What You Need to Know
- Successful leaders recognize changing trends and, rather than fight them, seek to harness them to strengthen their businesses.
- Small firms that historically had a recruiting disadvantage increasingly have access to high-quality employees outside their immediate geographies.
- The pandemic has changed the way firms must look at efficiency, communication and organization.
Recently, a prospective consulting client spent a good 20 minutes complaining about what he characterized as his self-centered employees. They were demanding inflation adjustments to their salaries, he explained. They also wanted hybrid work arrangements. In short, the firm leader was complaining about emerging trends in employee management, and it was clear that he wanted no part of them.
This recent conversation made me think deeper about the successful leaders I’ve had the privilege of working with over the years. One area that sets these leaders apart is their ability to evolve, change and be flexible in their employee management approach. Leaders of these firms recognize changing trends and, rather than fight them, seek to harness them to strengthen their businesses.
While the wealth management industry has historically been slower to adapt than other industries on the employee management front, the COVID-19 pandemic has forced it to catch up. Let’s look at the most important trends unfolding right now.
1. Wage Inflation
The most immediate and pressing trend springs from inflation. Rising costs of living have forced firms to address the question of whether and how to raise salaries to compensate for increased inflation.
Complicating the equation is the fact that inflation has been accompanied by turbulent markets and, consequently, falling revenues. And advisory firms typically don’t have pricing power to increase the costs of their services to accommodate for increasing demands from employees who want their compensation to be adjusted for inflation.
A related and tricky situation firms are beginning to confront is when prospective new hires ask for inflation-adjusted salaries that are higher than those of existing staff. In some cases, firms are accommodating those requests, feeling that their need for talent is so urgent that the salary concession is worth it.
But many other firms are standing firm and successfully landing new talent by offering something more attractive in the long run, both for recruiting and retention: A clear career path.
2. More Decentralization
Many industries had begun workplace decentralization prior to COVID-19. But it took the pandemic to get the advisory firms moving in the same direction.
The wealth management industry’s lag in adopting human capital trends isn’t an anomaly; advisor firms’ tendency to run behind was exemplified by its belated adoption of unrestricted vacation time. While that trend gained traction among American businesses in 2009 and 2010, it didn’t gain popularity within the advisory industry until 2012 or 2013.
The pandemic forced firms that had lagged in decentralizing their workplaces to finally implement the ability and technology for their teams to work virtually. This hybrid work trend is likely to outlive COVID-19, and when it comes to hiring, it is proving especially advantageous to smaller-market firms.
Those firms, which were historically at a steep recruiting disadvantage to businesses in big metro areas, increasingly have access to high-quality employees outside their immediate geographies. In response to the more-level playing field, larger firms appear to be doubling down on recruiting talent.
3. Workplace Well-Being
Another important trend is the transition from a focus on individual employees’ well-being to an organizational focus. Because it ushered in so much change, COVID-19 forced firms to focus on individual employees’ professional and personal welfare. Now, leaders are stepping back and looking to facilitate the creation of a healthy overall organization.