Last month I discussed how hiring young breakaway brokers can be a great way for you, as an independent advisor, to capitalize on new opportunities and grow your practice. What’s more, younger advisors are very interested in transitioning to the RIA model. Based on our recent survey of advisor attitudes, “Advisors Turning Independent,” advisors under the age of 40 were significantly more likely than those 40 and over to find the idea of becoming and RIA appealing (65% to 43%).
Opportunityand interest alone are not enough. You need to take the right steps to find, attract and ultimately hire the right young advisor—one who is both highly qualified and a great fit for your business. With that in mind, here are some key considerations and tips that can help you recruit top young talent looking to enter the RIA world:
Tip 1: Tap new technologies and traditional methods to source candidates.
LinkedIn, Facebook and other social media outlets let you cast a wide geographic net, potentially giving you a large and diverse pool of job candidates. And since younger generations can be heavy users of these channels, you can be very effective at getting your name out in front of under-40 advisors by using social media in your recruiting efforts. That said, the more traditional sourcing vehicles also remain highly valuable. Professional associations and certification boards, which offer networks through which you can advertise yourself, as well as alumni associations are highly effective at connecting young job seekers with employers.
Tip 2: Emphasize your firm’s unique culture and values.
Young advisors have become increasingly disenchanted with their employers’ corporate cultures. Our survey revealed that advisors under the age of 40 are far more likely to face challenges with their current firm than their older colleagues. That means you can attract strong candidates from this group if you clearly communicate your firm’s independent culture and approach during all your interactions with candidates. In particular, emphasize any of your specific values or guiding principles that resonate with the under-40 set—such as flexible scheduling and the importance of a good work-life balance.
The key is to communicate your specific culture and beliefs honestly and consistently at every contact point a new hire could potentially have with your firm. That includes your website—62% of advisors tell us that they would conduct Internet searches to learn more about an RIA firm if they were approached by an RIA recruiter—as well as other professionals who belong to the same professional associations as you.
Even your office itself can send a powerful message about your culture and values. For example, if you purport to be a family-oriented firm, your décor should reflect that focus. One such firm I work with has a children’s play area and pictures of employees with their families prominently displayed on the walls. By reinforcing who you are and what you stand for at every interaction in the recruiting process, you’ll find candidates who share your values and would be an ideal fit at your firm.
Tip 3: Highlight your solutions to young advisors’ biggest professional challenges.
Many younger wirehouse advisors today see significant professional challenges blocking their path to success. For example, two-thirds (67%) of advisors at large firms we surveyed told us that there is generally less job security for them than there used to be. Additionally, today’s under-40 wirehouse advisors report three main challenges in trying to help their clients: too much pressure from their firms to grow their books of business (76%), losing assets to other advisors (58%) and too much emphasis on proprietary products (50%)
That knowledge gives you an opportunity to market your firm as the solution to those challenges. For example, by highlighting the RIA model’s client-centric approach you’ll appeal to the 74% of young advisors who tell us that they believe smaller, independent firms are indeed more client focused. Younger advisors are drawn to this messaging at a time when loyalty to the wirehouse environment has eroded. Consider, for example, that 45% of advisors tell Schwab that employee morale at their firms has worsened during the past five years—while just 17% say it has improved.
Tip 4: Offer transition support.
Most advisors under 40 years old surveyed by Schwab (65%) like the idea of becoming an RIA, citing benefits such as the potential for a larger income (cited by 56% of advisors), the freedom of running one’s own business (52%) and the ability to prioritize clients’ needs (51%). Clearly, those perceived benefits should be part of your conversations with candidates. However, these advisors also see significant hurdles in making the switch to independence. The biggest perceived challenges include the time and effort needed to transition to a new business (61%), getting access to legal and compliance support (60%) and the time required to run a new business (56%).
When meeting with potential hires, start by acknowledging that you understand the risks of making such a big move. Then explain how you can help make the transition smoother. For example, if you already have an employee who is roughly the same age as the candidate, make that person be the main contact point initially so the candidate feels an immediate affinity with your firm. You also might pair new hires with older, more experienced employees who can serve as informal mentors. These moves reassure new employees that you’ll help them not just with the initial transition but with their professional development on an ongoing basis.
Tip 5: Focus on compensation that really counts.
In today’s environment, you may not need to offer huge salaries or immediate equity stakes in your firm to attract highly qualified young advisors—especially when you consider that more than half of the wirehouse advisors recently surveyed by Schwab earned $150,000 or less in 2010.
Young advisors transitioning to independence may care more about attractive benefits packages for themselves and their families, as well as a clear indication that your firm offers the long-term job stability they may be currently missing. They might also want to see that you have a well-defined career path for them that will eventual lead to equity ownership or profit sharing, with clear benchmarks and goals that spell out exactly what they need to do to move up in the company over specific time periods and how their progress will be evaluated along the way. Ambiguous promises of ownership “someday, if you work hard” won’t cut it with this group.
In my next post in this three-part series, I’ll bust some of the biggest myths about today’s crop of young advisors.
For informational purposes only.
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