Staffing Your Office: Hiring, Outsourcing & More

In Death of a Salesman, Willie Lohman tells his son that if he's in a job interview at a company and drops a pencil, not to bend over and pick it up, because there are office boys for that. His observation reflects the sad, misguided notions of a failing salesman, but in a bizarre way it also underscores the comforts of working in an office. That is, when one employee needs a hand, there are numerous other employees to reach out to. Certainly that's true, to some extent, at the nation's wirehouses. Thus, if you are considering leaving the wirehouse or other broker-dealers, either to establish your own company or to join another financial advisory firm, staffing needs to be a top concern.

To Manage or Not to Manage

"Staffing is the number one problem for advisors," says Jennifer A. Goldman, CFP, president of MyVirtualCOO.com. "Some people just don't want to manage people. Often, advisors come to us for help with their productivity and they expect that we'll present them with a host of technology tools to help grow their practice. But when we look under the hood, we discover the real problem is the staff. The advisor doesn't like the staff, doesn't want to manage people, and, accordingly, the practice just isn't going to grow."

Goldman says that for some advisors the idea of having to staff their own office will be "an absolute deal breaker." There are, however, a few alternatives for advisors who don't enjoy managing people but are set on forming their own firms.

She explains, "If an advisor has the budget, he or she can hire a midline manager or go the outsourcing route. Yet, even with these solutions, there's a certain amount of management involved that an advisor just might not be interested in."

Mindy Diamond, president of Diamond Consultants, a boutique financial-services search and consulting firm, agrees with Goldman. "We believe strongly in the concept of hiring a well-paid COO to handle everything from hiring to firing, compliance, and administration, so that the advisor is free to focus on his or her core competencies," she says.

The importance of hiring the right people to manage your independent wealth management firm cannot be overestimated, adds Diamond. "Advisors who act as one-armed paper hangers find themselves not growing nearly as fast as those who have built professionally managed firms," she notes.

If you don't want to splurge on a COO salary, you could also search for a partner with human resources skills and administrative interests. If you decide on this route, experts extol the benefits of an organizational chart.

"Second in importance only to the partnership agreement itself, an organizational chart should include job descriptions and detail the exact structure of the practice so everyone agrees who is best doing what and who is responsible for what decisions," says Mary Lacey Gibson, a CFP who functions as a solo practitioner under a fee-only RIA business model and also provides business planning and coaching services to financial planners (www.marylaceygibson.com).

"The same goes for producing detailed job descriptions for any staff you hire," explains Lacey Gibson. "Without these guidelines in place, you set up the potential for disagreement. With the organizational chart and detailed job descriptions, when disagreements occur, as they will, you have documents, with agreed upon decisions spelled out, to fall back on."

Kirk Hulett, the author of two books on staffing stresses that a roles and responsibilities (or R&R) chart can help you communicate reporting relationships, show relationships between jobs and relate the vision for future structure.

"In the early days, you may end up placing your name in multiple boxes on the R&R chart," explains the writer of Hiring to Grow: A Practical Workbook and Managing for Performance: The Cycle of Success. "From the outset, create a job description for each of the roles on the chart. Do not combine job descriptions across functions.

"Having a job description for each box enables you to quickly reorganize responsibilities when you hire someone to fill that specific job description," Hulett explains. "Well written job descriptions provide a method to ensure the survival of the organization, beyond its current workforce," he comments.

If you decide that you want nothing to do with managing people, consider joining a branch office of an independent broker/dealer or an existing RIA firm, suggests the practice-management expert. "These options may have built-in solutions for you, including professional looking office space and administrative support," he notes. (Click here to view an example of what a fully appointed office space looks like in an existing firm: http://www.coopermcmanus.info/independentbrokerdealeroffices.html.)

"You'll look well established, with a smiling receptionist and have the convenience of an office full of other productive professionals from day one. In addition to the camaraderie, benefits include the ability to do joint casework/trouble-shooting, compliance supervision, and marketing support. It can also be beneficial to share other start-up costs–from the telephone and Internet infrastructure to office furniture and décor," shares Hulett.

Not All or Nothing

If you do decide to staff and manage your own office, remember that you don't need to have world-class office staff assembled and ready for action on day one. Luckily for advisors in transition, there are a multitude of alternative staffing options that can keep your practice afloat until you can assess your long-term full-time staffing needs.

The following are some temporary-staffing solutions suggested by Hulett:

• Use a temporary staffing agency. "This will cost you more in the short term, but the benefit is that you will not have a long-term commitment and the agency does the hiring and screening for you," he says.
• Use part-time or flex schedule staffing. "Hire a part-time employee, perhaps a professional who wants to split time between work and child rearing or a retiree who wants to transition from a full-time job into retirement with apart-time job," Hulett suggests. "Mine your client base for friends, family and colleagues in search of part-time work. Use LinkedIn and Facebook to connect with people who may be able to help or who can refer you to someone who can."
• Outsource. For discrete tasks that do not require specific knowledge about your business and access to client info, it makes sense to consider outsourced service solutions such as Ruby Receptionists for phone greeting and call routing, he shares (www.callruby.com). You might also peruse the list of industry specialists posted on www.virtualsolutionsconsortium.com.

Outsourcing Compliance

Attorney Patrick J. Burns, president and founder of Advanced Regulatory Compliance, a leading regulatory and compliance consulting firm serving financial advisors, also advocates outsourcing to take advantage of industry consultants' specialized expertise. "There are only so many hours in a day and only so many areas that you can honestly build an expertise in," explains Burns. "The famous small business adage 'Do what you do best and outsource the rest' speaks directly to what advisors should consider as they look to successfully manage and grow their practices."

Outsourcing, says Burns, is particularly beneficial when it comes to the critical functions such as compliance where the rules are constantly changing and the business risk to the firm is the highest.

"With the passage of the Dodd-Frank Act, advisors can expect a much more complex compliance and regulatory operating environment," the attorney shares. "Additionally, we've seen many advisors struggle with the new 'plain language' requirements of the new Form ADV update. While on the surface, these types of changes to the fundamental regulatory document advisors are required to file, appear simple, they are actually quite involved and require a great deal of time and focus to get right."

Burns notes further that there are a number of issues on the horizon that require particular compliance expertise, above and beyond what a firm may be able to effectively deal with in-house. "Many firms with assets under management under $100 million will soon be switching from SEC to state regulation," he explains.

"Also of big concern are the evolving rules, requirements and regulatory mandates for advisors' use of social media," notes Burns. "The SEC has noticeably left this issue unaddressed and as a result, many advisors are not sure what to do." (For a resource on the compliance aspects of social media use by advisors, he suggests reading a recent white paper authored by Advanced Regulatory Compliance.)

"It's tempting to try and manage all aspects of your business yourself," concludes Burns. "But it's wise to find the best professionals to take care of the areas that are outside of your sweet spot so you can focus on taking your firm to the next level of growth, profitability and outstanding client service."

Using Interns

Caleb Brown, CFP, partner at New Planner Recruiting believes advisors should consider hiring a student intern or two to manage specific "extra" projects or to help alleviate some of your workload during your transition from the wirehouse to whatever business model you choose.

"You might have an intern compare various software packages or help with quarterly reporting, depending on how far the student is through their CFP Board registered program coursework," he says. "Interns could also manage developing a newsletter and/or add to existing content on your web site, anything that makes your office an easier place to be for the rest of your staff or benefits your clients."

With all the issues that surround staffing in mind, Brown says that an ideal intern project would be documenting processes, sequences, procedures, and job descriptions. "That way, when you have someone new come aboard, they have a written resource in addition to talking to everyone trying to figure out what everyone does," he says. "Addressing items staffing issues like this on your to-do list is the first step in transforming a practice into a business."

Weighing Your Options

If you are open to outsourcing but unsure where to start, Goldman's MyVirtualCOO.com not only recommends outsourcers based on your business model and goals, but paves the way to ensure all communication goes smoothly by assessing technology needs and implementing any necessary tools. "If a firm has fewer than 15 employees, we believe there will be efficiencies to be gained by outsourcing some work, whether it's bookkeeping or compliance," she notes.

Pershing also offers this Ask an Expert page: http://www.advisorintransition.com/advice-insight/ask-an-expert/index.html. Readers are invited to contact the consultants listed in this directory of industry specialists who can provide answers to questions about breaking away from your current firm. All you need to do is confidentially submit a question directly to one of the specialists who will provide you with an answer.