Customized One-on-One Business Coaching for Financial Advisors

If you have read the April e-newsletter "Smart Hiring," skip down to Step 4 to continue.

SMART HIRING

Hiring a team member can be a long and onerous task, especially without guidance. We have discovered that advisors prefer someone other than themselves to handle certain aspects of the hiring process – and often, the entire process. Here are 10 steps to consider when going it alone.

1. Clearly Define the Role

Ask yourself and your team what you want the person to accomplish in this role. What is the main raison d’être? Once you know the outcomes you want you can determine:

• The three most critical functions to be performed;
• The skills needed to perform those functions;
• The three main strengths the employee must have.

Be in selling mode as you create the job posting.

2. Identify Sources for Attracting Candidates

Ideally, you would have a bank of contacts that you have been collecting from your and your team’s own personal observations. If you do not have one, you will need to look at these traditional options.

• Online job boards such as Indeed, local sites such as bcworks and kwjobshop, as well as industry specific sites such as Advocis and the FPSC;
• Word of mouth through colleagues, clients, friends, etc. Send out an e-mail blast; 
• Local college and university career centers; 
• Networking sites such as LinkedIn; and
• Employment agency firms including The Personal Coach

Decide which of the above are within your time frame, budget and expertise. 

3. Review the Resumes

This is a very time consuming step, so know your minimum requirements and scan for items that would add value to the role. Pay attention to the candidate’s experience, background, courses taken and qualifications. Check the grammar and find typos if any. Note any questions you would like to ask this candidate. Choose ten to twelve of the most likely candidates. Your goal is to conduct a series of interviews that will whittle the list down, eventually revealing the right person for the job.

4. Telephone Screen
This is where you discuss the most important aspects of the job and how their experience may fit. Ask:

• Why are you interested in this job?
• Rate yourself on a scale of 1 – 10 on MS Office, organization skills, etc.
• What experience do you have in the financial services industry?
• What do you excel at?
• What would you not want to do in your next role

Once you have chosen the six to eight candidates you want to interview, bring them in for the first of two face-to-face interviews.

5. Conduct a Structured Interview Day
Book a day specifically for interviews. Plan to spend 30 - 45 minutes with each person and allow time between interviews to debrief with your team.

Break the interview into three parts:

1. Data - have them walk you through their education and career path from the beginning so that you can see how it has evolved. Ask what they were hired to do; were they successful and were they promoted, recruited or fired?
2. Important attributes that are not indicated on the resume - organization, accuracy, neatness and loyalty, for example.
3. Personality and socialization - get to know the real person.

6. Assessment
Discuss with your team or a colleague and pick the top three candidates. Ask yourself the following questions about each person you interviewed:

• Will this person fit the company’s culture? (You will need to know in advance what the key adjectives are that describe your culture).
• Does he or she have the strengths required?
• Why do I think this would be the right person?

7. The Second Interview
Ask candidates to bring in past performance reviews and references. If you have a skills test, this is the time to run it.

Understand what is important to the candidate when it comes to the work environment. This may include compensation, flexibility and benefits. You want to know the candidate’s expectations about what you are going to provide as an employer. Then you have to decide if it fits your game plan.

The underlying philosophy of multiple interviews is, if you still like the person as much after the second meeting as you did after the first, chances are you’ve found the perfect fit.

8. Reference Checks

Do not skip doing the reference checks. Call previous employers and ask questions about:

• Duties performed and compensation received;
• What the candidate could have improved back then;
• Whether they would hire the person again or not; and
• Why the candidate left the organization.

9. Selection

As in step 6, discuss your options with someone whose input you value. Who do you think has the best chance at succeeding in the role and on the team? Be as concerned with the fit for the candidate as you are in the fit for you.

10. Negotiate Compensation & Make An Offer of Employment

Balance what you can offer as an employer against the candidate’s flexibility and skills. Be sure to put a formal offer of employment in place, including:

• Specific responsibilities of the position;
• Required work hours;
• Negotiated salary;
• Any holidays, vacations, special considerations;
• Any additional expenses you will cover (e.g., training, licenses etc.);
• Any expectations regarding changes or growth within the job.

Good luck with your hiring and if you would like to talk to a coach, please connect!

Risky Business

Thinking of acquiring a book or exiting the business? Our Coach, Afsar Shah explains five things you can do to bridge the gap and minimize risk.

Over the next 12 to 24 months, we are likely to bear witness to a significant spike in demand for books of business and a resulting boom in acquisition activity. One of the most frequently asked questions I get from advisors who are considering an acquisition or sale is:

• What steps do I need to take to ensure that I maximize value, minimize risk, and ensure the safety of clients and staff?
• Where do I even start?

Advisor anxiety about this issue is legitimate; buying or selling a business is a complex initiative and is just as likely to fail as succeed. Moreover, the consequences of failure are considerable. You risk significantly diminishing not only the value of your business, but also your name, reputation, and life’s work. How can you avoid such a fate?

Click here for the five things you should do to achieve success in either a buy or a sale scenario. This article is published in the latest Forum Magazine.

Please contact us if you have any questions.

Afsar Shah, BA, LLB.

Business & Regulatory Coach

Get in touch

Check out our Fall 2018 Newsletter including helpful tips for advisors. This edition is focused on  personal planning, business planning as well as branding for 2019! Please connect if you have any questions or comments. 

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Referral Arrangement Rules (Part 1): What You Need to Know

Earlier this year, when the Canadian Securities Administrators (CSA) delivered their long-awaited proposals regarding embedded commissions, they also published a proposed set of rule changes aimed at enhancing advisor and dealer obligations toward their clients (Client Focused Reforms). These Client Focused Reforms will no doubt significantly impact the economics of advisors’ business models and how they address key issues such as KYC, KYP, suitability and conflicts of interest, all of which we discussed in a previous article.

An area of particular interest and concern to many of our clients, however, were the proposed rule changes dealing with referral arrangements. Many advisors have arrangements with third parties either as a means of client acquisition or to provide their clients with services that they are not authorized to perform. For example, it’s very common for an MFDA advisor to have an arrangement with another professional services firm (i.e. an accounting firm) for purposes of client acquisition. They may also have arrangements with either an investment counsel or brokerage firm for certain high net worth clients who want either products or services that the MFDA advisor is not licensed to provide. The Client Focused Reforms will impact each of these relationships. 

The Big Picture: Regulators are proposing major changes to rules governing how financial advisors and dealers deal with referral arrangements. Referral arrangements will be permitted but only if advisors comply with specific requirements.

Here are five key takeaways from the CSA’s proposals:

1. A Referral Fee must not:

• Continue for longer than 36 months;
• Constitute a series of payments that together exceed 25% of the fees or commissions collected from the client;
• Increase the amount of fees or commissions that a client would otherwise pay for the same product or service.

2. Advisors cannot pay a Referral Fee unless:

• The recipient of the fee is a registered individual or firm;
• The terms of the referral arrangement have been set out in writing between the registered firm (i.e. dealer) and the other party. The advisor may (but need not) be a party to the agreement.
• The dealer keeps a record of all referral fees; and
• The client receives in writing and understands the terms of the referral agreement.

3. The definition of what constitutes a referral arrangement goes beyond that of providing financial products and services. It also includes client names and information.

4. The regulators view all referral arrangements as a conflict of interest that must be resolved in favor of the client.

5. The rules governing referral relationships will come into effect immediately once the Client Focused Reforms come into force. Advisors will have 3 years to bring pre-existing arrangements into conformity.

Why This Matters: The proposed new requirements will significantly increase the risk, cost and administrative complexity of referral arrangements for both advisors and dealers. They will certainly alter how advisors process, administer, and evaluate any current and future referral relationship.

Check out Part 2 of our article to learn more about what you can do to get ahead of these changes to ensure that your referral arrangements comply with regulatory requirements.

Please contact us if you have any questions.

Afsar Shah, BA, LLB.

Business & Regulatory Coach

Get in touch

Referral Arrangement Rules (Part 2): Take Action Now

In part one of our Referral Arrangement article, we discussed what advisors need to know about the regulatory changes regarding their referral arrangements. In this article, we will discuss what to do about these upcoming changes. 

Why This Matters: The proposed new requirements will significantly increase the risk, cost and administrative complexity of referral arrangements for both advisors and dealers. They will certainly alter how advisors process, administer, and evaluate any current and future referral relationship given that:

• Advisors will need to obtain dealer consent prior to entering into any referral arrangement;
• Advisors will need to demonstrate in writing that a referral arrangement is in the client’s best interest;
• The economic benefits to an advisor of a referral arrangement may no longer justify the additional administrative costs, requirements and risk;
• Certain book acquisitions may be deemed a ‘referral relationship’ unless properly structured and documented;
• Any violation of the proposed new rules can result in serious financial penalties.

The Bottom Line: All advisors should review their current (and future) referral relationships to make sure they align with the proposed new requirements and still make economic sense. Here are the impacts of the CSA’s proposals as they relate to referral relationships:

• There will be increased and on-going regulatory scrutiny around referral relationships, particularly with respect to fees, duration, the client interest and disclosure;
• Referral arrangements will still be permitted but only if certain requirements are met;
• The fees associated with a referral arrangement will be capped and the duration limited;
• All permitted referral arrangements will have to be documented in writing, approved of by your dealer, and disclosed in writing to your client;
• The proposed changes will likely reduce the economic value of all referral arrangements.

Take Action: Advisors have a window of opportunity to get ahead of these changes and ensure that their referral arrangements comply with regulatory requirements. Here are a few suggestions as to what your action plan should include:

1. Education & Training – learn more about the proposed rules and how they might affect your business model. Understanding the new requirements is key if you wish to continue to enter into these kinds of relationships and keep regulators and compliance at bay.

2. Identify Your Existing Referral Arrangements – create an inventory of all the referral arrangements that you currently have in place.

3. Conduct an Assessment – do your existing referral arrangements comply with the proposed new requirements? Do the fees fit the new criteria? Did you document the terms of each referral arrangement in writing? Do you have a written record of all fees paid or collected? Did you document that your client understood the terms of the referral arrangement and that it was in their best interest?

4. Re-evaluateTheir Economic Value – do each of your referral arrangements still make economic sense given the increased costs and risk?

5. Talk to Your Dealer – start working with your Dealer to bring your referral arrangements into conformity with the proposed new changes. What will they be looking for from you?

6. Review your Process for Future Referral Arrangements – make sure you have a playbook in place that ensures your future referral arrangements comply with the new requirements and make economic sense.

The Personal Coach Can Help: To learn more about the CSA proposed policy changes and to help you develop your readiness game plan, contact The Personal Coach. Our extraordinary team of coaches and consultants has extensive experience working with advisors to develop customized strategies and plans to help you drive results and reach your strategic and financial objectives. Happy planning!

Afsar Shah, BA, LLB.

Business & Regulatory Coach

Get in touch

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