We are operating in an environment that makes it challenging to recruit and retain good people. Developing an effective talent strategy requires an understanding of what compels people to join your firm and what compels them to stay. Usually, high unemployment would give the employer more choice in who they hire and what they pay. For financial advisory firms, however, the leverage has shifted to job seekers.
As has been reported ad nauseam, our business is being redefined. The market cataclysm of 2008 created distrust and cynicism about this business. Greed, fraud and manipulation are words now associated with financial services professionals, regardless of whether one is a broker, advisor, investment banker or lender. Meanwhile regulators are reacting with force, and new competitive models are emerging.
In terms of senior talent, our industry tends to trade experienced people between firms rather than promote from within. The pressure for immediate results often overrides the patience needed to invest in the careers of young people. As a result, the absolute number of financial professionals in all retail segments has shrunk over the past five years. Further, only 22% of the advisor population is under the age of 40, and only 5% is under the age of 30. With the average age of advisors in their 50s, the business is suffering from a growing cultural gap between advisors and clients, as well as a significant age gap between advisors and others in the business.
Yes, the industry as we know it today was built around the baby boomer, both as client and employee. A whole new generation of accumulators and inheritors of wealth have expressed the intention to move their business away from their parents’ advisors. The age and cultural gap is one reason, but so too is the inability of their parents’ advisors to communicate with them the way they wanted to be communicated with.
What Your Peers Are Reading
High unemployment aside, a couple of industries—the financial advisory business among them—are experiencing a talent shortage. As a result, hiring leverage has shifted to talented individuals who possess the smarts, work ethic and drive to succeed. These people have choices, and this is what they seek:
- A business with a compelling future
- Opportunities for growth, both personally and professionally
- A positive, constructive work environment in which motivated people can flourish
- Rewards appropriate to the job, both in terms of production goals and alignment with the behavior sought
- Above all, real engagement: a sense that they are valued, that their role contributes to the firm’s goals and strategy and that their opinions will be listened to and respected
While these job characteristics seem obvious, how do you transform ideas into actions and outcomes for your firm? First, take a good look at the four big challenges in attracting and retaining talent—capacity, generational differences, culture and leadership.
Capacity is key to growing one’s business, managing well and serving clients effectively. A lack of capacity becomes more apparent in firms that have not been able to hire the right people. Every financial services firm has a physical limit to the number of clients it can handle; there are only so many hours in the day. Effective technology ameliorates the pressure but does not eliminate it. Ours is a people business in which qualities like empathy, active listening, good judgment and wisdom still prevail. These qualities also influence whether firm employees will feel inspired by and committed to the firm’s mission. An ample and motivated work force creates the capacity needed for your firm to excel.
Much has been discussed regarding the differences between generations. Matures and boomers frequently use terms such as “we, us, team, unit, group, company and nation” to describe their efforts and achievements. Millennials, on the other hand, employ phrasing like “I, me, my, you are special, unique and different from anyone else.” It isn’t about the work ethic as much as the way people measure success. Boomers and matures often judge success by how many hours they put in, whereas current generations view success by what you get out of your time. Younger generations also tend to be more cynical and focused on immediate gratification, much to the frustration of those who labored long and hard with optimism and grace. This generational gap has many causes, but it is here to stay. Our leaders need to find a better way to communicate with up-and-coming clients and employees, speaking to their needs and work styles.