Hiring on the cheap will cost you later

Wanted: adviser's assistant. Must have a bachelor's degree, a “nurturing gene” and the ability to speak Farsi. Pay: $13 an hour. Adviser Daniel Yasharel placed an ad early this month on craigslist with those requirements (and more) and has already received 300 applications to be his assistant at Los-Angeles-based NWF Advisory Group Inc. “I'm aiming for the sun, and maybe I get the moon,” said Mr. Yasharel, whose firm manages $30 million in assets. As is the case with many industries at this time, investment advisory firms are in the position to cherry-pick candidates with top-notch credentials and pay them less than in recent years. But practice-management ex-perts caution that however tempting it is to hire people who are overqualified or to pay newly hired staff members below what they are worth, it is unwise. Advisers may have the upper hand now, but these types of dream hires likely will depart for better positions once the economy rebounds. “Yes, it is an employer's market, but employers need to be careful they're not offering something ridiculously low,” said Mary Dunlap, whose eponymous consulting firm works with about 50 advisers. “Talented people will go where they're appreciated and compensated,” she said. “As long as you're willing to have a revolving door of employees, you can pay low compensation.”
Consultants and practice-management experts say that they are amazed by the sheer number of advisory firms posting job advertisements seeking employees with solid résumés that aren't willing to pay good wages to keep these employees long term. For his part, Mr. Yasharel said that he is willing to pay more money for the right person who meets many of his job's requirements. He also realizes that the right candidate may not speak Farsi, but he pointed out that a number of his clients speak that language, and it would be helpful if his assistant could as well. Mr. Yasharel said that he wanted to be as specific as possible in the advertisement be-cause he was afraid he would get applicants who weren't serious about the post. “I wanted a career-minded serious person who wants to grow,” he said. Although it is important to list specific job descriptions, employers need to realize that the “perfect person” doesn't exist, said Angela Herbers, president of Angela Herbers & Associates Inc. “Firms can be really picky,” she said. “They can be really picky with the people they're looking for, because the market supports it. The problem is, they're setting the firm up for failure when they do it.” She also worries that firms are low-balling highly qualified employees. For example, an advisory firm client recently wanted to hire a chief executive for $80,000 — an unrealistic salary for a talented professional, Ms. Herbers said. “You're not going to find someone in the industry who knows how to run a company for $80,000,” she said. “You're giving them an operational management position with a title of CEO for the pay of a junior adviser. That doesn't work.” Even though advisers have an attractive pool of candidates, many of whom may be willing to work for less, they still need to think long-term, said Scott Slater, a managing director of business consulting at The Charles Schwab Corp. “We don't want advisers to make a bad hire or an opportunistic hire,” Mr. Slater said. “Employees will feel like you took advantage of them, and they'll continue looking. You want to get a really good person and make them want to be there for the long haul.”

SEEKING HELP FROM A PRO

Doug Flynn, an adviser and partner at Flynn Zito Capital Management LLC, which manages more than $250 million in assets, said he wants to hire someone but admits that he isn't exactly sure what he's looking for. So he intends to seek help from a consulting firm in crafting a clear definition of the position before placing an advertisement. Right now, his firm has four employees. “In the past, it was easy, and we knew what we wanted,” he said. “This is the hardest hire we've had. We're wondering if we should hire an administrative person. Or should we hire an assistant to the partners, or should we hire an assistant planner? The higher up you go, the more you'll spend.” He expects to spend at least six months settling on the position and coming up with qualifications and a competitive salary. Robert Siegmann, chief operating officer and senior advisor with Financial Management Group Inc., which manages $175 million in assets, said his firm is being very selective as it looks for an established adviser but it is willing to pay that individual $150,000. While the qualifications are important, Mr. Siegmann said, it's equally important that the person is well-suited for the firm. “There are plenty of bright individuals, but are they going to fit into our culture?” he said. “We have to make sure it's a good fit.” E-mail Lisa Shidler at lshidler@investmentnews.com.