When should RIAs hand clients to next-generation advisors?

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• Key insight: For firms that get it right, there are several strategies that ensure young advisors are ready to take on their own clients.
• Expert quote:  “If [clients are] contacting you because they have an issue, and they want to know how to solve it, and they’re bypassing me to go to that advisor, they’re ready.” Haleh “Holly” Moddasser.

Although he’s been in the business for three decades, Anthony Skvarka, senior wealth advisor at Halbert Hargrove, remembers his early-career stage fright like it was yesterday. 

“I was petrified,” he said. 

Skvarka, who eventually got over it through sheer repetition, credits the guidance of a good mentor. 

“I still work with that same guy,” he said. “We are still aligned. He was my mentor, and he continues to be my mentor. However, we are now investment professionals together. We share some clients together, we have clients of our own, but we bounce things off each other. He still provides me with constructive criticism. That is so critical.”

Firms continue to face a two-sided problem. Cerulli estimated more than 72% of early-career or “rookie” advisors left the profession in 2022. Meanwhile, senior talent grapples with sustainable succession planning, with nearly 110,000 advisors set to retire over the next decade. 

Putting young talent into positions they aren’t fully equipped for presents as much potential for fallout as refusing to promote and develop them. This makes finding a firmwide sweet spotamong juniors, longstanding clients and older advisors key. 

It also makes knowing the signs that a junior advisor is in the right place all the more important. 

They know how to inherit business rather than hunt for it

The first step toward ensuring an advisor will make the senior ranks is simply ensuring that they’re a good fit for the firm. 

Haleh “Holly” Moddasser is a managing director and senior wealth advisor at Hightower Signature Wealth who has worked to hire and develop a next-generation talent team for roughly a decade. 

At her firm, rather than overwhelm next-gen advisors with the need to produce revenue, “we literally hired them to be able to inherit a book from [the first generation],” she said. 

To keep the strategy intact, the firm hired people who were “mutually aligned, fit our firm culture, right age, stage and credentials,” she said. “And then we had them start joining us in meetings with our longtime clients.”

At Halbert Hargrove, younger talent readiness begins at the hiring and culture levels. Skvarka said the firm hires for passion and fit, “because we don’t want turnover.” 

In fact, “we don’t have a lot of turnover.” The firm takes its time hiring and “they don’t all [start out wanting] to be an advisor,” he said. “They may turn into that or they may turn into something else.”

They know and develop their expertise from day one

Moddasser sets up team meetings by repositioning herself as a big-picture strategist and relationship manager and then introducing the next-gen team members as experts. For instance, if a client needs the year’s required minimum distribution, the planner is their point person. For investment strategy, the team leans on the portfolio advisor. 

“My thought is that the client gets the best experience when you’re not asking each individual advisor to be all things to that client,” she said. 

She puts together what she calls a “diamond team” that combines a planner, investment specialist and the first-generation team member, ensuring every client is used to two or three people handling the relationship.

“I became the relationship manager and basically the one who is selling work and immediately introduced them as part of the team that is actually the nuts and bolts of the business,” she said. After time went by, “I actually leveraged their highest and best use. I didn’t throw them in there and say, ‘I need you to pound the pavement and bring in some business.'” 

They earn the lead one piece at a time

At Modera, according to Jeanne Bernardin, principal and wealth manager, before a next-generation advisor is promoted to work with clients, certain fundamentals need to be in place. Prior to client meetings, the team has its prep meetings where junior team members are expected to explain topics clearly and follow through. 

“As we’re doing meeting prep,” she said, junior team members “go through with me how they would present this to a client,” which she considers a progressive approach for leading client meetings.

In those prep sessions, “we are talking about who will lead different parts of the meeting, so this is where it comes to a progression [where they’re] involved in leading pieces of the meeting once they’ve shown competency, reliability and discipline,” she said. 

Clients seek them out individually

A 25-year-old looking to appeal to a 60-year-old prospect during a pitch is a recipe for trouble, according to Moddasser. That’s why she doesn’t send juniors out to pitch.

But over time and with enough exposure to one another, relationships can and do evolve. 

At Modera, the final step is making sure the young advisor has a more personalized connection with the client. 

“They understand what their needs are, what drives their decisions and can really connect with the client,” said Bernardin. “You see that trust developed, the client’s going to them more frequently as the first point of contact.” 

A client reaching out about an appointment or moving money from one account to another is “not confidence,” according to Moddasser. “If they’re contacting you because they have an issue, and they want to know how to solve it, and they’re bypassing me to go to that advisor, they’re ready,” she said. 

Skvarka agreed that the personalized relationship is a cornerstone signal, but cautioned that it takes time to get to that level. 

“Success just doesn’t naturally come overnight,” he said. “They have to be willing to commit to a certain level of understanding that they’re just not going to roll in and take over somebody’s book of business.”

According to Moddasser, first-generation advisors who’ve spent decades in the seat may resist relinquishing the controls. The veterans need to be willing to make this mental transition for it to work. 

“You can take great satisfaction in watching them become a star as opposed to you always having to be the star,” she said. 

Moddasser saw this firsthand when an eye injury left her unable to read or look at a Zoom screen. Her team initially panicked, but she told them they were ready, “and they were.”

“You have to believe in them,” she said. “Not falsely believe in them, but they’ve demonstrated, they’ve done, they’ve been a star.”

Although bittersweet, “it’s like launching kids,” she said. “You don’t want them to leave you, but they have to spread their wings and go … that’s part of your job, to let them go.”