So you have more tasks on your plate than you can handle, you feel like you’re constantly running out of time, and you’re sure that hiring is the answer. If you could just get another set of hands on board as quickly as possible, things would smooth out, right?
Spoiler alert: this doesn’t work. Not only does it not work, it is a costly approach to the problems at hand. Here are some cases where advisors have allowed their sense of urgency to cloud their judgement and paid the price for their shortsightedness in year(s) of revenue.
The data points (aka. process) by which these firms are being evaluated are:
Case 1: $1.2 million revenue, 7 person firm hires lead advisor and part-time admin without following the recruiting and hiring process. The problem cost them more in yearly revenue than the advisor was earning, putting them in the red.
The sequence of tragic events are a result of one thing: not properly screening candidates through the process mentioned above. Because this firm did not take the time to create a thorough job description, complete a robust interview process, or learn about this candidate’s abilities, they ended up with an individual who needed more help than they were monetarily worth.
This hire was not comfortable asking for business, did not network, had zero online presence, and lacked the tech skills necessary to do the daily work. They would rely 100% on the firm’s marketing to bring in business. And even when the firm did bring in prospects, they were unable to close many of them. Because of their shortcomings, they required the full-time support of an associate advisor, client service admin, and specially made marketing materials to help increase the odds of closing a new client. Futhermore, this hire serviced $320,000 in gross revenue from clients they brought over. However, between their pay and the business being forced to spend approximately $200,000 on improving the firm’s marketing, the compensation for the associate and client service staff, and time of others to help close business, this was a very costly misstep.
Unfortunately, these setbacks also included a rush hire of an unqualified CSA. This hire also cost everyone more hours in having to micro-manage, extensively train, and coach the person on good work habits. These setbacks cost the firm money and they lost a year of increased revenue growth.
Case 2: $2.1 million revenue, 13-person firm attempts to hire associate CFP without following the hiring process.
This firm befell a similar fate, spending over $300,000 on zero-impact marketing over a two-year period, while the team was stretched so thin that a lead advisor left. At this juncture, they knew things had to be done differently. They couldn’t afford to lose a third year of revenue nor advisors and clients. After learning and following the proper steps, this firm was finally able to turn things around and attract two qualified CFPs, an experienced paraplanner, and an experienced CSA.
The Ripple Effect
Bringing on a bad-fit new hire doesn’t just cost the firm in revenue, it costs the firm in sanity (aka. culture). Current employees are tasked with micro-managing and helping the new hire learn skills that he or she should have already brought to the table, while also managing their own mounting work load. Tasks and priorities fall through the cracks and eventually start reverberating on the client level. Some firms have the wherewithal to spot and decelerate the momentum before too much profit is lost, but others aren’t so lucky.
As always, feel free to reach out if you have any questions or share with a friend if you think this information could add value. Good luck transforming your business!