June 5, 2017 – Even with strong demand, the wealth management industry is having trouble attracting and retaining top performers, especially younger talent. For every eight advisors that retire, in fact, only three are trained to replace them, according to one study.
“It has never been more important to build a pipeline of next generation advisors, but Millennials generally seem uninterested in the field,” said Hunter Judson, Jr., wealth management practice director at the Judson Group, an affiliate of MRINetwork, a Philadelphia-based search and recruitment organization.
Scott Roulston, principal, director of wealth management at Segall Bryant & Hamill, a Chicago-based investment firm, cited three main reasons for the industry’s struggles to attract younger employees. First, he said, is a general lack of education about financial advice. School systems simply fail to educate students about financial advice or financial management. When dealing with a financial advisor, Mr. Roulston said, most people lack even a basic understanding of everyday concepts like commission structure versus a fee structure.
Second, young people tend to have a negative impression of the wealth management industry. The financial crisis, the bad publicity that followed and the regulations that ensued, said Mr. Roulston, damaged the industry’s reputation in the eyes of many of those soon to be entering the workforce. Changing that negative viewpoint is critical to attracting new talent, he said.
And third, training for new recruits is inadequate. Too often, wealth management firms place their young talent straight into sales roles, which often involves calling upon friends and family. Many young employees are uneasy with that, said Mr. Roulston, and it makes the industry unappealing to them.
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Retaining new hires is on the minds of leaders at the vast majority of companies these days, according to a recent report by Korn Ferry’s Futurestep division. Here are some possible solutions to the problem.
What Matters to Young People
In truth, too many businesses fail to understand what Millennials are thinking and looking for from employers. A recent report by MRINetwork, “The 2017 Millennial Hiring Trends Study,” said that market reputation is a primary consideration for Millennials in deciding what field and what companies within that field they want to work for. Overall positioning of a prospective company matters to them, the study said. Younger workers want to know how well the brand is known and respected, how it compares to the competition and its potential for growth. A company’s internal and external positive messaging in this regard is a major factor in attracting young talent to a given company and industry.
MRINetwork offered the following suggestions for the wealth management industry to help create greater awareness and attract top-level talent:
Use education to dispel misconceptions and to depict the actual role of an advisor. Many aspects of being a financial advisor align with what Millennials value and seek in a workplace. Flexibility, having an impact on people’s lives and an entrepreneurial environment are all attractive ingredients. As such, the industry should focus on areas like making a difference in people’s lives, networking and building strong relationships with clients. Companies should deliver a message that strikes a chord with Millennials. They must be approachable and transparent in tone, and when appropriate, try to include some fun.
Address the perceived lack of diversity in the industry. Millennials are the most racially diverse generation, according to a Pew research study. Inclusion is important to them. But they want more than just racial diversity. Gender diversity, cultural diversity and generational diversity also matter to them. No one can deny that the financial services industry has a long way to go before achieving true multi-layered diversity, but companies can assure younger candidates that efforts are underway to change the environment, and let them know that they are a key part of that change.
Creating a Millennial Feedback Loop In the Workplace
HR professionals are increasingly concerned about how to best cater to Millennials’ workplace needs. Talent acquisition leaders recommend certain employee benefits to help mangers bolster their appeal. Problem is, it’s not working.
Launch a counter-campaign against negative perceptions of the industry. Millennials care about more than a company’s bottom line. They want to be involved with a firm and an industry that contributes to the greater good and cares about the people they’re serving. Businesses should speak to that. Companies can focus their recruitment language on the act of making meaningful connections and the service of enriching client lives, rather than highlighting commission percentages and fee structures. Firms can also use the Millennials already on staff as their best brand advocates. Retention strategies are just as effective as recruiting because once Millennials are on one’s side, they will express their approval through social media, and their friends – and potential recruits – will take note.
Mr. Judson said that recruiting young people presents challenges as well as opportunities. In speaking with young prospects, companies should demonstrate the positive and life-affirming work that advisors perform for their clients, he said. Between that and clearly laying out the case for becoming a financial advisor, wealth management firms can strengthen their ability to hire and retain the talent they need.
“Providing clarity about the role of a wealth management advisor is an opportunity to educate, while the lack of diversity barrier presents a huge advantage when you are attempting to recruit a generation that loves to disrupt the status quo and play a role in effecting meaningful change,” he said.
Wealth Management Recruiting
David Barrett, a managing partner with New York-based David Barrett Partners, a boutique specialist search firm focused on the investment and wealth management sector, said: “Recruiting top talent in our space has always been challenging and even with ongoing advances in technology and the proliferation of third-party candidate databases, it will not get easier.”
The investment and wealth management area is a very high paying industry and if someone is successful in it, he said, there will often be little incentive or reason to consider a move. “That means recruiting in the sector can be fraught with obstacles, bumps in the road, and more likely than not – pure frustration.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Stephen Sawicki, Managing Editor; Dale M. Zupsansky, Managing Editor; and Chase Barbe, Managing Editor – Hunt Scanlon Media