It’s no secret that there’s a professional talent shortage in the independent advisory industry: Business has been booming, firms are growing (both in new clients and assets under management), and baby boom age advisors are well into their retirement phase. In fact, according to Pershing’s Mark Tibergien, “Today, there are more [advisors] over 70 in the industry than there are people under 30 coming in.”
As you might expect, the combination of these factors has a created a perfect storm for today’s advisory firm owners. I know this probably sounds terrible, but I have to admit that I’ve been waiting 17 years for this moment when independent firm owners will finally realize that they have to run their firms like real businesses and focus on their people first.
Don’t get me wrong; it’s not that I’m reveling in owners’ problems. It’s just that, like most people, owner-advisors usually don’t want to do anything about their problems until they have to.
Now, the competition for finding much-needed professional talent is forcing firm owners to do the things I’ve been talking about for years. It’s a big problem, and to solve it, owners will have to do things differently.
The first thing that today’s firm owners need to do differently is to change their approach to hiring. Like most business owners in other industries, owner-advisors tend to think that attracting high-quality candidates is about writing a good job description with a clear career track, establishing a screening process and, of course, the money.
As it turns out, each of those things are important to the process, but none of them is why candidates accept job offers — at least, not any candidates that you’d want working for your firm.
Why ‘The Money’ Isn’t Enough
For starters, let’s talk about the money: Do you really want someone to take a job with your firm for “the money”? Based on 20 years of experience, I can tell you without hesitation that you don’t.
I advise my clients to pay their employees competitive salaries for their job descriptions (along with good benefits, and annual bonuses based on the success of the firm).
No one wants to feel they are underpaid, but paying top-end salaries often creates a sense of entitlement or a feeling of “having made it” — both of which can greatly decrease a younger advisor’s motivation, right at the most crucial time on the professional learning curve.
What you do want are professional employees who want to work for your firm; not for the money, but because they want to be a part of what your firm does. We call that being an “employer of choice.”
Becoming an employer of choice starts with your firm’s culture; it’s your culture that will attract top young professionals and sell them on your firm. (For more on how to be an employer of choice, see Mark Tibergien’s column on page 31.)
I’ve found that creating an attractive firm culture is easier for independent advisory firms than it is for some other businesses. Advisory firms help people in areas that have a major impact on their long-term well-being and happiness — not only for their clients, but children and grandchildren, as well. Simply put, advisory firms focus on “doing good,” which is a major attraction for professional job candidates.
Culture and Core Values
Of course, while it’s an excellent start, creating an attractive firm culture is about more than simply doing good: It’s a process by which the firm owner articulates his or her vision of how everyone in the firm should act, from the owner down to the receptionist.
But it’s not a laundry list of “dos” and “don’ts.” Rather, it’s a list of core values for the firm, which serve as guidelines for owners as well as employees.
I know what you’re thinking: “Ugh, core values.” It is true that most consultants talk about the importance of core values, but it is also true that most consultants (and advisors) don’t know how to use them to build a company where employees come to you.