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RIA owner Michelle Smith shares an observation that illustrates the dilemma independent financial advisors face in recruiting advisory talent.
“You can’t get AM on a radio station that’s tuned to FM,” says Smith, who runs Source Financial Advisors in New York. “If you’re stuck on the wrong station – meaning old stagnant job descriptions you’ve used for years – and don’t take the time as a leader of your organization to query the team, identify gaps, get their input as to their daily pain points, and ask them who their ideal hire would be, and what that hire, should do, you’ll hire the same person over and over,” she says.
“I don’t think there is a lack of talent,” Smith clarified. “The trouble is firms aren’t clear about their talent needs.”
For help out of this trap, Smith turned to my firm, which provides wealth management and technology services to independent RIAs. In particular, she reached out to our team for help filling two pivotal positions.
Put an end to circular thinking about candidates
“Talking things over with an experienced talent team about roles we needed to fill and receiving their feedback before we even started a search was critical,” Smith said. Later, in assessing candidates, she found that our talent “has a wonderful way of pointing out the pros and cons of particular candidates that helps cut through the second-guessing and circular thinking about candidates you can experience trying to make important hires by yourself.”
Bad hires are common and costly. Pre-pandemic research by CareerBuilder indicated that, across industries and levels of responsibility, nearly three-quarters of employers have “failed hires” drawing salaries or wages. “When it comes to costly workplace mistakes, few carry as hefty of a price tag as making a wrong hire,” the job site says, adding that the average cost of a bad hire is almost $15,000 while the average cost of losing a good hire comes close to $30,000.
Among top catalysts for bad hires, expressed as a percentage of employers polled, CareerBuilder cited:
35% underestimating the time it takes for an unskilled employer to get up to speed
33% taking a chance on a nice person
32% pressured to fill a role too quickly
29% difficulty finding qualified candidates
29% focusing on skills over attitude
Other bars to effective recruiting were lacking tools and resources to conduct adequate searches (10%), and failing to do complete background checks (10%), according to CareerBuilder.
The overriding importance of culture, mindset, and diversity
The stakes – and the rewards – can be higher for independent wealth managers like Smith. “Hiring a single top performer at $100,000 per annum salary has the potential for adding $1 million to $10 million to a company’s revenue every year that the new hire remains with the firm,” Insight Talent Solutions reckons.
Andy Arnold of Centerline Wealth Advisors in Louisville, Ky., also looked to us for help with a project with potentially far-reaching implications in the form of an internship program to train financial planners. Before that took shape, however, Arnold had a clear view of the challenges in store.
“The biggest bars to recruiting are time and access to a pool of people who are willing to wait for a career to mature in the time it takes to do so,” says Arnold. “A lot of candidates think they’re going to have giant salaries from the start, and so there’s a disconnect in the marketplace between what a new financial planner’s value is at the start of a career and what it truly is near the end of a career.”
Plainly, it’s imperative to find hires that match the company’s culture – and not just in terms of an individual’s ability to fit in, but in ways that work for different generations.
For example, millennials (age 25-39) prefer companies that demonstrate community involvement and encourage a healthy work-life balance. Gen-Xers (age 40-55) are tech-adept, loyal, and committed to societal development. Meanwhile, baby boomers, whose youngest members are now 57, are competitive, goal-oriented, and career-focused – but also nonconformist and ready to question authority.
Recruiting unaided can erode client-service standards
Meanwhile, RIAs that make diversity and inclusion a priority are attractive to job seekers of all ages, but especially younger candidates. To strike the right chord, however, an RIA’s approach to diversity and inclusion must be genuine and have whole-hearted backing from top management.
But efforts to encourage inclusion pay off. Just before COVID-19 struck, McKinsey found that companies in the top quartile for gender diversity among executives were 25% more likely to experience above-average profitability than peer companies in the bottom quartile.
Matt Kilgroe of Cyndeo Wealth Partners in St. Petersburg, Fla., said his RIA’s hiring processes have improved since tapping into our CTO program – though the year-old firm has yet to fill “a specialized role yet.”
But that’s unlikely to last. “As we move forward, we will need to fill specialized spots, so I can see Dynasty CTO helping more with that,” especially for “help sourcing candidates and analyzing our top picks,” says Kilgroe.
“We aren’t professional recruiters, but we’ve got a team that is,” Kilgroe concluded. “That’s important for us as we grow, because, frankly, anything that takes us away from client-facing activities is a drain.”
Mason Salit is chief talent officer at Dynasty Financial Partners in St. Petersburg, Fla.
Read more articles by Mason Salit