Recruiting for financial advisors to join your firm may be more difficult now than it has ever been. Fewer new advisors and more firms incentivizing their current staff to stay in their position has lead to more job openings than applicants. Here are ten tips for recruiting financial advisors:
#1 The timeline to finding a new advisor is 3-6 months. There are many variables that can go into the expected timeline for hiring a new advisor, including location, pay range, benefits, firm culture, growth opportunities, applicant pool, cost of living, etc. We have found that on average, the lead time for hiring a new advisor will be 3-6 months IF the firm meets a minimum standard for these criteria. The Investment News surveyed advisors on this topic in their Compensation and Staffing Study and found the following lead times for different positions:
Lead Advisor – 3 months
Service Advisor – 3 months
Business Development Specialist – 4 months
Senior Portfolio Manager – 6 months
Portfolio manager – 2.5 months
#2 We are in an employee’s market. The US unemployment rate is 3.6% according to the Bureau of Labor Statistics, which marks the lowest rate since December of 1969. We are in an unequivocal employee’s market. There are far more firms looking to hire than there are available candidates, especially new advisors. Cerulli Associates, a financial services research firm, reported that only 10% of financial advisors are less than 35 years old. There are not enough new advisors to keep up with the demand, and that means you must become an employer of choice to attract candidates to your firm.
#3 Younger advisors want to be mentored. New advisors that come out of university programs designed to prepare them for the CFP exam will enter the workforce with some technical knowledge about the industry, but they will need to be mentored to grow into productive advisors. Millennial advisors typically want to build a relationship with their employers that will benefit both the employer and employee. Some firms have fully developed mentorship programs that last 6-12 months. During this time, the new advisor has no one-on-one client interaction. (https://www.wealthmanagement.com/business-planning/recruiting-next-generation-financial-advisors) This can be an invaluable learning process for the new advisor that can set them up on the track to independent work more quickly.
#4 Lack of benefits will significantly limit your talent pool. Company-provided health insurance is the benefit that most people want to see in a new job. Some firms offer a health insurance stipend to their employees, which can be a temporary solution for a growing firm. However, as the cost of health insurance continues to rise, and the services provided by lower-tier plans falls, employees are looking more and more for the company to provide health care benefits as part of the employment package. When an advisor is considering a new job, once their minimum salary requirements are met, the number one deal-breaker will be lack of basic employment benefits.
#5 Younger people expect firms to keep up with new technology. Advisors in their late 20s and 30s are very accustomed to seeing different technologies come and go. Many millennial advisors only know a world where systems change every 2-5 years as technology and trends develop. If you are using outdated technology in your firm, younger advisors will see this as a weakness that they will be forced to deal with. Because these young advisors have grown up with constantly evolving technology, using outdated systems will be frustrating. Keeping up with new technology every few years to improve efficiency and provide the best for your clients is not only a great way to invest in your firm, but also in attracting new talent.
#6 A defined career path will attract ambitious advisors. Younger advisors who are at the beginning of their careers want to know how to be successful in their current position and move up to more responsibility, more autonomy, and more money. Having a clearly defined path that shows a new advisor how to move up the ranks in your organization will attract people who are striving for success.
#7 Internships are a great way to make connections with young advisors while they are still in school. Summer internships for students who are pursuing the CFP can be a great way to attract new advisors and it can be used as a trial period to find out if you would want to hire the intern after graduation. Many advisors see internships as a poor investment of their time because the interns are not typically able to provide much value to the firm during the internship. However, if your firm is growing and you anticipate the need to bring on two or more advisors in the next five years, internships can provide you with a pool of applicants that you have already vetted and know they will fit into your culture.
#8 Fostering a learning environment will encourage professional growth. Great employees will always be looking to grow and find ways to do their jobs better, but many younger advisors become stifled in their position because they are too afraid to make a mistake. By developing, training, and encouraging younger advisors to learn and try new things, you also have to accept the fact that there will be bumps along the road. If your employees know that if something doesn’t go as planned, your team will sit down to discuss how to face the issue together, they are much more likely to branch out into areas that could bring value to the firm that you never considered. However, if they can expect to have their ear chewed off when a mistake happens, they won’t want to try new things, that’s simply human nature.
#9 Experience working as an advisor is overrated. Recruiting experienced financial advisors can be time consuming and expensive. A new advisor is expected to start a new job with some knowledge of how the industry works and the language that we use on a daily basis. Training a new advisor on the systems your firm uses, your firm’s processes, and the details of individual client relationships is going to take time and there are few instances where an advisor can come into a new position already knowing any of this information. If you are willing to train a new advisor on these areas, requiring a new advisor to already have years of experience is shortsighted. It will take slightly longer to train a new advisor than an experienced one, but you also reap the benefits of not having to un-train bad habits.
#10 Training of a new advisor can make or break the relationship. After you decide to hire a new advisor, the most important aspect of the employment relationship in the first year is training. Having a defined training schedule for the new advisor with deadlines and accountability is the best way to plan for success. We have found the most effective way to ensure the training gets done is to simply give the training schedule to your new advisor and make them responsible for scheduling meetings with other members of the firm to receive training. A new employee is much more likely to follow through on the training you have laid out for them simply because they will not be mired down in the day-to-day work that the rest of the staff is. The lack of a clearly defined training schedule is the best way to lose a great new employee.
We have helped many of our clients hire new advisors and we have learned how to avoid many of the pitfalls that can come with it. If you know you will need to hire a new advisor in the next six months, please feel free to schedule a complimentary call to discuss how we can help.