Talent Management Trends and Looking Ahead

When it comes to talent management, financial advisory firms face a number of challenges.

For starters, the consulting workforce is older than many other professions, and many of the most successful professionals are approaching retirement age and considering an exit plan. Meanwhile, during the pandemic, those early to mid-career have become accustomed to a new level of autonomy and flexibility that may not remain the norm.

Attracting new talent to the field is also difficult, and few college programs are dedicated to financial planning and proactively bringing new people to the field. Taken together, these factors are forcing financial advisory firms to rethink talent management in order to attract and retain talent, as is the pressing need to improve the diversity of the advisor industry’s workforce.


As PLANADVISER recently reported, JD Power’s “2022 US Financial Advisor Satisfaction Study” shows that the risk of advisor attrition has increased this year across all categories, with 15% of advisors at cable companies and 7% of independent consultants now classified as “at risk” of leaving their company in the next two years.

“It’s no secret that the adviser population is older – it’s been a story for some time. However, our data shows that companies are increasingly focusing on talent management,” says Mike Foy, senior director of wealth and loan intelligence at JD Power. “They are thinking about succession plans and also devoting more resources to improving the advisor experience, whether through technology and platform upgrades or adding more flexibility to schedules. of work. These are things that will keep current advisors on board and support efforts to attract new talent. »

Succession planning is top of mind for advisors as they think about the future. Sources say companies that have older management teams are more likely to consider selling to an aggregator. Even if it does not have such a plan in place, the company must have a strategy to formalize and share institutional knowledge.

“We’re seeing a greater focus on ‘teamwork,'” Foy says. “With a team counseling approach, young counselors are paired with experienced professionals so that information is shared throughout the organization. A team-based approach can also benefit clients; for example, if someone leaves the company, that customer service relationship continues without significant disruption.

Stephen Caruso, research analyst with Cerulli Associates’ wealth management team, adds that sell-and-stay programs are becoming increasingly popular. These programs allow Senior Advisors to sell their books, but they also have a built-in phase-out plan, so they can evolve client relationships over time.

“Companies really want these transitions to be as seamless as possible,” he says. “We see a lot of work to make sure the changes are not abrupt.”

Find the right mix

As financial advisors reorient to the future, many of them are considering how best to structure operations, whether centralizing in a single home office or operating in a more decentralized format. through branches in many cities.

“The companies we work with are focused on how best to manage internal resources,” says Sean Kenney, defined contribution manager at MFS Investment Management, which works with advisory firms on team management through its Advisor program. edge.

Kenney notes that how companies choose to allocate resources can affect where they hire and whether advisers ultimately stay. A more centralized model will naturally limit the pool of potential candidates to areas around the head office and/or branches. A more decentralized model might provide a larger pool of potential candidates, but it may be more difficult to establish and maintain a strong company culture. Approaches to “flexible working” may also look different within these models.

Shauna Mace, head of practice management for SEI’s consulting business, agrees. She says many companies are looking closely at compensation to attract and retain talent.

“We’ve seen a lot of consolidation, and there’s a lot of change in how advisors find themselves in their current practice,” she explains. “If you come from the Wirehouse channel, for example, you might see a combination of salary and part of the incentive compensation. But if you come from the RIA world, it could be a salary plus a team bonus.

Mace tends to see friction when advisers face a significant change in their compensation terms. She says there should be better systems in place for consulting firm leaders to understand and respond to incoming talent pay changes.

“This is essential if you want to avoid attrition and/or recruit new people who may not be used to your compensation model,” suggests Mace.

Michael Rose, associate director of wealth management at Cerulli Associates, says investing in “wealth technology,” or the technology solutions and systems that power modern financial advice, can also support talent management. Advisors, like their clients, are looking for a simple user experience, and companies that invest in better platform technologies could come out on top.

“These improvements can be a differentiator,” Rose says. “They are valuable from an administrative point of view. Additionally, technologies that can help advisors manage all of their clients’ wealth are important. There is a big shift towards this concept of “total wealth”, which means moving away from investments alone and considering tax needs, estate planning, etc. Being able to present the big picture to customers is accretive in the long run. »

Go beyond headcount

Across the consulting and financial services industries, the theme of diversity, equity and inclusion has come to the fore. Sources agree that having a DEI strategy in place is both the right thing to do and a key way to attract talent that is more representative of the total potential customer base. Major distributors, brokers/dealers, and aggregators all adopt DEI policies into their hiring frameworks, but Kenney of MFS is quick to point out that policies alone aren’t always enough.

“Companies tend to get caught up in DEI measures,” he says. “They treat it like a staffing issue, and once the top row numbers look good, they think they’re on the right track. But that’s only part of the equation. Companies must focus on inclusion, and if various candidates don’t feel able to contribute or step forward, they likely won’t stay.

Kenney says company culture can help encourage diverse candidates to stay. If, for example, team meetings are dominated by only one or two voices, or if ideas and action plans come solely from upper management, this could indicate an inclusion issue.

SEI’s Mace notes that there is also an impact on the customer.

“We all know the statistic that 70% of women fire their financial advisor after their husband dies. It’s because the relationship doesn’t exist,” she warns. “We see it with younger generations too. They want a counselor who looks like them, who has had similar experiences If there is already a counselor serving a family and that counselor does not take the time to build a relationship with the whole family it’s not about profitable members at the moment, it’s about a relationship that probably won’t last long term. .

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