How do you build, reinforce and reward a collaborative, multi-disciplinary team for tomorrow’s advisory business? This feature article from the latest issue of NAPA Net the Magazine takes a closer look.
“We comically refer to ourselves as a 45-year-old startup,” says Grant Arends, co-founder and president of retirement services at intellicents inc. in Overland Park, Kansas. In 2015, Grant Arends and his brother Brad Arends, intellicents co-founder and CEO, rebranded the firm founded by their father as a national, multi-disciplinary financial services company with a special focus on giving individual advice to average Americans.
“We are growing pretty rapidly, both in the services we provide and in our team,” Grant Arends says. The company now has four core offerings: retirement plan services at both the plan and participant level, personal financial management, financial wellness education and advice, and group insurance. “We’ve gone from three locations to 11 locations in the past 24 months, and we see that growth continuing,” he says.
“Our industry is changing rapidly, and our business is changing rapidly,” Arends continues. “The collaborative, multi-disciplinary model is the way to go for advisors now. The solo, ‘eat what you kill’ practitioner model doesn’t really work anymore. Between the technological demands, fee-compression demands, and the aging of our industry, we see a need for advisory firms to expand beyond being single-discipline shops.”
Building the Team
Seven years ago, Pensionmark Financial Group, LLC had 20 producing advisors. Now, it has 130. “If you rewind even five, six, seven years ago, I spent lots of time talking to advisors about the benefits of joining a bigger firm. What’s changed is that when I talk to advisors today, they’re not talking about if they’ll join a larger firm, but when,” says Troy Hammond, CEO of Santa Barbara, California-based Pensionmark. “Advisors are aware that if they want to grow in today’s marketplace, they have to be part of a bigger firm. They realize that becoming part of a larger team is a lot easier, and a lot less expensive, than trying to build it yourself.”
When building a team and continuing to grow, it is important that the culture is outlined clearly with the vision of where the company is going, notes Vince Morris, President of Bukaty Companies Financial Services and Resources Investment Advisors, LLC. in Leawood, Kansas. “We want to communicate about the growth and development opportunities that lie ahead. At the same time, we keep an open door policy and allow for employees to get their questions answered,” says Morris, whose firm was acquired by benefits broker OneDigital earlier this year.
Building the right team can mean being flexible. Julie Ward, Austin, Texas-based vice president, consulting at NFP, heads up NFP’s provider benchmarking and RFP department. “I’ve been here about 19 years, and I helped build the department,” she says. “We find that we are able to train people on the retirement plan industry, if we need to do that. We’re looking primarily for people who have a deep understanding of data analytics. And we look for communication skills, being able to communicate well on the phone and in writing with providers.” NFP also has had success lately with its summer internship program that gives college students exposure to the industry, and a potential career path, she says.
Asked what they look for in a new hire or potential advisory practice acquisition, sources interviewed for this article talked about the tangible and intangible qualities they seek. Here are a handful of qualities in demand now:
The Growth Seeker
Insurance broker HUB International has made a splash with its recent acquisitions of numerous prominent plan advisory practices. HUB looks for advisors who are located in the geographic areas where its insurance business has a strong presence, who are thought leaders in the retirement plan business, and who feel strongly motivated to expand their business. “It really is an issue of, are they hungry to grow? That’s extremely important,” San Diego-based National President, Retirement Dave Reich says. “We are not looking for folks who want to cash out. And that is not an age-related issue, it’s an issue of how much gas somebody has left in their tank. We’ve got people in their 60s who’ve got plenty of gas left in the tank. But I’ve talked to people in their 40s who don’t, and that is not a good fit for us.”
HUB also seeks plan advisors who feel enthusiastic about cross-selling with HUB’s large insurance business as part of their growth model. “If they’re not interested in cross-selling, they are not a good fit for us,” Reich says. “We have about 600,000 commercial clients across the United States, and that gives us the ability to have a bunch of conversations about their business needs. And everyone knows that a warm lead is much easier than a cold lead.”
The Innovative Thinker
Jeanne Fisher and her colleagues Bryan Peebles and Rhea England moved their team to Strategic Retirement Partners (SRP) in 2019. Fisher, a Nashville, Tennessee-based managing director at SRP, started her practice in 2009. “For my 401(k) team, I really don’t look for a lot of tangible industry experience,” Fisher says. “Our industry has changed so fast. Sometimes, in an industry that’s fast-changing, I think that having experience can actually slow you down. In building our practice, we really want fresh eyes on old challenges, without the mindset of ‘This is the way we’ve always done it’ solutions.”
Resources Investment Advisors’ Morris says they use the “HIC” approach—Hard Working, Integrity, and Compassion. “We cannot teach people to be honest, to have compassion, and to have integrity. Those are skill sets that are not taught. We can teach them the skill to do their job. It’s more important for us to find the right people with the right talent, motivation, and integrity, and have them fit into a role within the organization.”
The Paradigm Changer
Intellicents has a big focus on giving personal financial management (its name for wealth management) advice. “We are extraordinarily involved in delivering services at the participant level,” Arends says, adding that intellicents seeks plan advisors interested in expanding their practice into individual advice. “Specialist 401(k) consultants see massive fee compression, and they’re nervous. For them, we have a mechanism to change the paradigm of what they can talk to their clients about: We have a model for providing advice on the individual level,” he says.
The Intellectually Curious Consultant
Lockton Retirement Services, a division of insurance broker Lockton Companies, looks to provide broader value to clients than focusing only on their retirement plan, Kansas City-based President Pam Popp says. “We are always asking, ‘How can we become the best business consultants we can be?’ So we are not just looking for 401(k) consulting abilities,” she says. “Helping clients resolve their business issues might be an issue with the 401(k), or it might be something related to the client’s balance sheet, or its costs across the board. That’s what we are focused on when we bring on new people: that business acumen. We’re looking for people who are smart, and intellectually curious. That could be someone very experienced, or it may be someone who is newer in his or her career, and not as technically proficient yet in working with retirement plans.”
The Collaborator
As the managing director for SageView Advisory Group’s West Palm Beach-based Florida office, Jeffrey Petrone leads its expanding team. “As our client base has grown, we’ve developed specializations within the team,” he says. At the same time, he puts a lot of emphasis on finding people who share SageView’s collaborative nature. “I’m going to look for people who fit with that culture,” he adds, “because if they don’t fit well with the idea of the team concept, they are not going to work well with our firm and our practice.”
Reinforcing the Team
CAPTRUST has long had a centralized approach to some aspects of plan advisory work, such as investment selection and monitoring. “Think of it as all the client-facing work—the time spent working with our clients—that’s happening out in the field,” Managing Director, Advisor Group Rick Shoff says. “Everything they need to go win new clients and service our existing clients, it happens at the central (Raleigh, North Carolina) office and other regional offices: Interestingly, we have more employees in our regional offices than in Raleigh. We get scale by centralizing tasks and roles that can be done more efficiently and consistently that way.”
CAPTRUST also has learned through experience how to build out a team in a regional office as it client base grows, Shoff says. “If you’re an advisor who’s newer in your career and your annual revenue is under $1 million, then you can operate very effectively in your region by yourself, and fully rely on our centralized resources,” he says. “As you get to $1½ million to $2½ million in annual revenue, you could benefit from adding a ‘right-hand person’ (a relationship manager) in the region.” That relationship manager primarily helps the advisor with day-to-day client service, and doesn’t usually get involved with finding new clients, he adds.
The advisor also will have a dedicated “client management consultant” (CMC) at the Raleigh headquarters or in a regional service center. If the advisor needs centralized CAPTRUST resources, the CMC will do the legwork to connect the advisor with those resources. “They are there to be the ‘traffic cop’ or ‘quarterback,’ so advisors don’t have to take the time to go to four or five people to get what they need,” Shoff explains.
As plan advisors’ business continues to grow, they may add additional people in their regional office. These new people could be “tweener” staff members, who work on both client relationship management and new-client development, Shoff says. Ultimately, the biggest teams at CAPTRUST may have 5 to 20 people in their regional office, with the lead advisor(s) focusing on client-facing work and business development. “For our advisors, their ‘highest and best’ use is the time they spend with their clients, and their potential clients,” he says.
Amid the plan advisory business’ consolidation to fewer and larger practices, it’s moved toward a service model that’s more centralized—but with some flexibility. Whether the personal financial management legwork for individual participants gets done by a centralized team at intellicents or by the advisor serving that plan depends on the advisor’s experience and interests, Arends says. “Some of our advisors are very seasoned financial planners, and they might want to run the planning work themselves. Others are not as experienced in that area, so they may prefer to rely on our centralized planning team,” he says. “But it is not going to impact advisors’ compensation if they choose to bring in centralized help. They have access to as much centralization as they need.”
As it expands its retirement business, HUB wants a service model that blends centralization with some flexibility. “In general, we want advisors to spend more of their time with their clients and their prospects. Anything that takes away from that, we want to provide shared services,” Reich says. “They can choose whether to use those shared services or not, but we want people who want to take advantage of that.” He declines to discuss specifically what centralized capabilities HUB will offer, saying that the build-out is in progress. But it’s likely to include areas such as support for client acquisition, client onboarding, and ongoing client management, he says.
“Advisors will tell you that they can’t grow their business because they’re spending so much time on this,” Reich says, meaning particular administrative tasks. “We want to solve for that this for them. We want advisors who say, ‘For me to grow my business, I’ve got to spend less time on these activities. Can you help me?’”
SageView has centralized some advisory work, such as the 18-member investment committee selecting the list of investments that teams like Petrone’s can utilize with plan clients. Having the investment due-diligence work centralized lets Petrone focus on the most impactful work he can do, he says. “That allows me to spend more time being strategic with clients, and focusing on plan-design initiatives, retirement readiness, and financial wellness,” he says. “I get involved directly with clients in a lot of strategy, working with committees to help their participants have better outcomes. The other area I’m heavily involved in is the business-development side.”
Pensionmark has centralized resources in areas of client work including proposals, employee education, financial wellness, contracts, and investment monitoring. “In a perfect world, I think that all our advisors should be managing their client relationships and going out and bringing in new clients, and outsourcing everything else to us,” Hammond says. “We’re trying to provide a framework and an infrastructure where advisors can outsource everything (but direct work with sponsors) to us.”
Pensionmark hasn’t gotten there fully yet, Hammond says, because some advisors still want to provide certain services themselves. They may love working on investments, or really want to keep doing participant education. “For an advisor to go from being a sole proprietor doing everything to handing everything over to us in one day is probably not realistic,” he says. The move toward centralized services often happens gradually. “Initially, that may be the investment piece of the work, and then the participant education, and then the RFPs (requests for proposal) for clients’ recordkeeper searches,” he says. “Over time, they outsource more to us, as their trust in us grows.”
Rewarding the Team
Ultimately, Lockton defines success in terms of growth, Popp says, and that growth takes both individual and team effort. “We want people who are true entrepreneurs and focus on their own business, but who also are able to focus on helping the team succeed,” she says. “That’s a pendulum that swings back and forth all the time, and it tries to find its equilibrium.”
Lockton has a compensation structure for its producing advisors that’s very much like owning a company, Popp says. “It’s an environment that really rewards independence, autonomy, and high performance,” she says. “For our associates, it is much more of a salary and bonus structure, and it’s designed to reward them for behavior that helps to attract new clients and retain existing clients.”
In its ongoing expansion, intellicents has set up all of the new locations as branches, but they’re separate companies. “That’s because we want the advisor in that location to be a very significant shareholder in that office,” Arends explains. “It’s almost like a franchise model. The national RIA and each branch brand as intellicents, but every team has a quasi-separate P&L (profit and loss statement).”
“We have a work hard, play hard mentality,” explains Morris. “To achieve goals as a team, you have to build and maintain the team spirit. You have to focus on being intentional with your ‘fun.’ We have created an environment within the office that integrates fun with events like office breakfasts/lunches, celebrating holidays and birthdays, and offering family-friendly events. We do offsite team outings that are casual but also have a competitive element within the activity. We do many conferences a year, where we are able to get our team members together and collaborate.”
The Nashville SRP team defines success as a team, but also specifies individual team member goals for helping make it happen. “You win or you lose as a team, period,” Fisher says. “The course of the ship has to be set for everybody. Everybody has to agree: What is success? There’s no other way to have buy-in.” The team identifies annual goals for each team member. “Then it’s an issue of, for an individual team member, ‘Did you meet the things you need to meet, in order for the team to meet its goals?” she adds.
Advisors affiliated with Pensionmark own their own business, and they define the compensation and rewards package they want for their team. The approach often varies depending on what makes sense for each job. “A relationship manager isn’t typically selling, so that person’s compensation may be based on the team’s client-retention and client-satisfaction rates,” Hammond says. “With salespeople, what we’ve seen work is the quick financial reward: They want that instant gratification after signing a new client. And that’s when you have to have creativity around your compensation and bonus structure.”
SRP’s Nashville team ties bonuses into the individual goals it sets for team members to contribute to the team’s goals. “We get base pay, and then we identify goals that are necessary for getting additional performance-based compensation,” Fisher says. “So everybody has clearly defined individual goals, and then they ‘bonus out’ if they meet those goals. Things like profit-sharing can be vague for people, and there are certain things happening that are outside the control of that one person.”
Fisher also likes giving ad-hoc rewards for extra effort. “I am a really firm believer in the surprise ‘Attaboys’ and ‘Attagirls,’” she says. “Being a young, nimble team, we have the ability to say, ‘We’re all going out to a fun dinner tonight!’ We do that spontaneously to keep team members motivated.”
“As we grow, it’s important we keep the same culture,” notes Morris. “We want to have people that are working hard around us. We want people that are excited about the growth.”
Judy Ward is a freelancer who specializes in writing about the retirement industry. This feature article originally appeared in the Spring issue of NAPA Net the Magazine.
