When I came out of the financial planning program at Kansas State in 2000, my classmates and I went all over the country to find jobs. We had people going to New Jersey, San Francisco, Minneapolis, Texas, and St. Louis. I took an internship in Charleston, South Carolina. Yet within the past couple of years, the demand for experienced young professionals has become so strong that we all realized we could live anywhere we wanted. Virtually all of us have since moved back to Kansas and the Kansas City metropolitan area.
The challenge of recruiting advisors today has crescendoed to a whole new level: The demand for young professionals is so strong that the game has really changed. For advisory firms looking to hire–and who isn’t, these days?–this new environment raises a whole host of issues that go far beyond higher salaries and formal career tracks.
Many practices face the very real prospect of taking far longer to fill jobs while spending much more time and effort to do so, taking less qualified prospects, and possibly not getting anyone at all. Here are some strategies that we use to mitigate today’s recruiting pain, and position advisory firms to successfully compete for young talent.
A Lack of Courtesy
Consider a few experiences I’ve had this fall recruiting for advisory firms: One announcement for a support advisor position received 250 responses, but only two of them had their CFP education requirements. The rest were truly entry level, and most firms–including that one–don’t want to train someone from scratch. So we called the two potential CFPs within a week of when the announcement was posted: both already had jobs.
For another client, our posting for a lead advisor position received some 30 responses. Of those, 15 were qualified, and they were only interested in talking about the starting salary, the career track, and the firm’s culture. But this job was the first lead advisor for the small but growing practice, and no one wanted to blaze that trail. We’re now on our sixth job offer. Finally, at a firm in a small town in the Great Plains region that recently retained us, they’ve had a support advisor position open for a year and a half.
Equally as annoying these days, thanks to their new-found advantage, courtesy from job applicants is out the window; no thank-you notes, turned down second interviews with no explanation, rescheduling interviews, and late cancellations, sometimes a few minutes before the appointment. I had one job applicant reschedule an appointment minutes before it was scheduled, because he wanted to take a long weekend in San Diego. The next week, he called to say he had accepted another job he just interviewed for in southern California.
Screen Out Comp Shoppers
In addition to the stiff competition for–and high demands by–prospective employee advisors, the recruiting process also is being bogged down by a current wave of compensation shoppers. After reading the myriad studies and articles reporting how compensation for young advisors is skyrocketing of late, many of today’s applicants are simply looking for a high job offer to show their current employer as a negotiating ploy. Not only does this waste the time and effort that the prospective employer spent in interviews, offers, and negotiations with them when they never intended to take the job anyway, it can greatly draw out the time it takes to fill a position. In my view, such bad-faith tactics should be a red flag to these advisors’ current employers: If they’ll treat someone else that way, chances are that sooner or later, that’s how they’ll treat you as well.
To screen out the comp shoppers from your interview lists, and mitigate the amount of you time they’ll waste, I’ve started employing the following tactics:
- Take salary ranges off the job announcement. In more reasonable times, posting a salary range for a given position helped job applicants to self-select jobs in which they had an interest, and therefore increased the percentage of qualified responses. Today, however, revealing the potential compensation simply encourages shopping, enabling the shoppers to target firms that will make an offer they can use elsewhere.
- Ask why the applicant is leaving his current job in the pre-screening interview. We used to save this question until late in the interview process, if at all, and only ask if there were other indicators that there might a problem. Now we ask right up front, and look for answers that focus on opportunity to grow professionally, growth potential of the firm, and long-term advancement, while watching for an emphasis on compensation, benefits, and short-term partnership opportunities.
- Look for the current employer on their reference list (or a good reason why that employer is not on the list). I realize this is a grey area, but in the current environment, you have to play hardball. Some serious applicants haven’t told their boss yet that they are looking to go elsewhere, but there’s also a good chance that if their current firm doesn’t know they’re looking, it’s because they don’t really intend to leave. The key to this question is their reaction, and how they answer, rather than what they say. If they appear uncomfortable about asking their present boss for a reference, it’s probably a bad sign.
- Ask about their current comp and their expectations. This is another change I’ve made in my prescreening: real candidates will be flexible on expectations and are far more interested in the growth potential of your firm, and their opportunities to contribute to and benefit from that growth. Comp shoppers, on the other hand, tend to be looking for a specific comp number.
- Shorten the recruiting process. One way to minimize the time that comp shoppers can drain from your recruiting cycle is to decide whether to make an offer faster, and if you do make an offer, then ask for a quicker answer. At least that way, if a candidate isn’t serious about your firm, you’ll know sooner, rather than later. Since most advisors take too long to make up their minds about most things, this isn’t a bad rule of thumb, anyway.
Do It Early, Do It Clearly
Of course, there are plenty more recruiting pitfalls today than merely those annoying comp shoppers. Here’s what I suggest to give your firm a fighting change in a very challenging environment:
Start recruiting earlier. Advisors typically start recruiting professional employees way too late. It takes about a year to recruit, hire, and train a professional employee to the point where they are making a significant impact on your firm. If you wait–as most advisors do–until you’ve already maxed out your current working capacity, your growth will slow dramatically while you get some professional help up to speed. Today, with a lengthier recruiting cycle, it will take longer to get the help you need. So start looking earlier: while you still have some room to grow without help. If you wait until you need help, it’s too late.
Have a strong company growth plan and clear career track. Given a choice, which they have today, young advisors want to work for a growing firm that has a clear vision of how they can grow with it. If your firm is already growing, great. If it isn’t, then you need to talk to about how adding a new advisor will shift you into growth mode. Remember, if they are the vehicle for your anticipated growth, which they probably will be, that increases their value to you. That’s one reason why demand for young advisors is so strong.
Have a clear compensation structure. You may not advertise it in your job announcement, but serious candidates today are going to want to know what your comp structure is. Moreover, it better be sophisticated: salary, incentives, and bonuses tied to the performance of the firm. You don’t have to be on the high end of the scale (although the range is narrowing), but you should be clear about what they’ll make if they meet or exceed your expectations.
Make your best offer. I used to make an average to high offer at first, and then increase it if I had to, to get the candidate we wanted. Now we just make our best offer, take it or leave it. You have to assume job applicants are talking to other firms as well as yours. If you don’t make your best offer up front, you’ll likely lose your job candidate to a firm that did.
Finally, use the current rudeness among some job applicants as an opportunity to identify high-quality people.
Courtesy is a key reflection of how someone will treat your clients. People who lose their sense of appropriate behavior simply because they have the upper hand today will likely do it again in a similar circumstance. Advisors are professionals who have the advantage of knowledge and industry perspective over their clients. Your firm can’t afford to hire people who will take advantage of their position. In my view, how they act as a seller in a seller’s market is a pretty good indicator of future behavior.
Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at firstname.lastname@example.org.