Employment Agreements: The 10 Most Commonly Asked Questions
Overview This resource is designed to help financial services business owners navigate one of the most important, but often overlooked, aspects of running a firm: employment agreements. In this practical FAQ guide, SRG answers the ten most common questions about creating, implementing, and maintaining Employee and Contractor Agreements, drawing on decades of industry-specific experience. You’ll learn the key benefits of written agreements, how to avoid worker misclassification, how often agreements should be updated, and how to structure them to protect your firm while supporting staff growth. The guide also covers best practices for incorporating compensation terms, equity grants, non-solicitation provisions, and role descriptions, ensuring compliance and clarity for both employers and employees Created by SRG’s Director of Strategic Organizational Planning, Julia Sexton, CVA®, this guide distills years of hands-on experience helping firms design agreements that retain top talent, minimize risk, and safeguard long-term business value. DOWNLOAD NOW
Trust Isn’t a Strategy: Protecting Your Practice and Unlocking Growth with Employment Agreements
An RIA firm owner’s roadmap to increasing your firm’s value in a sustainable way that enhance your firm’s market value now and in the long-run. Succession Resource Group shares six ways firms can carve a path towards smarter growth, identifying levers for better business decisions that retain talented employees as well as ideal profit margins.
5 Reasons Why Business Owners Avoid Formal Employment Agreements
Based on SRG’s recent survey of over 500 financial service businesses—ranging from small single-owner practices to larger multi-owner firms—we uncovered a surprising vulnerability: 17% reported having formal employment agreements in place, while 83% admitted they did not. If your business falls into the latter category, you may be exposing yourself to unnecessary risks and potentially diminishing the value of your firm. Why Employment Agreements Matter Your employees are the driving force behind your success and play a critical role in the long-term viability of any succession or growth strategy. Without proper agreements in place, your business could face challenges in protecting its interests and maintaining stability. Employment agreements help define expectations, protect confidential information, and secure the foundation of your firm’s future. If you currently lack formal agreements or believe yours could be improved, Succession Resource Group can help. We provide essential employment resources to guide you in implementing best practices for team development while safeguarding your business. Why Business Owners Avoid Formal Employment Agreements Informality and Trust: Small practices often rely on close-knit, informal environments. Employers may trust that mutual understanding negates the need for formal agreements. Cost and Complexity: Agreements are seen as costly and administratively burdensome. Lack of Awareness: Many owners are unaware of the benefits formal agreements can provide. Preference for Flexibility: Verbal or informal agreements feel more adaptable to changing needs. Short-Term Roles: Part-time or temporary roles may not seem to warrant a full employment agreement. Protecting Your Business with Formal Agreements Formal agreements set clear expectations for roles and responsibilities, outline behavioral standards, and align employees with your company’s mission and vision. They also protect intellectual property, ensure client confidentiality, and provide a critical layer of security for your business. Don’t leave your firm exposed. Let Succession Resource Group equip you with the tools to build a secure foundation for your team and your future success.
Employee Retention Guide for Advisors – 2024 ed.
Strategies to Fortify Employee Retention and Minimize Advisor Turnover In the fast-paced and competitive realm of financial services, the role of employee retention strategies has never been more critical for registered investment advisors. Independent advisors understand that retaining a skilled and dedicated team is as essential as acquiring new clients and expanding services. This article explores the multifaceted world of employee retention, providing insights into what the most effective advisory firms are doing today. The Paramount Importance of Employee Retention Retaining talent is a key element to scaling a business, sustaining growth, and maintaining a steadfast commitment to clients. The financial services sector faces not only industry-wide competition but also a scarcity of talent. Given the substantial investments in training financial advisors, employee retention emerges as a pivotal factor for the sustained success of financial services firms. Establishing the Pillars of Success A robust employee retention strategy begins with a foundation rooted in three foundational steps: well-crafted employment agreements; intentionally designed compensation plans; and a career path to partnership. This foundation should seamlessly align with the overarching business goals of your advisory firm, fostering team retention through clearly defined roles, comprehensive job descriptions, structured pay bands, and thoughtful equity/profit-sharing strategies (reserved for the most elite and impactful team members). Defining Roles Clearly delineating positions within the firm, from your operations and administrative team members to your C-suite and everything in between, lays the groundwork for an effective employee retention strategy. Outlining the various roles on your team, even if many of the roles are covered partially by the same person until the business grows and can justify narrowing people’s scope, is critical to make sure both you and your team understand the team’s needs in advance. Recruiting is something firms should never stop doing, and having a clear understanding of the next hire and roles needed can ensure strategic hires are accretive and done proactively. Crafting Job Descriptions Each position within your firm should come with detailed job descriptions that outline roles, responsibilities, expectations, and required skills. It is also important to ensure that the job descriptions are continually refined. As the firm grows, job requirements will gradually narrow, allowing team members to specialize and gain efficiencies. The narrower job requirements generally also make it progressively easier to find talent to fill such roles, as opposed to hiring a generalist that has skills across multiple disciplines. Formulating an Equity/Profit-Sharing Strategy There’s an old saying, “No one washes a rental car.” The point of the saying is that behaviors change when there is a sense of ownership. This is directly applicable to the professionals on a team. When they feel “invested,” they tend to approach the business differently. To foster a sense of ownership and create greater alignment with your employees, it is worth considering ways to give them a sense of ownership. ➡️ Free Download: Financial Advisor’s HR Toolkit Compensation Plan Design – The B.B.P. Formula Historically, advisory firms have paid their administrative/operations staff hourly or a salary. Team members responsible for client service or business development were paid a percentage of the gross revenue. While this legacy compensation model remains prominent in the industry, its usage is declining and being replaced by a more scalable compensation model that provides greater security to younger advisors joining the team, fosters greater enterprise value, and promotes teaming. The first step in getting away from a legacy compensation model and creating something that will help foster teaming, is more narrowly defining job roles and tailoring the compensation to incent the needed behaviors/outcomes for such roles. Most firms have struggled to find/recruit advisors to join their team that can find clients and service them. This is largely because providing excellent client service and doing business development require unique skill sets. Those that possess both skills are generally good at both, but not great at either. But with time and latitude, they will generally gravitate towards and excel in one area. Those who are mediocre at both service/operations and prospecting will have a place in early-stage growing teams, but the firm often outgrows these generalists as the firm achieves scale. And on the occasion the firm finds someone who is great at both – these team members that often make poor employees long-term, as most eventually leave to start their own practices. To begin to narrow the skills and requirements for roles, an effective high-level way to group professional staff for the purposes of compensation plan design is identifying the “Farmers” and the “Hunters” on the team. Most growing firms will have their professionals in a hybrid capacity, but again, most of these professionals are only truly great at one of these two areas. The goal is to narrow the work for each professional to the thing they are best at in an effort to maximize their potential and drive efficiency/effectiveness. Farmers Farmers are the service professionals on the team, taking care of clients, managing the investments, handling operations, etc. Their primary function is to ensure the firm retains clients. Farmers will have a base salary comprising roughly 80-90% of their total compensation. Farmers who service clients are often paid a salary that adjusts annually based on the number of clients and/or assets under management. As the amount of clients/AUM increases, through the assignment of more clients to service, referrals from existing clients, additions to accounts, or appreciation of the assets, the salary will be adjusted according to a predetermined schedule that is calibrated for the location and qualifications of the individual. They will often be eligible for bonuses based on new assets from existing clients or new referrals from existing clients. The final component is the “profit” element – which is designed to get them focused on the overall health and performance of the company. There are a variety of ways to structure this, but most farmers are eligible for a profit-sharing plan that pays a bonus at the end of the year based on firm
Employee Retention Strategies of Today’s Top Firms
Growing advisory firms takes talented professionals to operate, and finding/keeping them is a challenge for every organization, regardless of size. Uncover the insights you need to excel in talent management with this webinar, “Employee Retention Strategies of Today’s Top Firms,” presented by industry luminary David Grau Jr. Key Highlights: Decode successful compensation plan structures driving motivation and loyalty Navigate essential agreement frameworks to future-proof your practice Harness the power of equity and phantom equity for a unique edge Gain actionable insights from real client successes at SRG Watch the recording to learn the best practices from SRG’s latest client engagements. Register and secure your spot now for a competitive advantage in employee retention! Watch Recording Resources [Blog Post]Financial Services and Other Employee Benefits → [Blog Post]What is Phantom Equity and How is it Used? → [E-Book]The Financial Advisor HR Toolkit → [Webinar]Everything Equity → Presenters David Grau Jr., MBA President
The Financial Advisor’s HR Toolkit
DOWNLOAD NOW Streamline Your Practice with These Essential Tools Effective personnel management, including formalized employee agreements, equity sharing, and compensation plans, is equally crucial to the success of your financial practice as well as that of your team. Our toolkit is designed with all the essentials you need to manage your HR processes effectively, saving you time and increasing your efficiencies. Here’s what you’ll find inside: Expert recommendations on employment agreements Best practices for compensation Key elements for clear job role descriptions Guidance for creating a career path for your team Our toolkit is designed to help you improve your employee satisfaction, increase retention, and better align employee compensation plans with business initiatives. Complete the form to receive your free HR Toolkit today! Learn more about SRG’s Employment Resources and Equity Sharing services. Schedule your free consultation below!
5 Employment Best Practices to Create a Salable Business
https://youtu.be/fIBpJVPsoO4 Utilize Best Practices for Employees This live session will focus on the biggest challenge for most advisors – employees. They can be the key to your success, or your undoing. Join David Grau Jr., President of Succession Resource Group, as he shares the 5 most important employment matters you should consider to build a valuable practice, including: Employment agreements – How to use them, when to use them, and what should be in yours HR best practices – What the most successful advisors are doing right and wrong to make their business salable Staffing levels – How many employees you should have, and what they should be doing What to pay – Get general tips on how much each position should pay, along with regional differences How to pay – Key considerations for the most effective compensation programs that don’t undermine the value of your business These best practices in the industry will help you avoid common mistakes and build a more valuable business.
Advisor to CEO: Best Practices for Your Growing Enterprise
https://youtu.be/-rL2IYZ0PKE The transition from advisor to how to be a CEO Your first job as a new advisor was to understand the industry and products, then get clients. Here you are, years later – you have great clients, you’re growing, and you’ve hired a good team. Whether by design or by default, you now find yourself in the role of both advisor AND CEO. This webinar will walk you through some tips on how to make that transition and prepare you on how to be a CEO. Now that you’ve gone from advisor to business owner, there are new best practices to consider to ensure you continue to be successful. Join us as we talk about the most interesting and compelling topics for successful business-owner advisors: Equity sharing strategies for your key people How to set up and properly leverage an entity and organizational structure How your organizational structure impacts value, employment agreements and restrictive covenants The right way to compensate your team Employment Resources Join David Grau Jr. from Succession Resource Group as he shares mission-critical considerations that will either drive or detract from the value of your enterprise. About David Grau, Jr., MBA:David Grau Jr. is the founder and CEO of Succession Resource Group. He is currently one of the leading speakers in the financial services industry on mergers and acquisitions of independently owned financial services firms, as well as valuation strategies and practice continuity issues, with over 200 presentations to his credit. In the past five years, he has spoken at variety of the industry’s leading firms, including LPL Financial Services, Wells Fargo, Ameriprise Financial, MetLife, ING, AIG, Fidelity, Jackson National, Prudential, FSI and at many FPA chapters around the country. As an expert on advisor valuation, acquisition and succession planning, David has assisted hundreds of advisors and other professionals buy, merge, sell, and craft their transition plan for the sale of their business over the last decade.