Your financial advisor practice is growing, and to keep growing you know you need help. Many advisors who reach this point believe the next move is to hire an AFA. Unfortunately, this is one area where many advisors make their biggest– and most costly–mistakes. Before pulling the AFA trigger, ask yourself these questions.

Are You Hiring for the Right Reasons?

Many advisors who reach capacity assume that they should hire an AFA to handle their lower end clients. What they fail to realize it that an AFA is usually the most expensive type of staff member in a practice. Having them work with low-end clients who are producing the least amount revenue often falls short of covering the AFA’s expenses. However, if growth is a priority, an AFA can help, as one of their key functions is to help bring in new clients, while also helping to manage and improve the value of existing clients.

Do You Have the Right Incentives?

Many advisors who reach capacity assume that they should hire an AFA to handle their lower end clients. What they fail to realize it that an AFA is usually the most expensive type of staff member in a practice. Having them work with low-end clients who are producing the least amount revenue often falls short of covering the AFA’s expenses. However, if growth is a priority, an AFA can help, as one of their key functions is to help bring in new clients, while also helping to manage and improve the value of existing clients.

Do You Have the Right Candidate?

In addition to compensation and duties, the “who” also impacts when it’s time to hire an AFA. Many paraplanners “graduate” to the role of AFA. Advisors assume that the paraplanner is great at client service, so they will be a great AFA. Often this is not the case. That’s because the most successful AFAs have an entrepreneurial spirit. They work long hours, develop centers of influence, know how to market, know how to sell, and understand the importance of filling a pipeline. Many paraplanners are the opposite. Although they may work hard, they also enjoy set schedules, salaries, and are not proactive about acquiring new clients. While the paraplanner to AFA transition is possible, it requires the development of a certain skillset and a shift in mentality.

Do You Have the Ability to Train and Onboard an AFA?

Most advisors do not have the experience or the time to develop a great AFA. Often, advisors default to “shadowing” as a training method. First of all, it is not cost effective to have two high value team members in the same meetings. Second, this does not help the AFA develop the skills and habits they need to perform and earn their keep. This includes learning how to develop goals, practicing scripts, roleplaying, and accountability. New AFAs also need help structuring their work weeks, prioritizing tasks, developing centers of influence, and getting referrals from existing clients. Unless you have a system in place for doing this, it’s best to leverage an experienced AFA coach, such as Key Management Group, who can work one-on-one with your AFA to get them up and running quickly (and making money for your practice).

Need Help Assessing An AFA?

Our AFA Analysis tool will help you craft the right compensation and incentives to design an AFA relationship that works for the practice. Click on the button below to learn more.

About the Author: Ben Thelen

Ben Thelen serves as Vice President for Key Management Group. As a former financial advisor, Ben brings an intimate knowledge of the inner workings of a financial practice together with sound practice management principles. He uses this knowledge to help advisors identify key gaps and opportunities, design practice management systems, and implement solutions to help advisors improve client experience, practice efficiency, and drive growth.

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