Building a Scalable RIA Before You Hire, with Darci Smith

In this episode of Profit & Practice, host Max Holvik sits down with Darci Smith, founder of Roklyn Consulting, to discuss the complex and rapidly evolving landscape of recruiting within the RIA space. While many firms lament a "talent shortage," Darci explains why the industry is actually suffering from a training shortage driven by the rise of automation and AI tools. She shares invaluable insights on how independent RIAs can leverage their unique brand stories to out-recruit larger wirehouses, the critical importance of defining clear career trajectories for support staff, and how to navigate the delicate succession planning process between G1 founders and G2 advisors.

 

Darci Smith is the founder of Roklyn Consulting, a boutique recruitment firm specializing in financial advisor placements. Originally building her recruiting career by helping collegiate and professional athletes transition to corporate roles, she has spent the last six years helping independent RIAs and wealth management firms optimize their talent, operations, and cultural alignment.

 

In this episode, we cover:

·         The Training Shortage Myth

·         Defining Culture Beyond the Clichés

·         Avoiding the "Mini-Me" Hiring Bias

·         The Crucial (and Misunderstood) CSA Role

·         Spotting Candidate Red Flags

·         Independent RIAs vs. Broker-Dealers

·         Aligning Marketing with Recruiting

·         The G1 to G2 Succession Epidemic

 

Connect with Darci:

LinkedIn | Roklyn Consulting

Every episode closes with the same question: what's the best piece of financial advice Darci has ever received? Listen to find out.

 

Connect with the Show:

Profit & Practice is hosted by Max Holvik, founder of The Advisor's CFO, a fractional CFO practice for wealth management firms.

TheAdvisorsCFO.com | LinkedIn

Creators and Guests

Guest

Darci Smith

Founder of Roklyn, a boutique recruitment firm specializing in Financial Advisor Placements.

What is Profit & Practice?

Profit & Practice explores the business decisions that determine whether a wealth management firm thrives or struggles. Hosted by Max Holvik, CFA, a fractional CFO known as The Advisor's CFO, the show features conversations with RIA owners, operations leaders, M&A advisors, and the consultants and specialists helping advisory firms grow. If you run, manage, or advise a wealth management practice, this show is built for you.

Darci Smith (00:00)
Any chance you could recruit financial advisors? And I thought, well, how hard could it be? Turns out it's very hard.

The biggest thing I can tell those advisors is make sure that it's an open and honest conversation. Because if you've heard anything about the epidemic of the G2s getting very upset that they aren't getting that growth, it's because they're promised like this succession plan that never comes to fruition.

Max Holvik (00:25)
Welcome to Profit and Practice, the show about the business behind the wealth management firm. Here's your host, Max Holvik, the advisor CFO.

Max Holvik (00:38)
Welcome to Profit and Practice. I'm excited to introduce today's special guest, Darcy Smith.

founder of Rocklin.

Rocklin is a boutique recruitment firm specializing in financial advisor placements. It's an honor to have you here, Darcy. Welcome.

Darci Smith (00:56)
Thanks for having me, Max. I appreciate it.

Max Holvik (00:58)
So before we dig into the exciting world of recruiting in the RIA space, how did you get into this space

Darci Smith (01:06)
Yeah, great question. I kind of came in a different way. I feel like most recruiters in our space have worked within wealth management. So I actually have always worked in recruiting. Previous to owning Rockland, I worked at a company that helped athletes get jobs when they were done with their sport. So I worked with a lot of professional athletes, collegiate athletes, and that's how I got introduced to wealth management. Many RIAs and wealth management firms loved hiring athletes. The backgrounds they have in sports obviously translate really well into a team environment.

And they also have great networks. So that's how I first got introduced. And the more I worked in it, the more excited I was about so many things that needed change and the culture side of our space. There's so many wealth managers that own their own firms, but they're an advisor first and a manager second. So working with them from the recruiting side and trying to help them formulate the best way to hire and what that's going to look like and how to even identify their culture has been the best part of this adventure. and

So it's been about six years since I started Rocklin. And the first way in actually was someone I met through business school. So we became really good friends, still great friends to this day. And he was a market head at a warehouse. he contacted me and was like, Hey, I know you're a great recruiter. Any chance you could recruit financial advisors? And I thought, well, how hard could it be? Turns out it's very hard.

But I have so much to him, like I have to thank him a million times over because

He basically sat down with me and was like, I will teach you everything you need to know about wealth management and about the acronyms and the space and what to ask and why you're asking. And I need you to bring the recruiting side of the personal side, the not just what's on paper, but more so why people fit with certain firms and certain people from management style perspective. And so kind of joined forces with him and his warehouse was my first contract. And like I said, I have so much to thank for that because.

That was my first year. I really just worked with that firm. And then from there, obviously the more I learned, I started generating more clients, started just exploring the space of wealth management, what I loved and what didn't love. And it's just flourished from there.

Max Holvik (03:16)
That's exciting.

as a as a fraction

of CFO I I like to say that talent is your biggest expense, but it's also your biggest asset. So I'm excited to talk more about the the the asset side of this and how important it is to get the talent right and everything that that that you see out there. So kicking that off, I I'm curious to hear what what does the market for for advisor talent look like these days?

Darci Smith (03:40)
Right. It's a big need. I will say pretty much every wealth management firm is consistently hiring for financial advisors. As you can imagine, you're not necessarily paying for that talent if they come with a book of business. So if they come with assets, they come with revenue, then you're just more so identifying do these clients work with our firm? Do we have the right tools that the advisor needs? And do we have a culture that they're gonna wanna want to be a part of?

And obviously that continues to roll into what are we offering to those advisors in forms of equity or in forms of growth trajectory? And really that's how they are formulating their recruiting plans. And so in terms of like financial advisor recruitment, I think it's so it's, I mean, everyone's hiring right now in terms of the wealth advisor, right? However, when it comes to the implementation of technology and AI tools.

I think where we're struggling as a whole in the wealth management space is those entry-level jobs. Because we are now using the note takers and we're using so many of these tools, it's eliminating the younger generation from being inside those conversations that have helped them grow into the best advisors they can be in the future. And so we're kind of missing that training perspective. So when firms are coming to me, they're like, we want to hire someone with five years of experience.

Great, I understand that, but who is where are the firms that are spending the time with those advisors to get them to that level that we expect when they hit that five years of experience? So I think that's where I'm seeing the most the struggle is finding that sweet spot of how do we get someone that's been trained properly that we're ready to hire, or can we come up with a training to be able to hire out of college or, you know, out of a career pivot, let's say, to get someone to where they need to be.

and be implemented into our culture.

Max Holvik (05:36)
Interesting. So this seems to be one of the the dilemmas with AI in the way that they're starting to replace some of the more junior roles, but now you don't

have junior roles have been trade to take on the more senior roles. So this is probably gonna be worse and worse

Darci Smith (05:50)
Yeah. I mean, so many people too, and like they've cut their teeth cold calling or they've sat

and shadowed other advisors. And obviously we're trying to make things more efficient. So now we don't need those entry-level candidates necessarily in the meetings, but it is so helpful for them to see those conversations that I still think there's a place for that. I think we just need to figure out how we can marry the two of still providing the training and the experience for the younger advisors.

And then still being efficient as a firm. but really that's where the talent people say we have a shortage of talent. I think we more so just have a shortage of training talent than anything.

Max Holvik (06:29)
you mentioned in terms of fit, how much does a a firm story matter versus just a plain upcom?

Darci Smith (06:37)
Great question. I think it does depend on the advisor and where they're at in their lives and what their goals are. Cause some advisors come to me and they're like, I just need to make more money, right? And that's perfectly okay.

I mean, most of the time people are switching positions because they want to gain financially or they want to gain from a career perspective, whether that's growth trajectory, right? And at the end of the day, you know, the client is the end user. And does this move actually helped the end user?

Am I able to provide more opportunities for my clients, better investment strategies, better platforms for them? And I think that should be the forefront. But for the advisor, does it make their life easier? Right. so many advisors, you know, there's big paychecks happening because there's private equity in the space now. There's a lot of transition money coming across people's desks. But I think they need to look further than just that paycheck and really think about how does this help me?

And my clients in the long run. And that's where I think the word culture has

gotten s really buzzy. I mean, you hear the words culture fit. And I think when I work with a wealth management team, I love to really dive into that because I'll just keep pressing and pressing until I'm like, define that, define what your culture means. And most of the time they can't. They're like,

we just don't hire assholes, right? Like that's like their tagline. And I'm like, well, that's everyone's tagline, right? Like I would hope that most firms don't want to hire that type of person. So

I don't think that's good enough to call that your culture. Like, let's dig in more about what does culture actually mean? Do you have an in-office policy? Do you have hybrid? Do you have remote? do you have all hands meetings? You know, do you have things that are standardized across the team and the firm in general?

To really speak to that culture and what does that mean? And that's gonna trickle down into the clients and what the clients want because it starts with the advisors, it starts with the the team, you know, the the biggest asset, like you were saying, the talent at your firm tends to dictate how the clients feel and if they're happy. And when an advisor is, you can see, is upset with their own firm and what they can and can't do, that's gonna trickle down into the happiness of that client.

Max Holvik (08:49)
That's a good point. And I and I guess the the wealth management industry is somewhat unique in the way that I would say most most industries you need a a a cultural fit between the employer and the talent. But in this case, you have a third one that is super important, which is the clients. Now, clients obviously important in other industries too, but because of that special relationship that that that the advisor have to the client and making sure that that's a good fit, you need alignment among all three, I would say.

Darci Smith (09:19)
Correct. Yeah. And I it's funny because you hear a lot of wealth management firms say, you know, we put the client first and that's always their number one thing, which makes sense. But I actually like to push back on that too and say, well, in order to do that, you have to put your team first. So it should go, you know, our team, our employees are number one. And if they're happy, then obviously the client will be number one as well. But if you don't have a happy team,

then you're gonna start losing clients and that's the blood of your business, right? So

Max Holvik (09:53)
That's a good point.

and how going but going back to to in terms of the the fit you mentioned and and and culture

how do you assess whether a candidate has a culture fit to the employer before they even met the employer? Because that's that seems like a tricky

job on your end to try to assess.

Darci Smith (10:10)
It is. I mean, for lack of sounding a little bit woo-woo, it's a a lot of like vibes.

You just have to identify like what does the person morally care about, get to know them from a personal level, because you can start to identify what matters to that candidate and then make sure that matches up with what matters to that manager or that firm. And that starts to align. But I think a lot of the times financial advisory firms, especially if they're smaller, right? The RIAs.

They tend to have that like me bias. So they just say to me, I want to hire a mini me. And then we have to talk through that. Like sometimes that does work, but really it's like, do you want someone that's not going to challenge you and not going to have differing opinions? Or do you want to kind of elevate where you're at and bring people in that are going to have different ways of thinking and make this, you know, full circle that's going to help move the whole firm forward? Or do you just want someone that's like, I know they're just like me.

And they're gonna just shadow what I do and do it exactly the way I've done it. And sometimes that works, like I said, but ultimately what I've seen is the success is bringing in different ways of thought. And that's gonna be, you know, really how you advance the firm. I I like to use, you know, the personality tests that most people are familiar with. It kind of you can use whichever one you you feel comfortable. They all kind of end up saying the same thing. but the disc is probably just the most common. And really, you see, like the advisor that.

That owns the firm that is more dominant, that D in the disc, they're that red color. and usually you see the the really like the I, which is the influence, like that salesperson that's always gonna be talking to people, that's the person that you want in that business development or financial advisor role, doesn't mean they're gonna be really great at servicing clients. They're probably not great at the, you know, the list building and the really like clear clarity type of person. So you gotta you gotta start to balance that out. and something I really wanted to talk about today too is

The client service associate role is the number one most important role. And I think it's not taken as seriously as that advisor role, but really they are the life of the firm. I mean, clients are calling in and getting this person on the phone, and they're the ones that are going to be kind of handling behind the scenes. And I see what happens a lot is we hire this client service associate thinking they're amazing. They have all of the qualities we're looking for, entrepreneurial, you know, go getter.

And then what I say back to the advisors is like, well, isn't that what you had? They're gonna wanna become an advisor. And if you don't have that path for them, they're quitting. So

we have to hire someone that actually doesn't want to become an advisor. They forever want to stay in that client support role in the operation side. Or if you're willing to hire that really go-getter personality, you have to have a path for them, or you're gonna.

Be upset because they're gonna, you're gonna have that attrition. And you see it time and time again, and people are having a hard time hanging on to that client service person.

Max Holvik (13:08)
Yeah, and that that attrition is is not a good sign to clients usually too, because

that's often the front face that they see, sometimes even more often than their advisor. And how

related to all of this, how are there any any red flags that you see that you realize saying hey, this is not gonna work out between the firm and the talents that that you look out for?

Darci Smith (13:30)
Yeah, I think an obvious one is when I talk to a candidate and their first question is, you know, is this a remote position? You know, I'm kind of always like, well, and that's usually one of their first questions, right? I'm like, well, why are we asking that? Like, what do you what is the goal and what do you need? Or are you just trying to find something where you can kind of sit back and not have to work as much? And I think that's a fear of a lot of advisors. If the culture is set that way.

then that's an exciting thing for the candidate, right? So it it can be a positive or a negative. I think also the very obvious one is you look at a resume or you talk to someone and they've jumped around a few times. I think most industries, when you're moving firms or moving companies, you it's because you're making more money. I think our industry in wealth management is the one one industry where you shouldn't be making more money because what's valuable is those client relationships. So unless they're following you,

I don't see why you should be jumping around because if you've been building a really great relationship and client base, you should obviously increase that client base where you're at and want to obviously increase your revenues and and so on and so forth. And so when you see someone not in a producing role that's been jumping around, there's some question marks there. and of course it can be the firm, right? And so we just have to uncover like what is it? And I have to really dig in with candidates because they'll say very vague answers of, my

You know, we just didn't get along or it was a little toxic. And I'm like, well, explain what happened. Because I need to know in order to make sure that I'm representing you well to this next firm. So they don't just automatically assume it's a you problem and you're jumping around. So I think those are some, you know, the the remote thing and then the the jumping around is the top two. and I like to ask people like, why did you get into wealth management? I think, you know, I want to hear like the real behind it because, you know, some people have

you know, family in it. And then your question mark is, are you going to end up working for your family business one day and you're just trying to get some experience to then go do that. So you kind of need to uncover why they're in the business and what brought them there. And you will hear people say, I just want to help people. And you have to obviously dig in, like, okay, well, what does that mean to you? Right. And just like keep pushing, keep pushing. So I think that's like a a product of my job is just to keep like prying until I get the real answers.

Max Holvik (15:51)
A little bit of detective work in some ways, right? Yeah. And and does

Darci Smith (15:53)
Yes.

Max Holvik (15:56)
does who you hire and how you hire, does that change as the firm grows or does it stay the same?

Darci Smith (16:04)
It does. I mean, the firms, it depends on their needs and how they're

set up. So some firms want people to have all the autonomy and they want them to run their business the way they want to run it. Some firms have a very strict way of doing things and a structure. And I would say those tend to be a little bit more stable because it's the clients are the you know, they are owned by the firm and they're more so bringing in people that want to service those clients.

That person has a very different personality to that that wants to go out and generate new business and actually own their client relationships. So not all wealth advisor or financial advisor positions are created equal because you have to identify what does this look for me, you know, 10, 15, 20 years down the road? Do I have something of ownership or am I going here because it's a stable environment? I get to do what I love, which is meet with clients every day, and I'm okay with that. And I'm willing to take that W-2 job that's more stable.

I may not make the millions of dollars you see other financial advisors making, but that's what I want. So you also have to identify those traits in the candidates to make sure you're truly helping them find the right position and not just the next position.

Max Holvik (17:18)
That makes sense. And do you do you see that a lot of your clients tend to have stated values or are they they're less stated but you kind of discover them as you learn more about the firms to then see if there's a good fit with your the talent that you have?

Darci Smith (17:31)
Yeah, I do think it depends on the size of the firm. I will say like it's a little bit less stated and more so you get to know the person and what they value and then kind of start to identify that. And it's definitely something that I work with firms on too. And you know, if I see whether their operations or their marketing or things aren't aligned and in sync, before I hire someone, I'll say to them, like, I don't think that we're ready to hire yet. I know you need talent and you feel like you're drowning, but

It's not gonna work out if these things aren't in line because the operations are falling apart or you don't have the right messaging. And therefore people are gonna come into your firm, they'll work great for a few months, and then they're gonna start to see those things too and get unhappy, right? So let's make sure the systems are in place before we plug someone into the systems and that's gonna be the highest success rate of keeping someone at your firm. There's nothing worse, right, than someone you're so excited to make this higher.

And it just you hear it all the time, right? it just didn't work out. But but why? Like, let's figure that out first. And I really, really try and push that with my clients. Like I want them to have those operations in order. And I have created such a great network of people that I really trust that I can plug into there. And I I will recommend, you know, specific people in marketing or in operations, or maybe it's their tech, right? or maybe it's their financials max. And you know, it's important to have those things.

good to go before you start building your firm 'cause you're just gonna find more problems.

Max Holvik (19:04)
That's a great point. That's and are there are there any other things that you think that that the firms should get right before they even start looking for the next hire?

Darci Smith (19:15)
Yeah, I really want firms to like stand behind and hold true to what they believe in from like what I was talking about, that culture side of the the simplest one is probably that in office culture. If you do really truly believe in that and you everyone at your firm is in office, then don't like if someone comes to you and says, I just want one day work from home, don't slide on it. Right. Like I I think you have to be very matter-of-fact about what you want.

And I have seen clients kind of bend the rules a little bit for certain people, which in it starts out fine, but it starts to seep into the culture because other people are like, wait, like this person is allowed to work from home, like why can't I? And it just starts to get a little rocky. and that starts to crumble that culture.

So I even have people like, hey, let's get a one pager together of like, what are the values? What do we care about? What do we make sure that this is our standard operating procedures that we aren't going to change because this is important to the firm and we have to hold true to that, even if that means saying no to a candidate that you really want. Right. I think those are the important things to have down.

Max Holvik (20:21)
Great. So so I guess through you by having that not only do you do you help protect your culture by not being too lenient if you're tempted to do so, but I guess that also helped attract the right type of client that fits your firm as well.

Darci Smith (20:35)
Right, right. And it's also like what what is your story? What how are you talking to not only your your employees, but to your clients? And how does that, you know, actually go all the way through from the top down of the firm? And sometimes it changes and that's okay, but I think everyone in the firm needs to be in the know.

Is just as important as the person at the top. And a lot of times we don't see that in in the culture. And I think when that starts to break is when you start to see people leave. And I just really want to encourage people to like get those, you know, the values across and make sure that it's something you want to stand behind. Cause I know there's so many things that advisors are like, I have a million things on my plate. The last thing I need to do is sit down and just like talk about my mission and my goals. But it is the most important to make sure that.

you have like a through line to the client and to your team. So I would say before hiring, make sure that you kind of take a step back and look at why are we doing this?

Max Holvik (21:33)
and you you

you mentioned earlier that you you started working with a warehouse and now you're obviously deeply involved with with many types of RIAs and so on. So you see the wider wealth management landscape. What's different about hiring for an RIA or finding talent for an RIA versus for a broker dealer?

Darci Smith (21:52)
Great question. I think that for an I mean, I could probably talk about this for hours, but the most obvious and I think the way that the training and the way that you're thrown into so many things when it comes to the world of an RIA, I mean, you have to wear a lot of hats and sometimes you're asked to do things that aren't quote unquote on the job description. And what I found is at the broker dealers or at the larger firms, they tend to have a little bit more siloed.

approaches and it's like, this is your responsibility and this is what we want you to do. And at an RAA, that's always transforming. And so we need to find people that are a lot more adaptable. And it's not a right or wrong because some people really thrive when they're given like one specific specialty or one thing they need to do. And others are like, I like all the different stuff being thrown at me. So it's just identifying what that looks like. But I would say that's probably the biggest like differentiator. I mean you're

let's just talk like, you know, like Merrill Lynch or Wells Fargo, like you're in their systems and their proprietary systems and you get to know those systems very well. And then you pull yourself out of that into an independent firm and you're using multiple systems, multiple softwares. You're trying to handle, you know, problem solving. And there's not just like one centralized place. And so having that ability to be to adapt and like kind of, I guess, figure things out on the fly is super important.

Max Holvik (23:14)
and do you see that change backwards a little bit as as some of these REAs get much bigger and while there's still the differences from an RIA versus a broker dealer perspective, but that size wise now some of these RIAs are getting bigger and roles are getting more specialized.

Darci Smith (23:31)
Correct. Yeah. And really, I mean, that's how you when you grow, that's how it works. You know, you start to plug people into like where their strengths are. And that makes a lot of sense. And so these mega RIAs, I mean, they kind of run similar to that of a warehouse, right? They have people in those specific positions from a talent perspective. Now, if we're talking more of the you know, the kind of the overarching theme here is the broker dealer or the warehouse, like they tend to have the products and

They're meeting with people at different levels of their of their own careers as a client. and then on the RA side, you tend to see a little bit more of that like really deep hand-holding relationship building, like the white glove service. And I still think you can get that out of wire. I think it depends on the person. But again, we're kind of talking like high level. I think when I work with RAAs, you know, they have a hard time with people that are coming out of bank channels or coming out of wires because they don't have that same relationship building skills that you would have in an RIA.

Max Holvik (24:27)
Interesting. And I guess that comes from the the compensation and the incentive structure between the broker dealer and the RIA and to some degree

Darci Smith (24:35)
Correct.

Max Holvik (24:35)
what what behavior that tends to to lead to, but to some degree also maybe the type of people attracted to the different models without making

Darci Smith (24:43)
Right.

Max Holvik (24:44)
judgments on any of them.

Darci Smith (24:46)
Right.

Max Holvik (24:46)
going back to the RAA, not the big ones but but most of the REAs

There are in that one to fifty people to put to just to put a bracket

on it. d do you think that they have some advantage in recruiting that versus the broker dealers that they're just not aware of?

Darci Smith (25:05)
I think so. I think when they are able to really sell their story, I think that's where the differentiator is. And I really work on the differentiator is probably my number one talk with RAs. Like what makes you different than the RAA down the street? And I think people look very much internal of like, well, it's cause of me. Like I do this, this, and this. And I'm like, okay, yes, you're great, but can we get can we get more about

What's the story behind the firm? Like, why is someone going to want to work here and going to want to represent this name that no one's ever heard of? Right. Many a times you've heard many clients have heard of the wires. They've heard of these big broker dealers. But when you go to this independent firms, they've never heard this name. You're wanting them to go out and, you know, talk to clients about your firm. So what is that story? And how are you going to make sure that they are like fully 100% on board with supporting that story? And so

I think that it's really hard when you've worked your whole life as a singular advisor and you've done things you're so successful. You've done things so well. So it's hard to remove yourself from it and look at it as more of an enterprise because all you've known is like, it's me. I'm the reason people come here, you know, I'm the reason they do business with us. So now it's like, well, how do you pass that on to the next generation and they'll do business with that person? Cause they're not you. So we need to figure out like,

How do we separate you from being that differentiator? And we talk more about, you know, the clients and the team and figure out like what does that look like and why are people gonna work with the team now? And so it's hard. I mean, I'm not, you know, there's reasons why people hire marketing people to create these stories. But at the end the day, there's definitely there's always something that differentiates a firm. And it's just a matter of finding it and then really using that as your niche and using that as your story.

And hiring people that are gonna align with that. Because I think, to give an example, you know, I worked with a firm that all they did was market to like doctors and dentists, which is great. Like that's their niche. And then they went out and hired and they're like, but it's okay if they don't do that. I'm like, Well, why? Like, why don't we want to keep like what's worked and what's been successful? And, you know, and they're like, Well, if they just bring any assets, we'll figure it out. And I'm like, Well, now we're watering down what you've built and this is a whole different

Like we need to look at it from a different lens now. Like what's the goal? Again, like get back to that end goal to work backwards. And so that's like a great example of here's a way that we've been doing things. And now I'm just thinking about, okay, let's bring in assets to the firm, but I'm not thinking about like how is the firm gonna grow as a whole and how are we gonna continue the success to make sure that we keep this this this plan or this, you know, like I guess the marketing of it all. Right. And so it's things like that that really help to differentiate like why someone would want to work there.

and then being able to say no to people. Like saying no is so powerful that just because they're a great candidate doesn't always mean they're a great candidate for your firm.

Max Holvik (28:04)
do you have any good examples out there of of interesting niches or interesting differentiators that you've seen that you're able to share?

Darci Smith (28:12)
good question. I think, well, I will say from like a story

or an investment side, I think there's some fun stories of like whether it's I work with a firm that, you know, they're an RA that's spun out of a family office. And so their story to clients is like we get to tap into this family office structure and you know, work with you as our RA client and have the same investments and have the same access to these alternative investments and things like that that our family office does. So I think that's a great.

differentiator. I work with a firm that I love. I'm so incredibly grateful we get to work together, but they really treat every single advisor like we want to help you grow your business. There's no handcuffs here. You own your book of business. We will do everything we can. We will fly out and meet clients with you. We'll help you close them. At the end of the day, if you are unhappy here, if we're not doing something right, we will help you get those clients and go somewhere else. Like

They are so hands off to where no one wants to leave because they're so that's their story of like, we want people to be here because they want to work as a team and share all of our brain power, but we're we'll never be the people that are gonna handcuff you to this job. and I just think it's it's incredible. And they always have like they listen to their advisors. If they come to them with questions, they will figure out how do we make this work. And if they can't, they don't, they never say no. They'll say no, and here's why.

And here's exactly what it looks like. Let's figure out another way to make sure that we can make this happen for you. And so here's an alternative solution. And so it's like every time the advisor is talking to their friends, family, they're so happy with their job that it's so easy that gets people that want to work at the firm. And not like internally, but like the clients want to work with the firm as a client, you know? And it's like that is all trickling down to ultimately growing the success of that firm.

Max Holvik (30:04)
Wow. Sounds like someone who really got their culture and their values narrowed in and sticking through to it. Yeah, that's impressive.

there's a short supply of talent out there. it's hard to get good talent and more talent is re retiring, as I understand, versus coming into the industry.

How has this sort of changed the the landscape from your from a recruiter perspective and have compensation structure become more complex because of it?

Darci Smith (30:32)
Yeah, there's been a lot of change in the comp plans. many a times I I'll talk to someone

that I would call a G2, so that you know, that next generation or G three even. And they'll come to me and say, Yeah, I'm looking for an opportunity where there's a retiring advisor and I can just kind of slide into that book of business. And that's like the worst thing, right? Like I'm like, Great, me

Max Holvik (30:50)
Yeah.

Darci Smith (30:51)
too. Tell me where you find them, you know. I'm like, I would love that.

and it's kind of like it sucks, right? You want people to have that drive to like want to build it themselves.

But at the same time, like there's a need for both sides. I think that from our retiring advisors, they're looking at it from what is my succession plan? And they come to me to kind of figure out, okay, I have identified this G2 or I'm using Darcy to identify how do we find this G2. And it's not just as simple as like, okay, now they can just start servicing my clients, but it's the talk about what happens when they want to become owners and how do I structure that succession plan to help me and my family, but also this next generation.

And so there's different ways of doing it. And there's many advisors that just want to hire someone, pay them a flat, you know, W-2 salary to say, hey, just manage my book and I will go do the things I want to do because I've built this book. And it's fair, right? Like they have worked their, you know what off to make to build this book a business. And now it's just about like hiring that right, what I call the servicing advisor to do that job. And so

The biggest thing I can tell those advisors is make sure that it's an open and honest conversation. Because if you've heard anything about the epidemic of the G2s getting very upset that they aren't getting that growth, it's because they're promised like this succession plan that never comes to fruition. And I just wish that like advisors could be honest and say, hey, like I don't have a plan to help you buy into the business or to help you actually take over as owner.

But I do have a plan to where I'm gonna pay you to do the job. And as long as there's that honesty and open door policy, conversations can then happen from there. But I think the overpromising of saying like, I'm retiring, this can all be yours one day, you know, that's really unfortunate

Open it up to them and just you have to trust your team and show them like if there's a path to succession, I need you to see like what that looks like because that's the only way the conversations are gonna happen.

Max Holvik (32:52)
Well and and and from a valuation perspective too, if you if you're planning on retiring but you don't really have any other ones with a fairly sticky relationship to those clients, that book is is going to be worth a lot less, potentially nothing.

Darci Smith (33:05)
Right. Yeah. And then I mean, if you take that a step further too, it's okay, now that retiring advisor, if there isn't a way for the G two to actually buy the practice from them, which happens a lot, right? So now

they have to go to the open market, sell the practice. Now the G2's terrified because like, do they actually have any skin in the game? It's important for the G one to actually have that person, but are they actually t speaking to them about what they're thinking and

if they're going to sell. Like a lot of times you see they kind of keep it a secret. And it's like, well, that's that's an important asset to your valuation and to this working. So you need to make sure that they are in on the the deal and they know what's going on and they're going to be taken care of and their families are going to be taken care of. And so I think that's so important. And it all starts with just that open communication from the beginning.

Max Holvik (33:51)
It's great points, great points. And it all goes under the the big, you know, the the important part here that that clients are going to be continued to be served well. talking about valuations, what I see often is the the the downside of these high valuations that firms have where it's becoming too expensive from any G to to actually be able to buy into the book because the valuations are so high.

Now there's there's work around this that's that's and and different ways to tackle it, but it is a problem where basically most G2s can afford to buy the business compared to what G1 can get on the marketplace.

I am curious to hear, you know, what what has changed the most about recruiting advisors in the last few years?

Darci Smith (34:35)
Think the the big paychecks, the the private equity, the word

equity in general

it's crazy to me how many advisors like they hear the word equity and that's all they need to get excited. And I'm like, whoa, whoa, whoa, what does that mean? Like, is it real equity or is it profit share or is it, you know, like we need to really phantom equity, truly understanding.

what you're getting and then what that ends up being from like a handcuff perspective, like that you really, really need to like know that information before just accepting something that sounds good. Right. And I see a lot of these brochures that they're trying to recruit advisors. we're providing equity. It's like, well, like you have to explain what that is, right? Like it doesn't make any sense. So I think that piece is being these huge valuations, the way that we're

looking at advisory teams and the MA space in general is, you know, it's so much different. and I think the independent space, it's not as scary as it used to be. Many people like really, really cared about having a name behind them like a Merrill, and they liked, you know what I mean? But now it's like, well, not a big deal if it's it doesn't matter the name, like it's me. And like having more confidence as the person doing the job, I think has also

been a huge change that we've seen the industry from all of these RAAs coming up and the independent space in general. So I mean from a recruiting standpoint, I think it's always gonna be you want to work with people you like, you want to work with people you trust, you want to work with like the the people that are loyal. And that's never going to change. But I think what will change is people no longer are just accepting jobs because it's a job. In our industry, like there needs to there we have to have a growth path. Like there's no question about it.

And every, you know, the CFP board, every time an advisor is getting into the space, they're being told this over and over, like, make sure you have a career path where you're going. And we're still not seeing enough of that. So I think that's probably

the most important like piece to get together before you start recruiting is having a very clear trajectory of where this person goes or doesn't go, right? you know, when they come to your firm.

Max Holvik (36:48)
if you were to to start an RIA today, what what

would you

Darci Smith (36:51)
Mm-hmm.

Max Holvik (36:51)
do to make sure that that you win when it comes to talent?

Darci Smith (36:56)
Yeah. my gosh. I feel like I'd have a little bit of a competitive advantage because I have my network of talent.

Max Holvik (37:00)
Yeah.

Darci Smith (37:02)
but yeah, I think that I would if I started RA today, I probably wouldn't even start hiring for like another year. I would make sure the operations are set. I'd make sure I have all of the people like in my circle that have helped me build something that is ready to take to someone and say, Hey, this is what I'm building. I want to now hire. And here's why, and here's what we're doing, and here's where we're going.

Like that story needs to be so well embedded. And like right now, I'm working with an RAA that just is, they haven't even launched yet. They're they're forming right now. And I'm so appreciative that they've come to me now because they don't just want to go out and start hiring. Like they're like, let's get our actual like recruiting plan together. And what are we going to be selling to advisors that's going to differentiate us? And what are we going to be selling to our clients and showing to our clients to help us build something that's not just.

Hey, we have all this money, we're gonna pay for books of business and just like try our best to get to a couple billion and then sell it to some other private equity firm. Cause many a times that is the story, unfortunately. And so yeah, it's more about like, why are we doing this and why get into the space? Like I think to answer your question truthfully, I don't know if I would start RA right now. I think why would I get into that space? You know, I'd have to really like look into the question there of like what do I want to build? And I don't want

To get caught in the rat race of okay, gotta get to that one billion or like why? You know, I feel like many advisors I speak to, they're like, I just gotta get to a billion or I just gotta get to five billion. And I'm like, well, let's slow down. Like, why are you trying to get there? What is that magic number doing for you? Versus hiring the right people, having the right revenue, having the systems in place that you're gonna be happy with a firm that you've built.

Max Holvik (38:45)
anything we didn't cover that you wish that

owners of REAs would understand better about recruiting in the REA space?

Darci Smith (38:56)
Think so. I think the only main thing I would say that maybe we didn't touch on is from that marketing side, the same way that you would market and you would think about your niche and you would think about how you want to build your firm from a client perspective. I would take those same thoughts and processes and turn them into my recruiting plan. And some people that is, they love being on video or they love doing podcasts, speak to how you want to build your firm as just as much as you're speaking to that.

And client that you want, you know, the prospect, because that's gonna build the right firm for you. So if it's getting on LinkedIn and posting a video about your culture of their firm or your story and get people like that are excited to work there, there's a firm down in San Diego, they're called Root Financial R-O-O-T, and they have so much inbound people that want to work at that firm. And it's solely because of their marketing.

Like what they've built from a marketing perspective and how they've sp they've spoken to a very specific type of candidate, you know, a CFP that is wanting to work with clients at a, you know, they have a specific niche. and it's just worked so well. Like I've talked to them many a times. They don't need my help recruiting. Like they have so much inbound from a recruiting aspect and they've done it great. So that's just to give you a good example, right? Of like something that you can build that people want or like

It's like they want to be on the inside, like they wanna work there and they wanna they wanna know what that's like. and so that's something I would I would recommend is kind of making sure that the marketing transcends not only to your clients, but to people that you want to work at your firm.

Max Holvik (40:33)
Well, that's a really powerful strategic advantage as well. That's

impressive. Well be before we wrap up, I I ask every guest the same question. what is the best financial advice that you've ever received?

Darci Smith (40:48)
I have to shout out my dad. so my dad is incredible, number one. you know, he supported our entire family. And I learned a lot of what I've learned like finance-wise from him because just watching him and how he did his finances. And he always taught me, you know, like how to save and how to do the right thing, all that stuff. But I think the one thing I remember is like,

I wasn't someone that was just allowed to go out and get a credit card, right? Like he talked me through like what a credit card is, what it means when I was young. And he's like, if you're gonna get one, you go do you do what you need to do, but make sure you can pay that credit card off every Friday. Like you don't, you know what I mean? And so I've that has stuck with me forever and ever. And like I can like say I've always paid my credit card off, you know, every single week. I'm like, it's it's done. And it's I don't know, it's just like I'm very grateful, right? I've never been in credit card debt.

And I have all that to thank for my dad. So, like from a finance perspective, like I just yeah, I don't know if I'll ever listen to this, but love ya, dad.

Max Holvik (41:48)
Thank you. That's that's very powerful.

And now where can people find you who learn more about what you do?

Darci Smith (41:56)
Yeah, thanks for asking. So Rockland.com is my website and on LinkedIn, just Darcy Smith, I pop up there. I I post videos and talk all about recruiting. so yeah, anytime you wanna get in touch, you can, you know, obviously go to the website or check out my LinkedIn.

Max Holvik (42:12)
Thanks for listening to Profit and Practice. If this episode was useful, please leave a waiting wherever you're listening. It's the best way to help others find a show. And I'd love to hear from you. Episode feedback, topic ideas, or just to connect. You'll find me on LinkedIn or at the AdvisersCFO.com. New episodes every other week. Until next time.