It’s no secret that there’s a talent shortage in the independent advisory industry. And this shortage is hitting the smaller advisory firms harder than their larger counterparts.
What’s behind this hiring imbalance? With the competition for young advisors driving up starting salaries, smaller firms with fewer resources find themselves at a significant disadvantage.
To help my smaller client firms compete for the young advisors, I make two recommendations:
First, since smaller firms can’t compete on salaries, they should stop trying.
Bringing new advisors into any firm is not a science; nobody really knows who is going to work out and who isn’t. So, depleting your limited resources on one new advisor just isn’t smart business.
Plus, there are better ways to compete for young talent than throwing money at them.
Do you really want to hire a young advisor whose primary focus is on how much money she/he can earn today? (In an industry whose biggest problems seem to arise from the drive to “earn more money today”?)
As those involved in hiring on a large scale know, the number one reason that people take jobs and/or stay at jobs isn’t the money, it’s the potential. And this seems to be true of today’s crop of younger advisors.
For smaller advisory firms, this is a window of recruiting opportunity.
Today’s young advisors are looking for more than just a paycheck. They want a nice place to work, with friendly, competent co-workers, and led by someone who is more mentor than boss.
And, they want a realistic opportunity to advance; which includes mentoring, training, guidance, support, and usually a chance at partnership.
They also want all this in a firm that treats them with respect, is flexible about working hours, is dedicated to their success, and provides a service that makes a difference in people’s lives.
Two. Owners of smaller firms should emphasize their growth potential to young advisors.
Typically, smaller firms grow at faster rates than larger firms. And usually that growth comes from attracting new clients, rather than acquiring other firms with existing advisors.
Someone’s going to have to work with those new clients, and both you and your new advisor are hoping it will be them.
The good news is young advisors can get all these things more easily at smaller firms than they can at larger firms.
The challenge for smaller firms, then, is two-fold: They must “sell” young advisors on each of these points — and then they should deliver.
I always highlight this last point to remind firm owners that the talent shortage door swings both ways: Their current employees and new hires can easily go get another job, too.