Kitces & Carl Ep 93: Getting An ROI From Your New Associate Advisor (In Less Than 6 Years)

Kitces & Carl Ep 93: Getting An ROI From Your New Associate Advisor (In Less Than 6 Years)

Historically, the career path for newer financial advisors has followed a commission-based model that was focused on sales and business development first and learning the technical aspects of financial planning along the way. As the financial advisory industry has evolved, though, it has shifted to a business model that focuses more on teaching new advisors how to provide good financial planning services first, and to focus on business development later. With that shift, the timeline for how long it takes for an associate advisor to manage their own client relationships and develop new business for the firm has changed from just a few months to an average of 6 to 7 years. This shift has led the current generation of advisors to wonder if the return on investment in developing new associate advisors is worth the extended time and effort it takes to fully train them to become lead advisors.

In our 93rd episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards explain how the time and resources it takes to elevate an associate advisor can benefit a firm, and what the current generation of new advisors can do to be successful in their roles.

As a starting point, it’s important to recognize that since many of the business models that financial advisory firms follow have become more service-oriented, determining how newer advisors can add meaningful value has also changed, as evaluating newer advisors based on the value they bring through sales and business development is no longer as relevant. Though it may take longer for associate advisors to reach a point where they will bring in their own new clients and generate revenue, they can still add value to the firm in as little as 6 months. While they are getting up to speed, associate advisors can attend meetings, take notes, input data into CRM systems and planning software, and even help prepare the financial plan. The more time spent working on such tasks helps the associate advisor to understand and learn these important processes, doing them in a way consistent with the firm culture. Because, by delegating these tasks to an associate advisor, the lead advisor can spend more time focusing on providing better service to clients by spending more face time in client meetings, prospecting for new clients, and following up more diligently with client referrals.

Ultimately, the key point is that while there may be a significant investment of time and money into training associate advisors to become lead advisors, the meaningful value they create along the way in supporting lead advisors and learning firm culture can still have a great impact on the business now, even if they aren’t generating new business for the firm right away. Because when lead advisors have the support to enable them to focus more time on developing client relationships, not only will clients be more inclined to stay, but advisors will also have the capacity to bring even more clients to the firm (and generate more revenue) along the way!

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