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Hosted by Financial Advisor Coach, Ray Sclafani, "Building The Billion Dollar Business" is the ultimate podcast for financial advisors seeking to elevate their practice. Each episode features deep dives into actionable advice and exclusive interviews with top professionals in the financial services industry. Tune in to unlock your potential and build a successful, enduring financial advisory practice.
Ray Sclafani (00:00.366)
Welcome to Building the Billion Dollar Business, the podcast where we dive deep into the strategies, insights, and stories behind the world's most successful financial advisors and introduce content and actionable ideas to fuel your growth. Together, we'll unlock the methods, tactics, and mindset shifts that set the top 1 % apart from the rest. I'm Ray Schlaffani, and I'll be your host.
Perhaps now more than ever, creating structured career paths for your team members is one of the most crucial, yet all too often overlooked aspects of running a successful advisory business. You you've dedicated your entire professional life to helping others plan their financial futures. Have you devoted the same level of intention and strategic career planning for your own employees? Establishing clear career tracks within your business
boosts employee satisfaction and dramatically improves long-term financial success, retention rates and overall client experience. At its core, a well-structured career progression model allows team members to visualize a future within the firm, enhancing their engagement and motivation and potential to becoming next generation leaders and potential owners. In today's episode, I wanna cover two key topics. First,
There are five reasons why career paths matter. And secondly, is this how to it's the seven steps to building career paths for your team. So whether you've done this really well as a firm, you'll get something really valuable today. If you're thinking about a place with which to begin, you'll find this incredibly pointed and helpful. So let's get into it first. Why do career paths matter? Well,
There are five key reasons. And I've mentioned at the top of the episode here, just kind of a little bit, but let me give you a little more information. First is retention engagement. Employees who envision a long-term future with your firm, well, they're far more likely to remain, which will help reduce turnover and ensure continuity of care for clients. According to LinkedIn's workforce learning report, 94 % of employees are willing to stay longer at a company that invests in career development. Second reason.
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Skill development. A structured plan affords team members an opportunity to gain the necessary skills and grow in their roles. Research from Gallup shows that 87 % of millennials consider professional development and career growth critical to their job satisfaction. Third, stronger client relationships. Advisors who pursue a defined career path cultivate deeper, more enduring client relationships.
firms with stronger career development programs report 34 % higher client retention rates than average. Number four, succession planning. Teams that cultivate leadership from within are far more likely to ensure a seamless transition when key advisors retire or depart. Yet a recent CFP board study found that only 27 % of firms have a formal succession plan, making career pathing a vital differentiator. And number five, enhanced firm
value. An advisory firm with a structured talent development plan is considerably more valuable during ownership transitions and mergers. Studies show that firms with formal career paths and leadership development programs experience revenue growth two and a half times faster than those without them. So where do you begin? And if you've got a plan in place, how do you improve that plan? Here are seven steps we've identified in our research working with the best in the business.
on how to build career paths for your team. Chances are you're already implementing some of what I'm about to share. And I want to make sure that you're designing something that creates structure for your team and team members may not even fully understand what you have in place and how it connects to a formalized program. So if you're already doing some of this activity, why not put some framework around it and get some credit for what you're already doing successfully as a leader, making it a formal program.
rather just an informal practice. So I would suggest on the outset, name your career path program, name it. It could be the name of your firm. It could be something really clever, but name it. That clearly communicates that you're committed to it. And then you can build the steps involved in your design career path program for your firm. This will create structure, consistency, and ultimately reinforce the value
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of professional growth within your organization. So here are the seven parts. First, define career stages. Start by mapping out the different stages of a career within your firm and break down the career paths into multiple levels. Here's an example. You might have entry level, which would be associates and analysts focusing on learning technical and operational aspects. You might have mid-level lead advisor and managers, which are
demonstrates kind of that shift toward client facing responsibilities and leadership. You might have a senior level of partners and principles. This involves strategic firm leadership, business development and mentorship. And then a fourth level executive ownership, CEO, managing partners, firm wide decision making and ownership responsibilities. Defining clear career stages is essential for attracting and retaining top talent while ensuring a structured path for professional growth. A well mapped
career path helps advisors and team members understand where they are today and what steps they'll need to take to advance. I'd like to highlight here, some of the best work I've seen in our industry is the CFP board's financial planning career paths guide, which offers a detailed framework for career growth within advisory firms. It highlights key roles and responsibilities, skill development at every stage, even some compensation benchmarks.
I'll put the access to that complete guide in the show notes in this episode. It's available in the public domain. Number two, identify core competencies for each role. Each career stage should have well-defined competencies that align with your firm's objectives. These could include a technical competence, such as gaining proficiency in financial planning or investment management, estate planning, and or compliance. There's a relational management competency.
demonstrating the ability to build and maintain client and team member trust. There's leadership and coaching competencies, establishing a capacity and willingness to mentor the next generation and contribute to team success. There are business development competencies, strengthening the skills and networking and new client acquisition and firm growth. And then there's operational excellence competencies, understanding company workflows and technology and process improvements.
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These are simple examples, five examples of competencies and having clear competencies for each role ensures team members know what's expected as they progress. In other words, it's not, hey, you've done a great job. We think you're ready for the next level. There's a real meritocracy and a measure of competencies that will advance professionals in the firm. Transparency builds trust. Third, provide mentorship and training. Clear progression, it doesn't happen in a vacuum.
Successful firms create a culture of mentorship where senior professionals actively develop next generation professionals. Some key initiatives and examples might include a formal mentorship program, pairing experienced established professionals with younger team members that helps build practical knowledge. I'm also a big fan of reverse mentorship, where younger professionals are mentoring some of the more senior professionals in a firm.
The second would be coaching sessions, providing structured coaching around the development of specific skills. We are a coaching organization focused on business and leadership coaching. And we are on retainer for quite a number of very large firms where we have coaching sessions with various team members around leadership and the acumen and running a wealth advising business. The third could be on the job learning, offering opportunities for next generation to shadow senior professionals
sitting second chair in meetings, joining a senior professional on a business development call, sitting in a compliance review. That all on the job learning is key. The fourth would be continuing education. Encouraging certifications like CFP, CPWA, SEPA, CFA, MBA, all of these encouraging learning and development and investing in these programs is key. And then the last would be leadership development.
developing programs, having your own firm leadership structure that nurtures stronger management and strategic thinking skills. Mentorship, I would also say, fosters a sense of investment in team members and accelerates their profound growth. In our Business Builders Academy, we have kind of a barter system where I've witnessed it happen organically, where advisors will actually create a mentorship program in partnership with other advisory firms.
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where there might be some cross-pollination of learning and development. I thought that was kind cool. The fourth would be creating measurable milestones. Each stage of career development should be tied to very specific and measurable goals. So here are a few examples. Completing required industry certifications, gaining a set of number of years of client-facing experience, successfully managing a roster of clients, taking on leadership responsibilities with the firm.
contributing to business development efforts. Take all of these points and you can start to hone in some specificity where setting milestones that can be measured makes career progression objective and transparent. That reduces uncertainty about what will be required to move forward. And again, where there's transparency, you build trust. Number five, establish compensation and incentives linked to growth. It doesn't matter what the role is in the organization.
And compensation should always align with career progression so that you can accurately reflect and reward increased responsibility and skill development. Consider designing your compensation structures with a combination of base salary increases where adjusting pay as team members move up the career ladder, bonus structures where you're rewarding contributions to business growth and client satisfaction, long-term incentive plans, the LTIP.
helping retain top talent and aligning team members with the firm's long-term goals, rewarding sustained performance and fostering greater organizational loyalty and stability, equity ownership opportunities that offers pathways to partnership for top performers, and profit sharing or deferred comp, which encourages long-term retention invested benefits. Transparent competitive compensation structures will assist your firm in retaining more top talent and fostering longer-term employee commitment. Notice,
It's not just base and bonus. You're using all the tools in the toolbox and linking those to a career progression and advancement of skills and competencies. Number six, you got to provide a clear path to partnership or passages to partnership, depending upon which professionals on which track for your most elite top performing team members, offering a structured path to become a partner in the firm. could be an income partner. You can be an equity partner.
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akin to a law firm. I noticed more more organizations in financial services, especially as they scale and grow, are offering income partnership. Not everybody wants to take the risk as an equity owner. Not everybody's got the same access to capital. Not everybody's got the same business development skills required to be a long-term equity owner. And not everybody has to be a business development professional to be a long-term equity owner. But those are some examples where if you have a senior key executive in your firm,
that's gonna go the distance long after maybe you're gone, you wanna make sure there's a place for them too. And that would be income partner. And then you've got your equity partners documenting the clear criteria for partnership eligibility, whether it's revenue contribution, leadership impact, tenure, all of that matters, providing ongoing training on firm management, strategic planning and financial operations. It doesn't happen overnight. Next generation professionals on a path or passage to
income or equity partnership learned by doing. So performative opportunities are key and establishing opportunities to participate in firm governance, having a voice in strategic decision making, absolutely key if you plan on that professional taking the reins at some point in the future. It is often overlooked in career progression plans and career pathing for this notion of partnership, income and equity.
But I'd encourage you to establish and communicate and establish route to leadership that shows your commitment that it's a two way street. This is going to help ensure your firm's longevity and continued success. But you got to put out that olive branch and be transparent and specific about what that criteria is. then number seven, encourage ongoing career conversations. Career planning should be an ongoing one. It's not just an annual review. It doesn't happen.
maybe once a year, midway through the year. At a minimum, you should be implementing quarterly check-ins, regular discussions about career progression and skill development, individual professional development planning, formal plans outlining career goals and action steps, feedback loops where professionals on your team are getting continuous feedback to help them adjust and refine their goals. And let's not forget sort of the episodic spot conversations where
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career path and planning becomes part of the everyday nature at your company. Proactively encouraging in these vital career discussions, it will demonstrate your genuine commitment to each team member's continued growth. Three common challenges I see advisors face here is advisors who don't want to manage, they really don't want to lean into this exercise. Not all advisors aspire to leadership roles. And frankly, let me just say out loud, that's okay.
You've got to provide alternative growth plans focusing on technical mastery or specialization, but you also want to make sure while you're training and developing around estate planning, tax investment, you also want to lean into this career path. If it's not for you, hire the right professionals to help you do it. The second is you want to find time for training. You've got to balance the need for delivering exceptional service to your clients with the desire to develop people.
There's that old saying, if you want to go fast, well, you go alone. All right, just do the effort yourself. But if you want to go far and build an enduring firm, you've got to go together. And that requires booking time on the calendar for training, putting intention to your training and development efforts, integrating career development into your regular workflows, using client meetings as teaching moments and leveraging mentorship to help spread leadership responsibilities. The third common challenge is retaining top talent.
To prevent top performers from leaving for perceived greener pastures, ensure they feel valued and engaged and envision a compelling future with your company. I often say the grass is always greenest right where you water it. So instead of getting team members thinking about like what's next door, what's a competitor doing and having your top talent poached away, help water the grass right where you're standing with them. Provide clear incentives, meaningful work and a strong culture.
I've got a few final thoughts and then with each episode we include coaching questions so you can reflect on this episode. Today there are four. As a leader, your ability to cultivate talent within your firm, it's as crucial as managing client assets. However, building career paths is not merely about filling roles. It's about creating a culture where team members feel valued and motivated and aligned with your enterprise's long-term vision. If they don't see themselves in your company's future,
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they're off to the races, finding a new role somewhere else. By adopting this strategic and structured approach to career development, you'll be far more effective in retaining top talent. By the way, you'll be far more effective at attracting top talent. You'll ensure business continuity and provide a consistently exceptional client experience. What steps are you currently taking to build career paths within your firm? That's my first coaching question for you. Second.
Where do see opportunities for improvement in your current career pathing? Third, how can naming your career path program improve long-term alignment and strengthen your credibility with team members? Remember, you're probably doing a lot of this activity now, but by formalizing it, naming it, putting some process to it, using the seven steps outlined in today's episode will help you improve what you're currently doing. And number four, what feedback have team members provided about
your team's current career path program. And how might they explain it to a potential new team member your team is considering recruiting? Remember, some of the best recruits come from your existing team members who know somebody and have a relationship already. So be curious, how do they explain your current career path program opportunity with your existing firm? Well, thanks for tuning in. And that's a wrap. Until next time, this is Ray Sglafani.
Keep building, growing, and striving for greatness. Together, we'll redefine what's possible in the world of wealth management. Be sure to check back for our latest episode and article.