For many advisory firm owners, hiring their first associate advisor marks a meaningful milestone, opening the door to new delegation capacity, mentorship opportunities, and expanded productivity. At first, the relationship tends to be mutually beneficial – the associate is eager to learn, and the firm owner needs to delegate and expand their capacity. After a few years, though, the associate advisor will naturally want to move upward and either manage their own clients or delve into more specialized planning work. This progression often reveals a critical gap, as the firm may not have built a clear path for career advancement. Which leaves many firm owners facing a critical crossroads: do they stay small and accept that the associate will eventually move on? Or do they grow into a multi-advisor firm and navigate the productivity and infrastructure challenges that accompany that growth?
In this 179th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how an advisory firm can facilitate an associate advisor's career growth in ways that align with long-term productivity.
Firms effectively have two viable paths forward. One option is to build a multi-advisor business intentionally, with clearly defined growth tracks, equity participation, and focused advisor 'pods'. When the decision is made deliberately and based on what the founder truly desires and is building toward, this can be a highly productive growth path. But if the firm is primarily driven by a desire to keep a talented associate, the firm may inadvertently create inefficiencies that inhibit long-term productivity – such as sharing clients between advisors and retaining clients who don't match the firm's required fee schedule.
Alternatively, firm owners who prefer to remain solo can adopt a residency-style model, where the associate advisor is brought in to work with the firm for a defined three- to five-year period before moving on to their next opportunity. When this arrangement is communicated clearly from the outset, it can become a win-win for both parties, creating a positive and predictable transition process. Systematic process documentation, structured handoffs, and planned knowledge transfer allow for smooth transitions and preserve firm operations, all while allowing the firm owner to train successors without expanding managerial complexity.
Ultimately, the key point is that few associate advisors set out to remain 'forever' associates at their firms. The real decision for firm owners is which tradeoffs they prefer: planning for associate advisor turnover so the firm can stay small, or taking on the additional operational and managerial commitments required to grow a team. The good news is that, with some planning, both options can lead to meaningful, sustainable work – for both the associate advisor and the long-term firm!
