Hire! Don't misfire! Wealth managers reveal the biggest mistakes when bringing on new employees

Listen up wealth managers! Don’t misfire when you hire. The downside can be deeper than you think.

Bringing on a new employee in the financial industry is not a cheap or trivial enterprise. Total costs frequently reach 50% to 90% of an employee's first-year salary, according to industry data, primarily due to high recruitment fees and specialized training.

Onboarding alone ranges from $4,000 to $8,000 per employee for training in regulations, accounting, and software. All those lost productivity hours also add up.

That’s why advisory firms need to avoid common mistakes like hiring too late, according to Arlene Moss, executive business coach at XYPN.

“You don't want to wait until you and your team are so busy you have no time for onboarding, training, and collaboration. Even the best new employee will take time away from the team's usual routine,” Moss said.

In her view, onboarding sets the tone and impacts employee retention, so hire before you "have to" so that you have the very best experience possible for them. It will pay off in retention and quality of training and delegation, all of which pave the way to a better experience for everyone on the team.

Another classic mistake, according to Moss, is hiring someone who reminds you of yourself.

“You want new teammates who complement your skill set, who add to the culture of the firm, and bring a new perspective, not just more of the exact same thing. Be intentional about evaluating what you truly need for the role. Look at what you are too busy doing, what tasks your team has the skills for and where there are gaps to be filled,” Moss said.

Along similar lines, Jamie Jones, director of teaming & business development at Janney Montgomery Scott, says financial advisor teams often make the mistake of hiring reactively instead of strategically. They often feel the “pain” of capacity, rapid growth or transition; and then rush to hire someone rather than clearly defining the role that the team needs.

“The teams that are most effective at hiring are those that step back and design what their future organization should look like aligned to their long-term vision and goals. They hire with intention. They will clearly define the roles and responsibilities of the talent needed, traits & attributes desired, what success looks like, and align the appropriate compensation,” Jones said.

Moving on, Mike Papedis, founder and CEO of Fusion Financial Partners, calls treating hiring like a resume exercise instead of a team psychology decision as the most common hiring mistake.

“Hiring is an art. And the psychology angle matters more than most firms admit,” Papedis said.

Papedis also calls the belief that a firm must hire only from inside wealth management a huge mistake. Yes, if you’re hiring a portfolio manager or compliance lead, industry experience indeed matters. But for many roles — including many advisor seats — the real key is the ability to manage a relationship, not be right, according to Papedis. 

“Even with everything happening in AI across industries, human-to-human relationship skill is not going away anytime soon, if ever. That’s the ‘secret sauce’ that makes an advisory firm strong and irreplaceable. Don’t undervalue it and don’t filter it out by over-weighting an impressive background on paper,” Papedis said.

And one more thing, says Papedis: “If you want a business with ‘perpetual life,’ you must invest in next-gen, and just as important, the generations behind that. That requires appealing to a broader and more diverse talent pool, because talent can come from anywhere.”