Having done hundreds of recruitment gigs over the years, I thought I'd seen it all. But, recently, as I recruited a junior advisor for one of my long-time client firms, I was astounded at the quality and experience of the candidates. And this was for a job at a small practice. Yet, we found that we had our pick of six or seven very experienced young advisors wanting to leave, not just good jobs in financial services, but great jobs at large, independent advisory firms--jobs that three years ago, people would have killed to get.
Now that most advisory firms, large and small, seem to have turned the economic corner into a solid recovery, lots of firms are looking once again to hire junior advisors. The recession forced many firms to take a hard look at their employees--both professional and staff--and make the hard decision to let go some folks who clearly weren't working out (although in better economic times they probably would have taken the psychologically easier route of simply working around these folks who probably never should have been hired in the first place). Now, these firms are looking to replace them with better, perhaps more reasonably priced, mployees to help them take advantage of the opportunities they're seeing in the economic recovery. If my clients and other advisors I talk to are any indication, independent firms have nearly doubled their hiring from the healthy staffing growth rates of the pre-crash 2007 days.
Yet, as in many other areas, the employment experience of the largest independent firms has been quite different from the rest of the advisory world. Like their smaller colleagues, they may have used the recession to jettison some problem employees, but for the most part, their higher-net-worth clients and much larger revenue base allowed them to weather the storm with a little belt tightening on expenses and the slowing of growth initiatives and raises, rather than actual staffing cuts. However, their economic advantages seem to have worked against these big firms in the recovery: Their institutional-like cultures appear to prevent them from adequately rewarding their employees for their loyalty, hard work, and sacrifices in the aftermath of the meltdown (see my January 2010 column). And their HR failure has resulted in the best hiring opportunity the advisory world has ever seen.
High Marks, But No Raise?
The candidate my client ended up hiring for a support advisor position is a young CFP with three years experience at one of the largest, most successful independent firms in the country. He has so much experience with all of the standard planning systems, software, and procedures that he requires virtually no training--and in fact, can probably give his new colleagues a pointer or two. And we got him at what can only be described as very fair terms, considering his qualifications.
During the job interview, I remarked that he had a great job at a great independent firm and asked him why in the world he would want to leave: "I love my work," he answered. "But they don't compensate me well, and haven't recognized my contributions during the tough times. I don't feel like I'm part of the team."
I found out that he'd recently had a performance review, during which the evaluation of his first three years was perfect: Highest marks across board. Yet the firm wasn't prepared to increase his compensation, promote him, or make any adjustment in his career track. He didn't even work directly with any of the firm's senior advisors. And he didn't think partnership would ever be a possibility.
He wasn't really interested in more money, although we did give him a small raise. His primary concern was the level of work he would do, seeing a clear track for advancement, and undoubtedly most important, simply working for a senior advisor from whom he could learn how to be a professional financial advisor. Frankly, I went into his interview thinking he'd never leave his old firm. But I quickly realized the job we were offering--as a support advisor working at a high level, directly with one of our two partners--was exactly what he was looking for.
Size Changes Things
A funny thing seems to have happened as independent advisory firms have gotten larger. Many of the largest firms--and I'm talking here about practices with $1 billion or more in client assets under management--appear to have lost much of what makes the independent advisory world unique, indeed, the very reason that most independent advisors went independent in the first place. As these firms have gotten larger, added more staff and more advisors, they've come to resemble other financial institutions--brokerage firms, mutual fund companies, and even, heaven forbid, banks. But with CEOs, office managers, HR people, IT departments, trading desks, management committees, compensation committees, satellite offices, etc. etc. it gets harder not to draw those comparisons.
It's my observation that if independent advisors wanted to work for financial institutions, they would. In fact, many of the advisors I know are refugees from the institutional world. Today's young advisors may not be as entrepreneurial as the first and second generations of financial advisors--willing to set up their own practices on a dream and their own Visa cards, and live on bologna and Velveeta for two or three years until the clients started to show up. But just like their predecessors, if they wanted to work for a financial institution, they certainly would. You really think good financial planning youngsters have a problem getting a job at Ameriprise or Wells Fargo?
So, while young folks today don't see any reason to recreate the wheel, they still want the same things that older advisors wanted, and for the most part, still want today: a small firm atmosphere, camaraderie at the office, a sense of teamwork, the ability to make a real--and visible--contribution to the success of the firm, and to walk into the bosses' office to discuss some work-related issue or just shoot the breeze.
By the way, my recruit started a month ago, he hit the ground running, and with no training started making a major contribution to the firm from day one. His new boss feels very lucky, and he couldn't be happier. The proverbial win/win.
Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at firstname.lastname@example.org.