I am beginning to think that the financial advisory business is suffering not from a talent shortage, but from a management shortage.
Since 2008, we have lost more than 40,000 financial professionals from across all channels of the industry. The average advisor age continues to rise, with more CFPs over the age of 70 than under the age of 30. I can’t help but scratch my head about these trends when most advisors report that their careers are financially rewarding, professionally fulfilling and designed to impact the lives of others. Yet young people are not attracted to our profession — why?
My epiphany about the root cause of this shortage occurred over several months of conferences and client meetings at which I perceived an almost universal aversion to the employee recruitment and development process. Firm owners expressed enthusiasm for attracting and serving clients — and dread for handling employee issues, especially those related to “challenging” employees.
Advisors continue to chant the same tired refrain: Younger employees “don’t want to work hard, don’t want to develop business, and want to be promoted to the top of the org chart after two years on the job.”
The millennial stereotype is bunk, of course. People who have little experience in management tend to blame failure on the source of their pain, rather than work to create a thoughtful solution.
Why do advisors often struggle when it comes to difficult employees, suffering in silence over the incompetence, intransigence or indifference of people in key positions? Perhaps it is a fear of conflict. More likely, this reluctance to manage may come from a lack of understanding on how to do so effectively.
As when developing any skill, the mastery of management techniques requires countless mistakes. One cannot become a master by avoiding challenges. Over my career in a variety of leadership roles, I experienced many cringe-worthy moments that ultimately became teaching moments. These lessons taught me to have a process, a method of measurement, a means of holding people accountable and a commitment to being transparent with others in the organization. While not foolproof, a discipline around hiring and development improves one’s odds of success with employees, regardless of whether they are entitled millennials or cynical boomers.
The first step in creating an effective human capital strategy is to develop a statement of cultural values. Unlike a mission statement, your cultural values statement doesn’t have to be a pithy phrase. Your strategy provides a framework for how you expect all employees and partners to conduct themselves. Ideas include “pursue excellence,” “act with integrity,” “commit to life-long learning,” “accept accountability” and “demonstrate respect.” This explanation of a firm’s culture helps leaders reinforce behavior and develop a strong team.
Job descriptions must be clear as well — not just the mechanical elements of the role, but also a definition of excellence. The combination of cultural values and job expectations (including those for partners) sets the foundation for performance evaluations.