people.”7 In other words, a firm's ability to train and develop professionals may very well be one of its most sustainable competitive advantages. Technology, efficiency, and investment process play a role, but at the end of the day, firms that can find the best people are the ones that will be the fastest growing and most profitable.
A career track is a vital tool in the development of people and is key to long‐term success. This applies not only to G2, but also to all present and future generations of employees. Without a career track, professional development becomes an arbitrary combination of experience, informal mentoring, personal relationships, and exposure to opportunities. This unstructured approach will likely waste the talents of many professionals who would have become valuable contributors to the firm in the presence of more structured and training. Many talented people may never develop because they are never taught a vital skill. Deserving professionals may never be promoted if they are not noticed by the right people. Some may quit because without a view of the finish line they become exhausted or demotivated. It may be very difficult to ask professionals for patience as they gain the necessary experience to advance. Establishing a path for advancement and support can help professionals fulfill their potential. A career track gives people reasonable expectations for their success in a firm and lets them know how they will benefit financially, intellectually, and socially at every step.
Career tracks are present in every profession, and they date all the way back to medieval guilds. Young aspiring craftsmen went through regimented training to first become apprentices and then journeymen. Journeymen could demonstrate their skills to earn admission into the guild and become master craftsmen. The system provided a way for the guild to regulate competition, but it also ensured that those who presented themselves as craftsmen actually had the skill to perform. This is how Michelangelo trained and this is how accountants, lawyers, engineers, and consultants continue to be trained.
A career track helps a firm recruit talent, particularly talent that is in the very early stages of development. The presence of a structured process with clear milestones encourages those who are beginning their professional journey and serves the same purpose as mile markers in a marathon. If you think about running 26.2 miles at the start of the race, the distance can be overwhelming. But if you focus on running the next mile, the task becomes practical and achievable. Similarly, when starting in a firm as an entry‐level professional, the goal of reaching the top of the profession, the finish line, may seem daunting or too distant. A career track encourages young professionals to think of the practical next step rather than the faraway destination.
A career track also benefits the firm. It achieves three very important objectives:
1. Creates reasonable expectations: Employees always want to know what will happen next and they will likely ask questions such as: Why should I invest my efforts and talents in your firm? Will I be successful if I do? How do I know I can trust you to lead me to success? Even when such questions are not explicitly asked, they always linger beneath the surface. A career track is not a guarantee for success, but it does help employees feel less anxious about the future.
2. Promotes the idea of progress: Progress helps motivate. Without visible progress it may be difficult to continue putting in effort. A career track enables employees to develop goals that can be structured around the needs of the firm and its values. The achievement of goals can be rewarded with advancement, which can bring desired financial rewards and prestige.
3. Brings a sense of fairness to the firm: In an environment where highly ambitious people are brought together in the pursuit of professional success, many times it will be necessary to explain why one person is advancing while another is not. Without a career track, changes in compensation and other perks become very difficult to explain. In the absence of a system, the firm can be suspected of being run by the “likes me, likes me not” rule.
A career track is vital for the success of a professional services firm. Let's examine what a career track looks like in the advisory industry.
The Advisory Career Track
The idea of what makes a career track in the advisory world is constantly being refined. After all, this is a young industry that is still discovering its best practices. Furthermore, a career track will not and should not look the same in every firm. That being said, there are similarities between firms – particularly large organizations that tend to have a career track similar to the one outlined ahead.
Associate
The associate is the entry‐level position. Associates are also called paraplanners, support advisors, analysts, or junior advisors. Associate responsibilities include gathering financial data; researching funds, products, or stocks at a basic level; drafting financial plans; creating financial models; and managing client data. Associates are often present in meetings but typically do not meet with clients alone. Associates may also have some administrative responsibilities such as completing paperwork, working with clients to make sure documents are signed and delivered, or taking notes and recording them in a CRM (customer relationship management) system. The position reports to a more senior member of the service team, usually a service advisor or lead advisor.
The associate position is defined by the accumulation of technical knowledge. Associates should focus on learning the systems and service methods of the firm (e.g., planning, trading, etc.), acquiring certifications, and completing education programs. Many associates (27 percent, according to the 2015 InvestmentNews survey8) hold a Certified Financial Planner (CFP) designation.
The expectations of the position are defined by the achievement of competency‐based goals. Compensation in independent firms is based on a salary with incentives tied to the performance management system of the firm. The 2015 InvestmentNews survey shows that associates earn a salary between $45,000 and $65,000 and incentive compensation (bonuses) between $4,000 and $10,000.9
Advancement to the next position is based on the associate's ability to demonstrate technical expertise and a good understanding of the service process used by the team. Advancement also signals the ability to work as a member of the service team and a willingness to embrace the efforts and policies of the firm.
Service Advisor
The service advisor is responsible for client service and performs many of the steps in the client process. Responsibilities include preparation of financial plans, analysis of portfolios, and subsequent trading and rebalancing (which may also be done by a separate department). Service advisors answer many client questions pertaining to planning or wealth management, and they are expected to have significant expertise. They work extensively with clients, handling meetings either on their own or together with lead advisors. A service advisor is often called the second chair, to borrow a term from the legal profession. As second chair, they may substitute for the first chair and are generally expected to have a relationship with the client.
The service advisor position is defined by service, meaning the ability to accomplish what the client needs. Through experience, service advisors combine the technical expertise of associates with the ability to communicate with the client. They often supervise their associate colleagues, thus learning how to manage people. It is not unusual to see service advisors handle some relationships as lead advisors. This combination of first and second chair is desirable to see in more experienced service advisors before they are promoted.
This is also the position where training in marketing and business development begins. A service advisor's activities in terms of growth should focus on assisting with the firm's marketing plan. They may also establish themselves in organizations and niches that will later become the center of their new business activities.
The
David Maister,
InvestmentNews Research,
Ibid.
