Why Finding Young Workers Is Easy for This RIA

This podcast is brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.

We hear so much about how challenging it is for RIAs to find talent. Well, our guests today say that their firm's internship program is working so well that it has become the foundation for how it finds talent. This is Greg Bartellis for Barron's The Way Forward. My guests today are Kevin Myhreoff and Elizabeth Scheiderer. Kevin is Principal and Senior Strategic Advisor of Sequoia Financial Group and a former founder and CEO of NCA Financial Planners. Elizabeth is senior financial advisor at Sequoia. Kevin, Elizabeth, welcome.

Thank you. Great to be here.

Thank you.

So before we get to the subject, which is really about finding, hiring, and retaining young talent, tell us about your firm, what you each do, and just broadly what the competitive landscape is for finding, hiring, and retaining young talent.

Okay, so I'll start. NCA Financial Planners, which we just merged with Sequoia in, uh, 3 months ago. So we're right there, but we're an independent financial planning firm. We do holistic financial planning. We're a multi-generational firm. We literally have the same number of 20-year-olds, 30-year-olds, 40-year-olds, and that's all because of our internship program that it's literally worked that way. And we were 99% fee-based, but in the broker-dealer environment, and now we're pure RIA and totally fee-based. And we currently have about $10 billion of assets under management.

Tell me a bit about the internship program and why it has been successful. There's a lot to dig into here.

Yeah, so our internship program has been around now for 16 years, because you're talking to a gal that was one of the first interns at the firm. We really wanted to start a program that would allow us to find really great talent and get them to want to really be a holistic financial planner. And one of these key areas we were looking at is, you know, how do we best train someone and remove the sales pressure from them when they join the firm. And we knew that an internship program was going to be a great way to work through some candidates.

And what's the size of it now compared to years past?

Yeah, so it's officially an every-year program. I think it started, you know, maybe 20 years ago, but it wasn't all the time. And so now every summer we have a group of 2 to 4 interns in the office for 10 to 12 weeks.

Okay. And what was the impetus behind this? What got the ball rolling?

Yeah.

Right. So, you know, I served on a number of advisory boards that are broker-dealer and people were sitting around complaining. It's so hard to find young talent. You know, how, how, how can you find it? And after listening to everybody talk, what I realized is that they weren't willing to pay for it. The, it, it was the old way of thinking where you brought somebody in, you gave 'em a draw, you taught 'em how to do things for 3 months, and then you put 'em out there to eat what they kill. And that you weren't training anybody. Kids didn't quite understand what was wanted of them. And so, We changed this around. We said that we want to have an enriching experience for kids. We created an apprenticeship that lasts for 5 years. So somebody comes in, they're paid a working wage, they work directly with somebody like Elizabeth, who's a senior financial advisor, and every single meeting she has, they get other experiences around the firm and we start growing them from there. And we could get more into that, but that was the impetus. We had to do it a different way because the traditional way was not working.

—then 5 years is quite a serious commitment. Like, what did you— why not 3, for example? What was the calculus there?

Yeah, you know, it's funny. People go through these phases that we've noticed. And now we're trying to speed it up a little because we can't hire fast enough right now, you know, because the client growth has been amazing over the last couple of years. And we're trying to hire even more interns. You know, we were going to have 5 interns or 6 interns this year so we could increase it quickly. I wish we would have done it sooner. It's just, it's hard to get people to do that.

And another change that we've seen over the last few years is the degree of Certified Financial Planning teaching happening in universities. So we're having students come be an intern at the office and then they're much, they're more ready to meet with clients in an earlier stage in their career than they've ever been given the education they have. But one of the areas that we often struggle with, with having students join us with that background and education is sometimes Sometimes their professors don't really understand that it is a relationship business. It does take time. And some kids are just expecting to, yeah, I'm going to be an advisor day one. And really, that's how we use our internship program is to work with the students, really set those expectations, and try to find the best of the best.

And I'll add on to that where I lost my train of thought a second ago, which was when people come in 6 months into the job, when we're having them complete paperwork, they're a little bit bored and they think they know everything. And then in year 2, they really believe, like they're ready. They want to go out there. They want to be a full financial planner. And then by the time they get to year 4, they're wondering if they'll ever be ready because now they're seeing more sophisticated meetings, more sophisticated planning. And in year 5, they need us to assure them, you're ready. You know, get out, go fly. You're ready to do this. And so the more you know, the more you realize how much there is to learn in this business to do it correctly.

Right, right, exactly. They don't know what they don't know at the early stage. Over time they learn the full landscape. How is your internship, would you say, different to the extent you can, you know what others are doing?

Yeah, so our internship is different in a way that, and we hope other firms take on this approach, is we focus on teaching the students during the time that they're in the office. I would often joke it's kind of a blend between a summer camp and a professional learning experience, but we really focus on the tenets of financial planning over the time frame. And what I think one of the greatest aspects of the of the internship program is when the students leave, they have built their own financial plan for themselves for life after graduation. And they do that by working with one of the advisors on the team. And then, you know, it's evolved over the years where even last year was the first year all 3 of the interns we had actually presented their financial plan to the entire firm. So great chance to see, you know, their skills in front of an audience. What did they pick up this year? And then if they do say they want to work with us in their financial plan, it's a nice sign there as well. Yeah.

And to be clear, having interns, a lot of people used to look at it as cheap labor and my summer's going to be easier. I can have them doing all this stuff. For us, when the interns come in, our life gets harder, not easier. It takes a lot of effort to create that enriching experience. We're trying to get these kids so excited that they go running back to their friends and say, hey, if— and they usually high performers hang around high performers and, you know, go check out Sequoia Financial, it's a— their internship's incredible.

Are you finding amongst younger people that this business is, um, uh, something that's, if not exciting, more exciting and interesting than in years past? I think the reputation of wealth management in years past was a little more sleepy, but I think it's, um, getting more democratized in pop culture and elsewhere. People are much more— money is more central to everything that we see and hear, it seems like. Can you Say anything to that point? Most certainly.

It's definitely more of a— I guess less of a sales career than more of a helping others career. And so one of the questions we ask in an interview with a potential new intern is, "What does financial planning mean to you?" And it really lets you look into that candidate and see, you know, why are you motivated to be a financial planner?

What's the interview process like?

Yeah, so we use a program called Handshake for the majority of our applications, applicants. Handshake Handshake is just a, it's a service put out there by all the many universities that it's a way to have employers see students, students see employers. And so we post the position on Handshake and we start to get applicants. So in 2020, we had 70 applicants, 2021, 93, and in this last year, we had over 100. So using that platform with the continued word of mouth, the purposeful work we do on the program is how we start the process.

What do you look for in their resumes?

Yeah, great question there as well. So we start with the filter of a grade point average of 3.5 or higher. You have to add a quantitative layer to this when you have over 100 applicants. The goal is to interview 10 to 15, you know, those, those high-performing students to really get a feel of what are they doing at their school. Again, how do they think about financial planning? Where do they want to make an impact here in the industry? And so we, we interview 10 to 15, you know, Due to COVID and now the virtual interview process, we can start interviewing even pre-winter break, but preferably it was over winter break, come in, interview, and then we'd start to offer jobs in January, February. Okay.

And when you have, let's say, a group of the final and best resumes, who decides on the final hires and how do you, what's the methodology? I mean, to what extent is it just the feel, the chemistry, et cetera?

Right, so I've delegated that to the people running the internship. And so in Elizabeth's year when she was heading up the internship, the intern that was just after her was her backup. And then when Elizabeth left, that person became the head. So they get to make a decision on who it is. They'll generally come to me with the recommendations. And, you know, I entrust these guys to make the right decisions. And we say yes. We have a couple rules though that everybody should follow to make— because I could tell you this because we made mistakes with them. One is, We only hire interns that want to be financial advisors or think they do. That means your next-door neighbor whose kid needs a job for the summer, who's, you know, a biochemistry major or an engineering major who has no— they're just looking for a place to work. And then we avoid and have successfully avoided clients' children. We know clients' children are really not eligible to do it.

And what does the curriculum look like?

The curriculum is a— basically, we break down the weeks, the 12 weeks, into investments and insurance planning, estate planning, all those tenets of financial planning, and we focus that educational content throughout those weeks. You know, you might have a wholesaler or 2 or 3 come in and just talk about that side of the industry. One of our favorite estate planning attorneys will come in and give a presentation to our students. It's a way to really give the students an opportunity to see all the facets of what we do. So that's happening throughout the program, and it's easy to do. So if you're listening to this, you know, who's, what insurance agent are you working with? Or, you know, what's your favorite estate planning attorney? Or, hey, let's go to a financial planning association meeting. There's a lot of ways to add that basic, you know, learning about the industry to the program. And then over that weekly period, the interns will actually rotate between different advisors because some advisors may be looking to hire and they want to get a feel of all the candidates. So they, you know, who might they work with the best.

And Elizabeth brings up a great point. You don't have to be big like us. And we're not, you know, we're 30 employees. Now we're 156 since we've joined Sequoia. But when we were doing this, you know, we were lucky. We had a chief investment officer so they could spend time with them. But if you're smaller, 2 or 3 employees, 5 employees, you could still do this, but just get help from the outside to come in. You know, get a mutual fund manager to come in and talk about investments. There's lots of different ways to do this. This is applicable for everybody. There's no reason not to try to start this.

In terms of the subject matter, has that changed over time? You know, what's been the emphasis?

Yeah, so it has evolved over time. What we started doing a few years ago, so stepping back, our internship program only runs Monday through Thursday. Okay. So that's one of the reasons we do that is, as Kevin shared, it's a lot of work on that internship director and the firm to have the interns. It's meaningful, so don't not do it because of the work. Right. But it's, we needed a day off. And then also this idea that you're only a student once. And, you know, to be able to have a 3-day weekend and just work Monday through, like, the rest of your life you'll be doing this. So let's give you a, you know, a little bit of a better summer experience. Yeah. But so to your question though, about how did the curriculum start is we added more and more learning to the equation. It was less filing, like when I was an intern, and we started to do vocab Thursdays. So end every week with an educational session where the students would write down 3 words that they heard over the course of the week. Research it themselves, and then present to you what they thought it meant. And really what was great about it for me looking back on it as the director, and then I've heard this from, you know, new directors that have done the program, is it's a chance to practice if a client was asking you that question, right? It's a way to say, yes, this is modern portfolio theory, or, you know, really describe things that you might get in a client meeting. And so we started with that education piece, and then we had the idea of, well, how about you build your own financial plan while you're here too? And so that's how we knew we had to break it down into those 10 The finance of financial planning so they could have that foundation.

Yeah, I think speaking about a concept is very different and often harder than just thinking about it because often people will think they understand something and then when they're asked to describe it, they might hem and haw a little bit.

Well, and I remember a few years ago in one of the vocab meetings, someone brought up Robinhood and I was like, "What's that?" And now here we are. Like, it's just, it's also a good way for us to think about, well, what's, you know, that really young generation of investor thinking about?

And what happens, you know, post-internship? What usually or often happens for these interns?

Yeah, so we actually have a curriculum for our residency program. And, you know, it's pretty detailed out and they have a very, very clear picture. Elizabeth wasn't so lucky. She was one of our first interns and I was in charge and there wasn't a very clear path. Free-range intern. Yes, very clear path. But I'll let Elizabeth talk a little bit about what the path is for people coming in.

Yeah, and before we even get to the path, month, we do the exit interview. It's really important to hear, you know, what was the most rewarding part of your internship? What would you change? We really get some good feedback from having that exit interview, and really, one of the current directors right now said that's, you know, one of his favorite parts is the exit interview because you get to see it full circle. We use that exit interview as a chance to offer a job to a candidate or 2 or 3 that we think would be a good fit at the firm. You know, what we heard, you know, we hear a lot about is the importance of a cultural fit, and we're a big believer that 10 to 12 weeks is the best way to find that cultural fit. Yes, it's a lot of work investing in the program, but you know that new employee is going to be here for the long term. You know, over half of our office pre-merge with Sequoia was, this is the only job we've ever had. Yeah.

And when you have the cultural fit, is it usually mutual where you feel comfortable with them, they invariably will feel comfortable with you, or has it ever happened that one of the two parties is comfortable and the other is not? Or is that— I assume that's more the exception, but—

Yeah, I think everyone's typically on board because you're purposefully during the 10 to 12 weeks just talking about the firm and setting expectations for what that residency program looks like. Okay.

And when do you, in terms of hiring, when do you pull the trigger?

Well, and in today's world, we hire as soon as we know we want them. That's been a change in evolution. It used to be, well, let's wait till closer to they graduate. No, in the job market we're in and you find good talent, we offer them a job and then typically a signing bonus once they start as well.

Right, and their path, they know exactly what they're gonna make their first year. They have a good idea the second year. They know once the end of their internship comes, they'll be at a six-figure income if they could make it. And so, you know, we're just filled with high performers. And so it's not easy to make it through the process, but we've done a great job of picking the right kids because of that time period we get to work with them. I mean, the other option is you interview with them once, you have a few people on your team interview them, interview with them, and everybody after spending an hour decides, will this person fit? And that can't compare to have somebody working with you for the entire summer.

Oh yeah, I mean, I kind of, I often marvel at the modern job market. I mean, you have a handful of interviews, and then you look at their resume, and it's like, okay, and you hire them, and that's just a blip compared to the exposure you have, so you definitely are mitigating risk much better with an approach like that. But to that point, when you do have, bad news to break to an intern? How does that happen?

Yeah, so it does happen, and I think the best way to manage that is to set expectations early on that this isn't a job guarantee. It's an opportunity to work here. You're getting paid. You're 4 days a week. Everything's— it'll be a good experience. You'll know more when you leave, but it's not a guarantee that you're going to receive a job. Yeah.

And we're very open when people leave. We don't want them to waste time thinking that this might be the right place for them. Yeah. And so, and we'll be very honest and we'll tell them, you know, the reasons from our viewpoint, but we want them to leave happy. We want them to be a friend of the firm and know that we care for them and that we think they're going to be successful wherever they head. And here's things that they could work on to do better in the next place they're at. Right.

And regardless if they're not hired or, um, they still have learned an awful lot that they personally will benefit from. I mean, that's exactly taken away. So exactly. Yeah, and how do you wrap up the program?

Yeah, so now it's a firm-wide presentation of your financial plan, and then we always have a, you know, sit back as a team and look and say, "What could we have done differently? Where can we improve?" And we also thank, you know, the advisors in the office because it is a commitment of time, and, you know, we want our interns sitting in as many meetings as possible. We want them, you know, being exposed to an array of opportunities to just see what the industry is. And so that's really how we wrap it up is with a thank you to the advisors in the office and our internship directors. Okay.

And one of the funny things about when the kids get to present their plan is that, you know, they know what their income would be when they start here and we get to see what income they put in on their plan. And so we could tell which ones have, you know, if the kids are thinking, they at least pretend this is where they wanted to be.

Helps you manage your budget for the coming year.

20-something years ago. Yeah, exactly. So it's a great process.

Well, and we know too, the more we know about our clients and what motivates them and how they think, it makes us better advisors. And so when you could see, you know, a potential new hire present their financial plan and they want a Ferrari one day, and then you hire them, you know, I'm going to help you get that Ferrari. Like you just, you can engage in different ways and really get to know that person with this time period too.

And full disclosure, nobody in our firm has a Ferrari right now.

Okay. The scope of all this seems fairly ambitious. What if you're a smaller firm? What would be expendable or what would be just the ideal way to distill the best aspects of this for them? Yeah, right.

So I mean, even if you're a one-person firm, the best way for you to grow and refocus your attention is to have somebody else there that you have to keep busy all day. And that might seem like a disaster for some people, like, oh my God, why would I wanna do that? But you know, you could have a lifestyle business in this firm. And lifestyle business to me is saying, you know what, I'm happy with my income. I'm really happy with my clients. And I have no problem with that if somebody wants to do it. But if you want to grow, you have to add people to leverage yourself. And so I don't care what size you are, you could still do this. You don't take 2 interns, you just take 1 intern, but the interns are a very, very low cost. You know, we pay them significantly more than minimum wage, but it's still a relatively low cost compared to the other expenses that we have.

Yeah, and I think you can sit back and say, these are some things I want to accomplish. And yes, we're talking about making it an enriching experience, but trust me, there's a lot of internship work that is not enriching. It's, you know, and we set those expectations when we interview as well that, you know, you may be be, you know, cranking out Excel files or, you know, uploading PDFs to certain areas. Like, just, it's not all going to be fun. There's that piece of the program. And so, you know, if there's some projects in your mind, you're a smaller firm that you just need done, hire an intern. And then don't— if it's 3 days a week instead of 4, if you're feeling overwhelmed by the task. Gotcha.

Yeah, I think so. Managing the expectations is extremely clear. So you don't want anyone resentful and saying, you said this, I did that. So just put your cards on the table at the beginning Exactly, yeah. So given the competitive landscape out there, what kind of best practices are resonating, are effective today for retaining talent?

The way I've brought up the talent, and I've been very lucky, people really haven't left our firm. You know, the interns we have are still with me today, and I just always had a theory that we need to have fun, and we make that part of every day. That people want to feel valued and they want to add value. We're picking these high performers. And so you need to be able to step back from controlling everything. Usually the advisor, the lead advisor, is the problem with them not growing because they're controlling of everything. And so when Elizabeth comes in, I'd give her a project when she first started, and I said, I want you to do this. And she'd come back and say, well, what do you think about this? And my question would be, well, what do you think about it? "Got it." And she would explain, and she doesn't have to do it exactly like I would. She only has to do it 80% as good as I would. Now with Elizabeth, it was like 110% better than I would have done it. But I'll let Elizabeth answer that from her side because she could tell you more about some of the things that we do to retain the talent we have. Yeah.

And I think even what's really different about our firm and, well, I guess it's becoming more of an industry trend we're seeing is that not all financial advisors want to sell.. And they're happy to support a team. They're, you know, they don't need to go out there and make it rain. They'll just, you know, be there to help. And so that is one of the differentiators with our new hires is that there's no sales pressure. It's truly you are here to learn, to get your CFP. You're sitting with the advisor. And I think that it really helps us get the talent that really wants to focus on the team approach because that's just our philosophy.

We are almost out of time, so I did want to ask you in the old Barron's tradition for an actionable idea.

I'll start with that. Hire somebody. If you want to improve, every time you hire somebody, and let's assume that they cost you $60,000 to hire them, you're not making a $60,000 commitment. You'll know in the first 3 months whether they're going to work out or not. So you're making a $15,000 commitment, but it's a great way to focus yourself. It's a great way to get your firm to the new next level and go get help. Help from people that have already done this before you. We're always happy to share our worksheet of, you know, here's the process you go through. So make sure you ask for help in the process. Sounds good.

And my actionable item would just be something for the interview that we've just really found is helpful, as I mentioned earlier, is that idea of asking, what does financial advising mean to you? When you think of financial planner, what does that mean? Especially talking to a 19, 20-year-old, it really kind of gives you a view of where they're coming from. It's an easy action item. Just put it on within the interview.

Is there a common answer? Are the answers all over the place, or are there thematically things that you tend to hear?

Yeah, they're all over the place. So it's one of the best ways to funnel, and you know who actually looked at your website before they came in, and who knows what a financial planner really does. And so that's why I really think it's a good idea.

It's been a total pleasure. Thank you so much for joining. Our pleasure. Yes, thank you. Absolutely. Well, thank you again, my guests, Kevin Meyerhoff and Elizabeth Scheiderer. For more advisor-specific podcasts, please check out barons.com/podcast. For The Way Forward, I'm Greg Bartolis.

This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.