Developing A Successful Recruiting Foundation

1. Ryan Shanks
Founder + CEO
Finetooth Consulting
BRICK
+
MORTAR
OCTOBER 14, 2011 SPONSORED BY: JOIN A FIRM

2. Ryan Shanks
Founder + CEO
Finetooth Consulting
BRICK
+
MORTAR
DEVELOPING A SUCCESSFUL RECRUITING FOUNDATION
OCTOBER 14, 2011 SPONSORED BY: JOIN A FIRM

3. About Ryan
✦ 11 Years in Financial Services
✦ Transformed Finetooth into an exclusive Referral Based
Firm
✦ Executive + Director for two IBD’s
✦ Recruited $100 Million in Revenue + $10 Billion in AUM
✦ Co-founder & Principal of www.joinafirm.com
✦ Married with 3 children
✦ Enjoys Tennis, Snow Skiing, Learning the Guitar and

4. Team Corporate Experience

5. RIA Variations
Regional
RIA
National RIA
Single Office
RIA
Hybrid RIA
w/IBD Corporate
Relationship
RIA/

6. Recruiting Resources
8% 8%
Wholesaler 17% 17%
PR/Articles
Local Advertising
Recruiters
Platform Partners 8%
Industry Networking
42%
BALANCED APPROACH BY FINETOOTH

7. Firm Evaluation
Developing your Value
Proposition is the single most
important aspect to launching a
recruiting campaign!
* WHY SHOULD AN ADVISOR JOIN YOUR RIA?
* WHAT ARE YOU OFFERING THAT OTHERS AREN’T?
* DO YOU HAVE THE TIME TO SUCCESSFULLY RECRUIT ADVISORS?
* IS YOUR COMPENSATION MODEL COMPETITIVE?
* ARE YOU LOOKING TO FILL OFFICE SPACE OR BUILD A FIRM?
* DO YOU HAVE STAFF IN PLACE TO HELP SUPPORT AN ADVISOR?
* CAN YOU ENGAGE WITH AN ADVISOR LIKE YOU DO WITH CLIENTS?
WHAT NEED DO YOU HAVE THAT AN ADVISOR CAN FILL?

8. Creating Your Value Proposition
Compensation Office Space Support
People Platform Partners Compliance
40
60 80
80 60
40
SCALE OF IMPORTANCE: 0 - 100

9. Competitive Compensation
Compensation Office Space Support
People Platform Partners Compliance
60 40
80
80
40 60

10. Compensation Types

11. Compensation Types

12. Compensation Types
Manage Minimize Allow Retention Firm
People Cost Branding Strength Loyalty
W2
X X X
1099
X X
Hybrid
X X X X

13. Compensation Types
Manage Minimize Allow Retention Firm
People Cost Branding Strength Loyalty
W2
X X X
1099
X X
Hybrid
X X X X

14. Compensation Types
Manage Minimize Allow Retention Firm
People Cost Branding Strength Loyalty
W2
X X X
1099
X X
Hybrid
X X X X

15. Compensation Types
Manage Minimize Allow Retention Firm
People Cost Branding Strength Loyalty
W2
X X X
1099
X X
Hybrid
X X X X

16. Compensation Types
Manage Minimize Allow Retention Firm
People Cost Branding Strength Loyalty
W2
X X X
1099
X X
Hybrid
X X X X

17. Compensation Types
Manage Minimize Allow Retention Firm
People Cost Branding Strength Loyalty
W2
X X X
1099
X X
Hybrid
X X X X

18. Compensation Comparisons
100
75
50
25
0
Start RIA Join RIA IBD Wirehouse Regional Bank + Trust
INDUSTRY PAYOUTS BASED ON $500K IN REVENUE

19. Compensation Analysis
Start RIA
Join RIA
Operating Cost
Advisor Net Payout IBD
Wirehouse
Regional
Bank + Trust
0 25 50 75 100
RESEARCH PROVIDED BY FINETOOTH CONSULTING

20. Compensation (Transition+)
Forgivable Loan Payback Loan
Independent Broker Dealer
Institutional Custody Platform
IBD Branch Office
Wirehouse+Regional
0 25.00 50.00 75.00 100.00
BASED ON $750,000 GDC

21. Suggested Schedule (1099)
$26 - $50
80%
$76+
70%
90%
$51 - $75 MILLION
85%
SCHEDULE BASED ON RESEARCH BY FINETOOTH

22. Suggested Schedule (W2)
Base
$60,000 $70,000 $80,000 $90,000 $100,000
Salary
Upfront
50% 50% 40% 30% 20%
Fees
Trails 35% 30% 25% 20% 15%

23. Case Study #1
CLIENT TYPE: HYBRID RIA (1 OWNER)
FIRMS AUM: $300 MILLION
AVERAGE FIRM FEE: 1.18%
POSITION: VP OF BUSINESS DEVELOPMENT
ANNUAL QUOTA: $24 MILLION
Required Skills
Degree in Economics, Accounting, Finance, or other Business Major
5+ Years Experience
FINRA licensed 7 & 66
CFP and/or CFA
Life, Health and Variable Annuity Insurance License
Strong Retail Selling Background

24. Case Study #1
Advisor Income
Base Salary
Quarterly Commission
Annual Commission
$286,000
$120,000.00
$90,000.00
$118,000
INCOME
$106,640
$60,000.00
$30,000.00
$0
$24 Million $50 Million $100 Million
ASSETS

25. Case Study #1
Firm Revenue
Base Salary
Quarterly Commission
Annual Commission
Annual Firm Revenue
$1,500,000.00 $1,180,000
$1,125,000.00
$590,000
INCOME
$750,000.00
$283,200
$375,000.00
$0
$24 Million $50 Million $100 Million
ASSETS

26. Case Study #2
CLIENT TYPE: RIA (3 OWNERS)
FIRMS AUM: $300 MILLION
AVERAGE FIRM FEE: .88%
POSITION: VP OF BUSINESS DEVELOPMENT
ANNUAL TARGET: $66 MILLION
Required Skills
7+ Years Experience
FINRA licensed 65 or 66
CFP and/or CFA
Proven & Verifiable Success at Raising Assets
Solid Network of High Net Worth Relationships

27. Case Study #2
Advisor Income
Base Salary
1st Year Fees
Trail Fees (3 Years)
Profit Sharing Plan
$245,640 $298,800
$272,700 $321,350
$110,000.00
$82,500.00
INCOME
$55,000.00
$27,500.00
$0
Year One Year Two Year Three Year Four

28. Case Study #2
Firm Revenue
Base Salary
1st Year Fees
Trail Fees (3 Years)
Annual Firm Revenue
Profit Sharing Plan
$2,000,000.00 $1,531,650
$1,103,200
$1,500,000.00
$674,750
INCOME
$246,300
$1,000,000.00
$500,000.00
$0
Year One Year Two Year Three Year Four

29. People
Compensation Office Space Support
People Platform Partners Compliance
60 40
80
80
40 60

30. Hiring + Firing 101
JIM COLLINS, AUTHOR
BUILT TO LAST
GOOD TO GREAT
HOW THE MIGHTY FALL

31. Power Principal
5%
5%
Operations/PM 5%
Staffing
Client Service
Business Development 40%
Education
Advisor Recruiting
40%
5%

32. Multi-Tasking Owner
15%
Operations/PM 25%
Staffing
Client Service
Business Development 10%
Education
Advisor Recruiting
10%
15%
25%

33. Balanced Office
20%
Operations/PM 25%
Staffing
Client Service
Business Development
Education
Advisor Recruiting
15%
10%
10%
20%

34. Effective Staffing Model
Owner/Principal
Assistant/Office Manager
Jr. Planner/Client Manager
Roles & Responsibilities
100
75
50
25
0
Operations/PM Staffing Client Services
MODEL IS BASED ON ONE PRINCIPAL ADVISOR, MAX OF 250 CLIENTS, $750,000 IN REVENUE

35. Effective Staffing Model
Owner/Principal
Assistant/Office Manager
Jr. Planner/Client Manager
Roles & Responsibilities
100
75
50
25
0
Business Development Education Advisor Recruiting
MODEL IS BASED ON ONE PRINCIPAL ADVISOR, MAX OF 250 CLIENTS, $750,000 IN REVENUE

36. People + Pay
$60,000 - $100,000
ASSISTANT/OFFICE MANAGER
7+ YEARS EXPERIENCE
JR. PLANNER/CLIENT MANAGER
5+ YEARS EXPERIENCE
$60,000 - $80,000
BASED ON RESEARCH BY FINETOOTH CONSULTING

37. Office Space
Compensation Office Space Support
People Platform Partners Compliance
80
40
60
60
80 40

38. Office Space
CLIENT ACCESSIBILITY
OFFICE PRESENTATION
BOARD/CONFERENCE ROOM NETWORKING
EASY PARKING Most Items
OFFICES WITH FURNITURE Offered w/
COMPUTERS/PHONES Executive Suite
GREETING KIOSK FOR CLIENTS
KITCHEN
FILING CABINETS
PRINTERS/FAX

39. Office Space Pricing (1099)
FIXED PRICING FOR INDEPENDENT AFFILIATED ADVISORS IS THE MOST
ATTRACTIVE OPTION AS ADVISORS WANT THINGS SIMPLIFIED FOR THEM
Net Payout Support Rent
$50,000.00
$75,000.00
$400,000.00
75% Payout on
$500,000 Producer

40. Platform Partners
Compensation Office Space Support
People Platform Partners Compliance
80
40
60
60
40
80

41. RIA Partners
If you plan to
recruit from the
wirehouse firms, you need
CUSTODY/CLEARING FIRM to establish an IBD
IBD relationship.
TECHNOLOGY VENDORS
LAW FIRMS
CPA FIRMS
MONEY MANAGERS
INVESTMENT PLATFORM VENDORS

42. Recruiting Help from Partners
Custody/Clearing Firms & IBD’s will pay Recruiting Fees for RIA’s
Fee Side Commission Side
$60,000.00
$45,000.00
Recruiting Fees
$30,000.00
$15,000.00
$0
$250K $500K $1M
Advisor Revenue

43. Support Offering
Compensation Office Space Support
People Platform Partners Compliance
80 60
40 40
60 80

44. Support Provided to Advisors
If you can’t convince an
advisor that you can support
them during their transition &
after, then you have no business
recruiting!
TRANSITION OF CLIENTS
ADMINISTRATIVE SUPPORT
CLIENT DEVELOPMENT/MENTORING
PLATFORM TRAINING
ACCOUNT OPENING
PLATFORM MAPPING
CASE DESIGN/STRATEGIC PARTNERS

45. Compliance History
Compensation Office Space Support
People Platform Partners Compliance
80
60
40
40
60
80

46. Compliance Factor
Advisors want to know
what your compliance Be prepared to
background looks like discuss any
compliance issues
and they will judge your RIA has faced
you, just as you judge in the past.
them!

47. Advisor Qualifications
✦ Business Purpose
✦ Minimum Production/AUM
✦ Required % of Current Fee Based Clients
✦ LOS (Length of Service)
✦ Overall Business Mix
✦ CRD/Compliance Background
✦ Certifications & Education

48. Sample Qualifications
✦ AUM: $35,000,000.00
✦ $325,000.00 GDC (Past 36 months)
✦ 60% Fee Based
✦ 6 Years Experience
✦ 60% Fee, 25% Securities, 15% Insurance
✦ Clean Compliance Background
✦ CFP + Bachelors Degree

49. Job Description (Sample)
Job Description
Our client is seeking a Vice President - Business Development Officer (BDO) for their rapidly growing and expanding $300,000,000 RIA firm.
Prospect referrals are generated by Investment Consultants located in institutional branch offices. We need a BDO who would call on and
develop relationships with the Investment Consultants located in the branches. After sale, client servicing and managing client relationships
would be minimal, since the client servicing would be provided by home office financial advisors. The BDO would work from home, but travel
on a continuous basis to all covered branches. Strong support provided by home office team. My client is offering a generous benefit package,
including company car, health & dental insurance, and 401(k) plan. Base salary + generous incentives based on performance. Total
compensation potential is $100,000-$200,000.
Desired Skills & Experience
A degree in economics, accounting, finance, or any other business related major
5 years+ years financial sales experience (Specifically Investment Related)
FINRA licensed 7 and 66
CFP and/or CFA
Life, health and variable annuity insurance license
Excellent interpersonal skills
A dedication to providing high level of service to prospects and Investment Consultants
Strong retail selling background with proven/verifiable closing ratios
Company Description
My client is a boutique firm that offers comprehensive wealth management to their clients. They are a one-stop shop for financial planning and
investment services for high net worth families. They have over doubled their AUM in the past two years (up +107% from December 31, 2008
to December 31, 2010). The client attributes this explosive growth to their high touch client experience, unique investment strategy,
comprehensive wealth management services (including income tax preparation), which has driven our high 90s% client retention rate. Their
commitment to exceeding client expectations and building long-term relationships has earned them the trust, confidence, and respect of their
clients and recognition from the industry. They have a unique highly quantitative, proprietary, trend following approach to investing and risk
management.
Compensation:
Base/Incentive Plan, Health/Dental, 401k
FINETOOTH CONSULTING CLIENT POSITION FILLED WITHIN 60 DAYS

50. Thank You!