Getting the right people on board

Could you do with another financial planner or paraplanner (or three)? With recent unemployment figures at record lows and a tight market for recruiting financial planners, paraplanners and administrative staff, the task of recruiting quality staff is harder than ever.

This has been front of my mind recently as our legal practice has sought to fill a number of positions, including law students who participate in our intern program, an articled clerk and an experienced financial services lawyer.

In the case of a lawyer with practical skills in financial services law, we have found that process more challenging and probably not dissimilar to the recruitment of a financial planner or paraplanner. There does not appear to be as many interested in leaving their current positions.

In this article, I make some general observations in relation to staffing issues and some specific suggestions for the recruitment of financial planners and paraplanners.

One stone can make a big ripple

When our business began more than 12 years ago, there were two of us — my business partner, Grant Holley, and I. We did everything including taking the mail to the post office, doing the banking and, in between administrative tasks, providing legal advice to clients.

We are now approaching 17 staff members, although a significant number of these are part-time.

The appointment of a new staff member can have significant impact in small organisations. If they don’t embrace the culture and/or just don’t fit in, the ramifications to staff harmony, productivity and cohesiveness are potentially destructive.

Should they be on the bus and if so, in which seat?

Many of you will recognise this analogy from Jim Collins’ book Good to Great.

One of the features of this very readable book is the ease with which Collins’ findings and comments can be applied to a business.

In relation to staff issues, the following takeouts from Good to Great may resonate with some of you as they did for me:

> when in doubt, don’t hire — keep looking. We have fallen into this trap on at least one occasion when we thought we had a desperate need for a particular employee. As a consequence, we made an appointment that was not the right fit. We should have tried harder to find the right person and not be rushed into a decision;

> get the right people on the bus and the wrong people off the bus — quickly. This analogy of the bus to a business has been a helpful one for us and we are convinced that our current staff should all be on the bus. Collins acknowledges the difficulty of taking action when it is apparent that someone who is on the bus shouldn’t be; and

> if they should be on the bus, are they in the right seats? This is critical and will be determined by a range of skills and personality traits. Consideration of this also represents an opportunity to enhance the current performance of an existing staff member who might serve the business better in a different role. It should also be considered before concluding that the person should not be on the bus at all.

In relation to your current staff/representatives, how do they stack up to the last two bullet points?

So what about your financial planners and paraplanners?

Whether you are a licensee or a corporate authorised representative running your own business, when it comes to recruiting staff, there are a number of steps I suggest you consider to enhance the possibility of the prospective employee becoming a long-term and valued member of the team.

1. Take some time to ascertain the precise needs of the business.

What role is this person going to play? How is that going to impact on others in the firm? Also, what are you looking for? Is it immediate experience and perhaps a planner who will bring clients with them?

Alternatively, is it a younger person who can grow into the role (our two youngest lawyers came through our intern program and started by doing administrative work one to two days per week with us several years before qualifying as lawyers — they are now in their fourth and second year respectively as lawyers).

Is it technical competence or personal traits? Because the applicants for lawyer positions are usually academically capable, we tend to try and identify other qualities such as honesty, a strong work ethic, ability to work in a team-based environment, willingness to chip in to do what might seem like menial tasks such as helping with the mail, and so on.

We figure they can acquire much of the technical training on the job under appropriate supervision while the development of other personal characteristics may be beyond our capabilities. This view is affirmed by Jim Collins who says: “Whether someone is the ‘right person’ has more to do with character traits and innate capabilities than with specific knowledge, background or skills.”

Longer term, of course, the person who is joining the business may be a potential owner or part owner of the business. Succession planning should be considered in the case of many appointments, no matter how far in the future that may seem a possibility or need.

2. Consider an intern program.

Our program has been running for at least eight years now and the benefits have been numerous including:

a. we have been able to watch staff mature professionally;

b. younger people in the office help to create a dynamic and stimulating atmosphere;

c. they have skills that some of us older ones don’t, simply because of their age and what they have grown up with; much of any competence I have in technological matters has been conveyed to me by someone under the age of 25;

d. it’s challenging and thought-provoking to have someone half your age question your view on a matter, whether it be a professional issue or a social issue; and

e. it’s also gratifying that our business has had a role to play in their professional development. A number of our former interns are now with other firms or in other positions and apparently thriving.

3. Do you have a recruitment policy?

Many licensees would have told the Australian Securities and Investments Commission (ASIC) as part of the Australian Financial Service licence application process that their recruiting procedures included bankruptcy checks, an ASIC database check, police checks, credit check, and so on. If your recruitment procedure does not reflect actual practice, then either it should or it should be reviewed and then adhered to.

4. Rigorous competency requirements.

Rigorous competency requirements are necessary, particularly if you want the recruit to provide technical services as soon as possible.

If the person will be an adviser or a paraplanner, RG 146 qualifications would be an absolute minimum. Many firms expect a higher standard, such as CFP status.

As mentioned above, however, don’t let technical competence or qualifications be the sole determinant.

5. Check their qualifications. Sight certified copies and make sure that the qualification appears on the ASIC RG 146 training register.

6. Review the applicant’s CV.

If you are in the fortunate position of having several applicants, use this as a means of narrowing the field. Sometimes this is made easy by the applicant.

Some years back, I received an application in which the applicant extolled the virtues of Holley Nethercote, particularly in the field of family law and conveyancing.

Either her research was faulty or the template she was using failed her badly because Holley Nethercote has never practised in family law nor done conveyancing work. The applicant was not granted an interview.

7. Interview the short list applicants.

I have to say that from my perspective, this is not an exact science. Obviously, there are clear rules about the sort of questions that are off-limits.

However, in an environment where appropriate but open questions can be asked, you can still learn much about a person.

Listening to the responses carefully and refraining from interrupting will generally elicit more information and give scope for further enquiries.

8. Contact referees and listen to the responses critically.

I find the real value in these discussions is often picking up on what the referee is not saying as much as what they are telling you.

Recently, I was contacted as a referee for a former employee (who incidentally had not told me they had nominated me as a referee).

The questions asked by the prospective employee were straightforward and it seemed obvious to me that they had already decided to employ the applicant and so were going through the motions of due diligence.

I was able to provide a truthful and favourable response to each question.

However, if the questioner had been more enquiring, I think some of my responses to more searching questions may have impacted upon their subsequent decision.

9. Personality assessment.

While a rigorous interviewing process and checking referees are important, another step we have utilised on two occasions in the past is to have the potential recruit undergo a personality assessment.

On one occasion, the assessment was ‘spot-on’.

On the second occasion, I can only conclude that the report we received were the results of an assessment of a person other than the one we employed! In other words, we may have been sent the wrong report!

10. Contact previous licensees for whom the adviser has been a representative.

While some licensees will be reluctant to provide less than glowing references or be co-operative at all, efforts should be made, nonetheless, to obtain a frank assessment of the applicant’s previous track record. At the very least, confirmation of factual information provided by the applicant should be sought.

11. ASIC checks.

Check the (ASIC) register of banned/disqualified persons on the ASIC website.

12. Other resources.

Watch out for available resources that can assist in the recruitment process. For example, ASIC is apparently set to release a handbook on pre-employment screening for Australian Financial Services Licensees. This is one outcome of the ‘Bad Apples’ project commenced in 2004 whereby ASIC and five industry groups (including the Financial Planning Association, the Investment and Financial Services Association and National Insurance Brokers Association) are working together to improve the process of recruiting advisers and limit the ability of ‘bad apples’ to move within the industry.

Another resource is the Australian Standard 4811-2006 published in July 2006 entitled ‘Employment Screening’.

13. Consider on-the-job ‘tests’.

Our newly recruited receptionist was asked to role-play dealing with a difficult client (of which we have very few, of course) on the telephone. She was also asked to produce on the computer a short explanation of why she thought she was a suitable person for the appointment. This latter task was at the end of the interview and after she had a better idea of the nature and focus of our practice. She carried out each task very well, which gave us greater confidence in appointing her.

14. Document appropriately the terms of the appointment.

In addition to the usual terms, this should normally address matters such as confidentiality, conflicts of interest, ‘ownership’ of clients, restraints of trade, probation period, level of authorisation under the licence, and so on.

15. Provide an induction package and appropriate training.

As mentioned earlier, we have made several recent appointments.

An induction day was scheduled with a set program, presentations by all existing staff members and a package of documentation provided that included policies, expectations, implementation of a ‘buddy’ system, employment forms, and so on.

It was a productive day and hopefully achieved the objective of enabling the new staff members to ‘hit the ground running’ a little quicker than might otherwise have been the case.

16. If the employee will be an authorised representative, notify ASIC.

Employees of the licensee providing financial services are representatives of the licensee but not authorised representatives under the Corporations Act and ASIC does not need to be notified. Only the Corporate Authorised Representative (CAR) and employee representatives of the CAR need to be notified to ASIC.

17. Make sure you have procedures that will enable the new recruit to comply with the AFS licence conditions and financial services laws.

This will involve providing appropriate training, adequate supervision, clear guidelines as to procedures, use of documents and generally assisting them to feel embraced by the firm and to understand the prevailing culture.

18. Aim high.

Finally, I always reckon that aiming to employ people who have the potential to be better financial planners, lawyers, accountants (as the case may be) than yourself is a valuable strategy.

These have been some of the things I have found have served us well over the years, but perhaps in conclusion, I can return to a quote from Jim Collins in Good to Great — “The old adage, ‘People are your most important asset’ is wrong. People are not your most important asset. The right people are.”

Tim Nethercote is a partner with Holley Nethercote Commercial Lawyers.