Dividing the Book

Passing two-thirds of my clients over to other advisors in my office was a good thing for everyone involved, but it only partially helped. Dustin and Larry started making more money, but each of them already had their own areas of responsibility in the firm. Dustin ran operations, and Larry ran tax and accounting. Sure, I relieved myself of the guilt of neglecting a significant number of my clients, and certainly they started getting some needed attention. Yes, I was able to lavish a lot more love on the clients I retained. But, Dustin and Larry quickly became overwhelmed. We needed another plan to  ensure we made good on the original promise we made to our clients when they hired us: to guide and manage their financial affairs for the rest of their lives. Dividing the book was only the first step. The next step was to expand our advisory staff. Our clients deserved not only a good advisor-client relationship and experience, they deserved great ones. Without more advisors, our clients were going to languish.

Enter the Paraplanner

I decided that I needed to bring on an advisor trainee who would act as a personal financial planning assistant and gain experience at my right hand. I had been the route of hiring advisors with licenses and experience, but this never seemed to work out. Either they were unsuccessful in their former positions and brought their unsuccess to my practice, or else they left their former positions unwillingly and brought those causes to my firm. In every single case (4 of them in a row), the hired guns ended up as liabilities and were let go. The only ones that have succeeded and remained have been the ones who were home grown. We worked out a process of paying recruits a modest base salary, sponsoring and paying for their licenses, giving them a year to learn the basic ins and outs of the business, and introducing them into our existing client relationships. We called the position Paraplanner.

The paraplanner works as my personal assistant, running research reports for client accounts, keeping prospectuses and sales kits in stock, tracking investment product performance, training clients to use our online account access system, executing securities trades, maintaining blotters, and performing due diligence on new investment offerings.  Once they get their sea legs, they are given clients from my personal book to manage on their own. Eventually, each paraplanner becomes a home grown, full-fledged financial advisor and goes full-time on straight-commission, giving up the salary and responsibilities when they feel they are personally ready. It takes about 18-24 months to complete the training, licensing, and conversion. Each paraplanner hires and trains his or her own replacement before being relieved of the position’s daily duties. None of them have ever looked back. Since I bring on about 40-50 new clients a year through referrals, a new advisor book of business is created within the firm about every two years.  The recruiting, training, and licensing process takes about as long to complete as it does to amass enough new clients to support the new advisor making the transition. It is a very effective system.

Stay tuned for more…