can bear at any given time.”

Ahrens Investment Partners, too, starts new FAs on a base salary, letting them progress to 100% fee structures at their own pace. “You’ve got to set reasonable expectations in terms of production,” Ahrens says. He gave his latest hires, recruited to the firm starting in mid-2013, 40 clients each to work with soon after they had passed their securities licensing exams and completed the in-house training program. In 2014, the trio, all in their twenties, produced total revenue of more than $300,000, pocketing at least half their sales. “They’ve achieved enough early success to avoid getting too frustrated and feeling burned out,” Ahrens says.

When Mike Bernier, a senior advisor at Pure Financial Advisors in San Diego, Calif., sees a young FA struggling, he invites the rookie to accompany him to meetings with prospects. The 12-year veteran, whose firm has AUM of $1.2 billion, says watching success in action is a powerful motivator. He also encourages inexperienced advisors to film themselves practicing their presentations to key prospects. It’s time-consuming, he admits, but the exercise can be critical to polishing a pitch and closing a deal. “I like to tell new recruits who are struggling that even if they’re the most knowledgeable and outgoing people in a room,” he says, “if they can’t explain complex planning concepts to clients, they’ll never succeed.”