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Practice Management > Building Your Business > Recruiting

Want to Keep Advisors? Recruit the Right Ones

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What You Need to Know

  • There may be a surge in recruiting in the next two quarters.
  • Firms would be wise to keep current successful advisors happy.
  • It costs more to replace an advisor than to keep current staff satisfied.

Almost everyone has heard the statistic that it’s five times more expensive to gain a new customer than to keep a current one. Whether that calculation is 100% accurate may be debatable, but it speaks to a larger truth: Customer retention is crucial for any successful business.

This is a critical point for everyone in our industry to remember, because we could see a recruiting surge at some point over the next two quarters. Due to the pandemic, financial professional movement slowed in 2020, especially in the first part of the year.

But as vaccines continue to be distributed more widely, the expectation is that the economy will bounce back with force this year, which should jump-start recruiting activity.

Winning Formula

Ahead of the coming recruiting shakeout, firms must understand that retention and recruiting are inextricably linked. Indeed, the best way to keep advisors starts at the beginning, by recruiting the right ones in the first place — and that comes from a firm having an appreciation of their strengths and weaknesses.

For example, in today’s world, most boutique firms will tout their unique culture or access to the leadership team. And while these things are — and should be — important to advisors, they are no longer differentiators.

The more critical consideration for firms is whether they can provide advisors everything they need based on their business model. In other words, which type of financial professionals are they equipped to serve well and, just as important, which ones are they not?

Coming to terms with these questions in the months ahead will help determine who “wins” the upcoming recruiting battles, because it’s not about how much headcount or assets firms gather during this time. Instead, it will be about how many of those advisors are still in the same place five, 10 or 15 years from now.

Two-Way Street

Notions of “fit” are, of course, a two-way street. If advisor attrition costs firms money, the stakes are even higher for the financial professionals themselves, many of whom cannot afford to suffer the type of client exodus that often accompanies a poor transition decision.

Therefore, they must ask themselves a slightly different variation of the same questions: Which firm can best help them support their clients and further their business goals?

Because this past year has tested firms’ ability to meet the moment and evolve, advisors looking to move have a unique opportunity to make a performance-based decision.

For instance, how quickly has a firm adjusted to the remote-work environment? Do they offer e-signature and other tools that make it easier to serve clients who do not want to meet in person?

Also, what about its communication model? In the absence of national conferences and regional meetings, “all-hands” calls or general email have become tiresome and irrelevant for many financial professionals. Does the firm provide useful information by targeting communications, outreach and programs (i.e., webinars) based on a financial professional’s business?

Obviously, advisors must consider more than this, but thinking about how a firm has adapted in the face of one challenge offers a window into how they will handle future ones. That’s an important consideration.

Firms can easily shave thousands each year off their marketing and recruiting budgets just by keeping their advisors happy — a crucial point as margins continue to get thinner.

But that process starts well before onboarding a single soul, beginning with a firm’s recruiting efforts, where the focus must be on playing to its strengths and minimizing weaknesses.

Otherwise, advisors will flee eventually, and when they do, the damage could have a domino effect, affecting all key stakeholders.


Elizabeth “Libet” Anderson is the president of ProEquities, a Birmingham, Alabama-based broker-dealer.