How to Recruit Top Talent
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The post-pandemic labor market remains extremely tight, which is making it hard for businesses in many industries to find and hire the employees needed to grow. This is especially true for RIA firms, which have experienced an increasingly competitive hiring landscape.
Human capital is critical to the success of an RIA firm, so it’s important to devise strategies for hiring and retaining top industry talent. Smaller RIA firms have an even bigger challenge, as they are competing against larger firms with deeper pockets in the quest to hire the best and brightest employees.
The first step in winning the “war for talent” is understanding what your potential employees want. A successful financial advisor with a healthy practice is typically looking for an RIA firm that offers a robust technology platform, a strong support framework, career growth opportunities, and a competitive compensation package. It’s likely that they are also seeking a high degree of freedom, flexibility, and control over their business.
Compensation and benefits are key
To hire and retain top talent, it’s vital to offer an attractive compensation package that motivates advisors to perform at a high level while keeping them in the fold. Base your compensation plan on merit, including some form of incentive compensation, and make it fully transparent. Share equity with affiliated advisors and key staff to encourage long-term commitments.
Many advisors expect some form of incentive compensation, such as commissions or bonuses awarded for reaching sales or production, client satisfaction, or AUM goals. According to industry studies, more than three quarters of advisory firms compensate staff with some form of performance-based incentive pay.
But it’s not just about the money.
Employees expect a flexible workplace, a generous or unlimited paid time off (PTO) package, and health care and retirement plans. Parental leave is critical for young professionals. Other perks you can consider offering include regular in-office meals or a stipend for food, childcare and education reimbursements, 529 contributions, charitable-donation matching, and even paid sabbaticals for longer-term employees. While you may not be able to compete on salary, brainstorm other creative ways you can entice new employees, like offering summer Fridays or closing your office between Christmas and New Years Day.
Technology is a differentiator
RIA employees are also looking for their employers to provide strong administrative support, cutting-edge information technology, and front-office and product-development processes. As you recruit and retain top advisors and employees, having the right technology in place is a key component to employee satisfaction. Providing your affiliated advisors with the latest technology tools enables them to grow their businesses, increase their efficiency, and grow their revenues. Tech-enabled advisors typically have higher levels of AUM, higher AUM per client, and greater compensation than other advisors.
Not every firm needs to include every piece of advisor technology in its tech stack. Each digital tool in your tech stack should play a specific role in strengthening your practice, improving client service, and boosting profitability. Start by identifying the specific technology needs of your firm and your clients.
With technical advances across industries, clients are now conditioned to expect more from their advisors technology-wise than they did in the past. Ask yourself: Are your tech tools making it easier for you to strengthen client relationships, deliver a high level of service, and offer customized financial planning? Choose components for your tech stack with this question in mind.
Other recruiting tips
- Offer an internship program. Talk to area colleges and universities that offer financial planning tracks about creating a formal internship program. For example, bring on one or two students each semester as interns. If they perform well and fit within your culture, offer them jobs as associates after they graduate. They will likely be more able to be productive quickly since they already have experience working in your firm.
- Tap into your professional network. Word-of-mouth networking is often the most effective strategy for finding new advisors. Let other professionals among your centers of influence know that you’re looking for new talent. You could even offer to pay a referral bonus for any recommendations that lead to successful hires.
- Get involved with industry groups. Organizations like BLX, Diversitas, and the CFP Board are all working hard to attract new and diverse talent to the industry. Partner with them or leverage their resources to find and retain talent.
- Establish mentorship and coaching programs. Top talent wants to be mentored and welcomes coaching from more experienced advisors. Assign an experienced coach/mentor to work closely with each new advisor and teach them the “tricks of the trade.” Stress this to prospective hires during the interview process.
- Hire for talent, and train for technical knowledge. Sometimes the best job candidate isn’t the one with the technical qualifications, but the one with the most natural talent and character. While a minimum level of industry knowledge and experience is required, you can often teach and train new advisors the rest of what they need to know if they exhibit talent and aptitude. Hire other “helping” professions, like teachers and nurses, who are looking to make a shift in careers.
- Use search firms strategically. Search firms and “headhunters” can do most of the legwork for you when it comes to recruiting new advisors, but at a cost. You may pay a hefty fee for candidates hired through a search firm – and you may still have to invest plenty of time and energy into screening and selecting the right hires. In the right circumstances, this is justified, but given the cost, use search firms selectively and strategically.
Differentiate your firm
To win the war for talent, RIAs must differentiate themselves as a prime destination for top talent. This differentiation can include compensation, technology, and business support.
The challenges of hiring and retaining top talent will not subside any time soon. RIAs must devise and implement a differentiated strategy to win the war for talent.
Mike Watson is SVP and head of RIA custody at Axos Advisor Services.