SUMMARY
As advisory firms grow, hiring becomes one of the most important decisions leaders make. Yet many firms focus almost exclusively on timing while overlooking an equally critical question: who should be hired? Determining that additional capacity is needed is only the beginning. The greater challenge is identifying the role that will actually solve the underlying constraint limiting growth. Hiring the wrong person may increase payroll, consume valuable management time, and still leave the original problem unresolved.
This episode builds upon a previous discussion about recognizing when it is time to hire and shifts the focus toward understanding what type of hire will create the greatest impact. The central message is simple but powerful: do not begin with a job title. Begin with the constraint.
Many advisory firms reach a point where the lead advisor feels overwhelmed. The immediate assumption is often that another advisor must be added to the team. However, being overwhelmed does not automatically indicate an advisor capacity problem. The more important question is what specifically is causing the overload. There is a significant difference between an advisor who lacks time for client meetings and an advisor who spends excessive hours preparing paperwork, following up on service requests, updating databases, scheduling meetings, and addressing operational issues.
In the first scenario, the firm may genuinely need another advisor. In the second, adding an advisor could actually worsen the situation by creating more work for an already strained support system. Understanding this distinction is critical because the solution should always align with the nature of the bottleneck.
The episode encourages advisors to think like business owners rather than simply practitioners. Every growing organization contains constraints. Some constraints exist within the advisor role. Others exist within operations, client service, planning support, or administrative functions. Identifying the location of the bottleneck provides clarity about the type of capacity that needs to be added.
A useful framework introduced throughout the discussion is the idea that the value of a new hire is not solely based on what they personally accomplish. Instead, the true value often lies in what they allow others to stop doing. A well-placed hire can unlock unused capacity that already exists within the organization by enabling high-value employees to focus on higher-value work.
For example, if a lead advisor spends ten hours each week performing administrative tasks, those hours represent an opportunity cost. A support professional may not directly generate revenue, but by removing those responsibilities, they create capacity for the advisor to conduct additional client meetings, deepen relationships, pursue business development opportunities, and engage in strategic leadership activities. In this context, the hire becomes a catalyst for growth rather than merely an additional expense.
This perspective also highlights one of the most common hiring mistakes advisory firms make. Organizations often assume that hiring another advisor will solve growth challenges when the real bottleneck exists within operations or client service. If support teams are already operating at capacity, another advisor increases demand for meeting preparation, paperwork processing, account servicing, planning support, and client administration. Instead of alleviating pressure, the hire increases stress on the most constrained area of the business.
The discussion then transitions into a more nuanced topic: not all advisors perform the same role. Even after determining that advisor capacity is the true constraint, firms must decide what kind of advisor they need. This distinction is frequently overlooked and can create long-term frustration for both the firm and the employee.
A servicing advisor and a producing advisor represent fundamentally different positions. Servicing advisors excel at managing relationships, conducting review meetings, delivering planning advice, solving client problems, and maintaining a consistently high-quality client experience. Their strengths typically center on retention, relationship management, and ongoing service.
Producing advisors, on the other hand, thrive in business development environments. They build relationships outside the firm, cultivate referral sources, develop centers of influence, prospect for opportunities, network actively, and drive new client acquisition. Their value comes from creating growth through relationship development and business generation.
The episode cautions against assuming that every advisor is naturally equipped to do both. While some professionals possess capabilities in both areas, many are significantly stronger in one. Firms often hire technically skilled and client-focused advisors, only to become disappointed when those individuals do not generate substantial new business. Conversely, some organizations hire highly effective business developers and then become frustrated when those professionals show less enthusiasm for ongoing service and relationship management.
The result is often dissatisfaction on both sides. Employees may feel pressured into responsibilities that do not align with their strengths, while firms become disappointed by outcomes that were unrealistic from the beginning. The solution is clarity. Organizations should define the actual responsibilities of the role before beginning the search process.
Rather than hiring a generic junior advisor and figuring out responsibilities later, firms should establish clear expectations. Will this individual support meetings? Assume responsibility for existing client relationships? Develop new business opportunities? Create succession continuity? The more specific the role definition, the higher the likelihood of making a successful hire.
Another important concept explored in the episode is sequencing. Solving one constraint often reveals the next. Firms expecting multiple hires over a period of years should think carefully about the order in which those hires occur. In many cases, strengthening support capacity first allows future advisors to become productive much faster. Building the proper infrastructure creates a foundation that supports sustainable growth.
The consequences of getting this wrong extend far beyond compensation costs. A misaligned hire requires recruiting, interviewing, onboarding, training, management attention, benefits expenses, and organizational effort. More importantly, the original bottleneck remains unresolved while valuable time continues to pass. In a growing advisory firm, lost momentum can be one of the most expensive consequences of all.
To help advisors evaluate their situation, the episode concludes with a simple thought exercise. Imagine that a fully trained, highly capable employee appeared in the office tomorrow morning. What work would immediately be handed to them? If the answer involves service requests, paperwork, meeting preparation, and administration, the firm likely needs a support role. If the answer involves transitioning client relationships and conducting review meetings, a servicing advisor may be required. If the answer centers on prospecting, business development, and relationship building, then a producing advisor is likely the right fit.
Ultimately, the lesson is clear: successful hiring decisions begin with understanding the work, not the title. Firms that identify their true constraint, understand whose capacity they are trying to unlock, and match talent to the actual need position themselves for sustainable growth. The goal is not simply to build a larger team. The goal is to build a team where the right people are doing the right work at the right time. When that happens, a hire becomes more than added capacity. It becomes the catalyst for the next stage of growth.
TRANSCRIPT
Aaron Grady, Advisor Consulting Director at USA Financial - Welcome back to the Rare Advisor, where we explore the recurring and repeatable activities that help financial advisors build stronger, more valuable, and more sustainable firms.
In the last episode, we talked about when is it time to make your next hire? And one of those ideas I wanted you to walk away with was simply don't wait until you're overwhelmed. And don't necessarily wait until the economics feel completely risk-free-free either. Because sometimes the next hire isn't simply an expense created by growth. Sometimes it's the investment that creates the capacity for your next stage of growth.
But once you've determined that it's time to hire, there's another question. And you've got to get this question right. I would argue that this can be at times just as important, if not even more important, than knowing when to hire. The question is: who should you actually hire? Because recognizing that you need another person is only half the decision. If you hire the wrong role, you can spend the next six or twelve months.
Adding payroll, recruiting, training, managing, and trying to make the position work without ever solving the problem that caused you to hire in the first place. And that doesn't just cost you money. It can cost you time, momentum, and possibly growth. You know, one of the most common conversations I have with growing advisors sounds something like this. Aaron, I'm overwhelmed. I think I need another advisor.
And my response is usually something like this, you know, maybe. But what are you actually overwhelmed doing? Because I'm overwhelmed tells me that there's probably a capacity problem, but it doesn't tell me where the capacity problem is. You know, maybe your calendar is packed with client meetings. Maybe you're pushing reviews further and further out. Maybe you've got prospects waiting to meet with you.
Maybe there are client relationships that another advisor could and should be responsible for. That sounds like an advisor capacity issue. But what if you're overwhelmed because you're doing meeting prep or you're following up on paperwork, you're handling service requests, you're updating the CRM, you're scheduling meetings, you're chasing signatures, you're opening accounts, you're moving money, you're putting out operational fires. That's a very different problem.
And in that situation, you may not need another advisor. What you may need is more capacity around the advisor that you already have. So before you start writing a job description, I want you to ask a simple question. Where is the constraint? What work is piling up?
What are things, where are things getting stuck? Where are clients beginning to feel delays? Which team member is consistently operating at, near, or above capacity? And maybe most importantly, where are your highest value people spending time doing work that someone else could be doing? Because your next hire should be determined by the constraints.
You're trying to remove, and not by what another advisory firm has on its organizational chart, or because somebody told you a firm of your size should have another advisor, or definitely not because you've crossed some arbitrary revenue threshold. Your service model is different. Your clients are different, your technology is different, your people are different, your growth strategy and trajectory are different.
And so your next hire needs to solve your next constraint. You know, a few years ago, we did a rare on, and Mike Walters recorded this for us, on the entrepreneur's economic hiring model. And we revisited that concept in our last episode. And one of the central ideas is that the value of a new hire isn't always what
they produce. Sometimes it's what they allow your proven people to do differently. That's particularly important when we decide who to hire. Because if the hire doesn't remove the right work from the right person's plate, you may have just added payroll with actually without actually creating meaningful capacity. The wrong hire can add capacity in an area where you weren't constrained in the first place. So again, don't just ask what will this new person do?
You also have to ask, what will this new person allow someone else to stop doing? That is where leverage and real leverage often shows up. Okay, so let's let's take this concept and make it practical. When firms grow, there's often an instinct to think, hey, look, we're getting bigger, we're gonna need another advisor. But before you do that, you need to ask: do we actually need more advisor capacity? Or
Do we need more support capacity so our existing advisors can operate like advisors? Those are two different hires. You may need a CSA or an operations person, a pair planner, or another support role if your advisors are still having client-facing capacity but can't use it if your service requests are backing up.
If meeting prep and follow-up are consuming too much of the advisor's time, if paperwork and administrative work are sitting on an advisor's desk, if clients aren't getting responses as quickly as they should, operations has become the bottleneck, or your existing support team simply can't absorb another wave of households. But here's something that advisors sometimes miss. Adding another advisor in this situation.
Actually makes the situation worse. So you've got a support issue and you patch the support issue with another advisor. Because another advisor creates more meetings, more preparation, more follow-up, more paperwork, more planning work, more service requests, more demands on operations. You may have just added another revenue-producing employee, but you've also added more demand to the exact part of the organization that was already constrained. And you didn't remove the bottleneck. You've increased the pressure behind it. Now let's say you've actually done the exercise and you've actually, you know, determined correctly that your next hire really does need to be an advisor. You're still not done. Because now you need to know what kind of advisor do you actually need?
Do you need a servicing advisor? Or do you need a producing advisor? Those aren't necessarily the same person. And I've seen advisory teams get this wrong in a bad way. They find someone who's smart, personable, technically competent, great with clients, and then they assume that the person will also be a rainmaker or
On the other side of the coin, they hire someone because they're great at prospecting and bringing on business, and then they discover they don't enjoy or aren't particularly good at the ongoing service planning, relationship management responsibility the firms really needed them to do. Those are different jobs. A servicing advisor may thrive on managing existing relationships, running new meetings, review meetings, doing financial planning.
Deepening client relationships, solving problems, retaining households, and consistently delivering the firm's client experience. But a producing advisor needs another set of capabilities. Creating opportunities, building relationships outside the firm, driving introductions, developing centers of influence, prospecting, networking, and closing business.
In dealing with and coming from the dealing with closing business, dealing with the uncertainty and the rejection that comes with business development. Now, to be fair, can someone do both? Absolutely. But my point is, don't assume they can. I've seen team after team after team hire someone and assume that they can do both roles, and not everybody is wired to do so. Because
You also need to assume that they that duh don't assume they want to do it either. because this isn't only a skill set issue, this is also a long-term job satisfaction issue. You can take a hire, and let's say you you hire an outstanding service advisor, and you spend the next three years being frustrated that they aren't bringing on enough new business. When
That was never really what they were wired to do. Or you could hire a natural producer and then bury them underneath a servicing role that eventually frustrates them and wastes what they're best at and may eventually force them out of your job and out of your firm. So don't just define the title. Define the job you're actually asking the person to succeed at. Not
Hey look, we're gonna hire a junior advisor and figure out what they're gonna do when we get them.
Be specific, define the role, be clear and set clear expectations. This person will initially support these meetings, begin owning these planning relationships, eventually transition these households, and create additional capacity for the lead advisor. Now you've defined the role. Now you have a path. And now you have a much better chance that the hire actually.
Can solve the constraint that you've hired them for. One more thing to keep in mind, and this is kind of a nuanced element of this topic, but it bears sharing. Sometimes solving one constraint can create the next one. So let's say if you know you're going to likely hire or make multiple hires in the next 12 to 24 months, think about the order in which you're going to make those hires.
Building support capacity before adding another advisor may just be the thing that allows that advisor to become productive much faster. But for most firms, you don't need to overcomplicate it. Focus on solving the most important constraint in front of you first, then reassess. Because when you skip that step or hire for the wrong constraint, the cost can be much greater than just adding the wrong salary to the payroll.
And I and this is where I think knowing who can be more important than actually knowing when. If you're a little early on a good hire, you may carry some excess capacity for a period of time. It's not ideal, but it's not the end of the world either. But if you hire for the wrong role,
Now you've got salary, you've got benefits, you've got recruiting costs, you've got training, you've got management time, you got onboarding time, and months invested in someone who may not exactly relieve the constraint. Meanwhile, the original problem is still sitting there. Your advisors may still be overloaded, your service team may still be buried, clients may still be experiencing delays, and growth, unfortunately, may still be stalled. So the wrong hire doesn't simply cost you the person's compensation.
It can cost you time and momentum. And in a growing advisory practice, those two things may be even more valuable. So here's a very simple exercise that you can do to kick off this process. Imagine that tomorrow morning I magically put an additional employee in your office. They're talented, they're trained, they understand your business, they're ready to go. So here's the question.
What would you immediately give them? If your answer is, you know, thank goodness, they can take all this paperwork, service work, meeting prep, administrative responsibility off our plates, then you probably need a support person. If the answer is I could immediately transition 50 or 60 existing client relationships to them and have them begin running review meetings and owning those relationships, well, you most likely need a servicing advisor.
The answer is, I need someone who can go build relationships, develop centers of influence, can create opportunities, and bring new clients to the firm. Then you definitely need a producing advisor. That's the point. Don't start with the title. Start with the work. What work needs a new owner? Because the answer will often tell you far more about who you need than looking at somebody else's organizational chart ever will.
So let's connect all this back to where we started. In the previous episode, we asked the question: when is it time to hire? We talked about watching capacity, understanding the economics, and getting ahead of the need rather than waiting until the business is already in pain. But once you've determined that it's time, don't rush past the next question. The old adage of hire slow, fire fast holds true today as much as it did in the past.
Question is, the next question you should ask is who should we hire? Because timing the hire correctly is important. But hiring the wrong role at the right time can still set you back. So don't hire another advisor simply because the lead advisor is busy. Don't hire support simply because it's less expensive as an employee. And don't assume that every person with advisor on their business card should be expected to serve.
Clients, develop a new business, and excel equally at both. Find the constraint, figure out what work needs the new owner, determine whose capacity you're trying to unlock, decide whether you need support, servicing capacity, or production capacity, and then hire the person whose skills, motivation, and responsibilities actually match the job you you need done. Because the goal isn't simply to build a bigger team.
The goal is to build a team where the right people are doing the right work at the right time. And when you get it right, the next hire doesn't simply add capacity. It can unlock the next stage of your firm's growth.
Thank you again for joining me for another episode of the Rare Advisor Podcast. If you found this episode helpful, please like, subscribe, and please share it with another advisor that's trying to determine who their next hire really should be. And as always, remember, when the why is clear, the how becomes easy. So never lose sight of your why.
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The RARE Advisor is a business model supercharged by Recurring And Repeatable Events. With decades of experience coaching successful advisors, your host, along with other leaders in the industry, discusses what it takes to grow a successful practice. With the aim of helping financial professionals and financial advisors take their business to the next level, this podcast shares insights and success stories that will make a real impact. Regardless of the stage of your practice, The RARE Advisor will provide thoughtful guidance, suggestions for developing systems and processes that work, and ideas for creating an authentic experience for your clients.
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