What RIAs get right about training new financial advisors

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• Key insight: Forward-thinking RIAs are abandoning the high-failure “eat what you kill” sales model in favor of multi-year, salaried apprenticeships and pod structures that embed junior talent directly into established advisory teams.

• What’s at stake: Advisory firms that fail to build internal talent pipelines face existential succession risks and stranded books of business as senior planners retire without trained successors capable of retaining clients.

• Expert quote: “You expect inexperienced people to do business development, and I don’t think that’s sustainable.” — David Wagner, Tidecrest Wealth Management

In an industry struggling with the succession of retiring financial advisors and a looming shortage of future professionals, two RIA firms’ training programs offer a possible solution.

The three-year training class at Atlanta-based registered investment advisory firm OpenArc Corporate Advisory and the two-year mentorship program with Franklin, Tennessee-based SageSpring Wealth Partners present viable alternatives to industry training programs with infamously high rates of failure. With one widely cited estimate last year suggesting that retirements and consumer demand for advice will leave the industry 100,000 below the headcount of advisors needed by 2034, the RIAs have joined a small number of peers that created their own internal talent development pipelines and career paths.

“Everyone wants to be successful, and a lot of people want to be in the investment business,” said Jeffrey Dobyns, the president of SageSpring, which has around 50 advisory teams, 200 employees and $10 billion in client assets. “It’s good for everyone if you have someone who’s really sharp and young and eager to learn. It’s just crazy that most firms have them go by themselves and have them cold call or knock on doors, etc.”

The firms became fully independent in recent years, with assistance from RIA services firm Dynasty Financial Partners, but they have each been investing in internal training programs for decades. Many RIAs will likely never reach the size of, say, what was likely the largest wirehouse breakaway ever last year, in OpenArc’s case. 

However, smaller firms can implement their own versions of strategies like enabling newer entrants to shadow a successful advisor and work on the same team with them rather than trying to build a client base alone. They could also convene several trainees together for regular instructional courses or open senior team members’ doors for college-style office hours.   

“It’s a culture of giving back that was started a long time ago by some of the folks on the board,” said Clifford “Trip” Farren, a partner and senior wealth management advisor with OpenArc, where he leads the firm’s training program for new advisors. “I received a ton of support that helped me when I launched my career, so I feel a responsibility to pay that forward.”

How to give back to the profession, and the firm

Even if RIA owners simply can’t call upon the level of resources necessary to build a developed system within their own firms, they could still invest in internships with a boost from growing external collaborations in the industry or simply take time to promote the field to young people and career changers. The difficulty of convincing enough people to place their life savings under the care of a recent industry entrant that they generate enough business to earn a sufficient income has always posed high barriers to entry into a rewarding professional career.

After noticing a dearth of financial planning coursework at his alma mater, the University of California, Santa Barbara, and the hundreds of applications for internships at Newport Beach, California-based Tidecrest Wealth Management, CEO David Wagner launched a quarterly information sessions for aspiring professionals. The first session earlier this month drew about 15 people for Wagner’s effort “to present information that I wish I had at that age,” he noted. Besides internships, shadowing or speaking with advisors or taking part in investment clubs could give college students an edge in the job search.

“I told them, ‘If you want to look into the industry, there are more opportunities than you think,'” Wagner said. “I advised them to show interest with their resume.”

The early-career advisors at SageSpring have made it past that point, but they spend the first two years with the firm “almost in the hip pocket of a senior advisor,” Dobyns noted. The firm trains the new entrants and their mentors in group settings, but the firm’s approach revolves around tapping into “sharp young people who want to be in this business and they’re willing to work hard and be coachable and study this craft,” he said. The proteges drive value for their mentor’s practices, and they can eventually then turn around and train the next proteges. 

To Dobyns, the mentor-protege pairings give the new industry entrants a stronger foothold in the field than the traditional directive ordering them to, for instance, make 30 phone calls a day in order to find customers among friends and family.

“I think they are so fixated on activity or sales calls or something that they don’t want to be perceived as if they’re just wasting time if they’re watching somebody,” Dobyns said. “The reality is that that guy’s going to learn really fast if he’s watching. I’ve tried to implement that concept, and I think that’s been super helpful.”

Avoiding the ‘eat what you kill’ path into the industry

At OpenArc, the new entrants join a group of advisors and support staff that the company calls a “pod,” according to Farren. They spend their first year learning the foundations of the industry, their second gaining a more nuanced understanding of it and their third getting a deep understanding of their pod’s client base, with weekly collective training in each of the first two years. The trainees do seek incoming client relationships, although senior members of the pod aid them in that process, too.

“You’re also starting to build your own practice and then helping your pod grow its practices as well,” Farren said. “After those three years, your salary goes away. So our goal is to get them to a point where at least they break even or get slightly below that.”  

Such teaming strategies can give young people a better shot, since they expose the trainees to other roles in the industry besides the advisor and add a layer of support for building a book of business, according to Wagner. Otherwise, trying to win clients while “probably charging the same price as someone with a full team” and decades in the industry often proves too tough.  

“It’s hard for a young person to come in and develop business,” Wagner said. “You expect inexperienced people to do business development, and I don’t think that’s sustainable.”

Introductory bullet points created by AI with editorial review.