Diversity is Good for Business
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The search for talent continues to be a focus for RIAs of all sizes. The tight labor market is pressuring recruiting processes as firms receive fewer applications, are forced to move quickly when hiring, and have trouble finding candidates with the ideal skillset. A recent AGS compensation trends survey found that 85% of RIAs hired new contributors in the last 12 months. These new hires included roles with higher turnover like client service associate, as well as advisory roles to expand capacity and growth. A surprising number of firms (20%) hired for key management positions. As firms seek talented team members to fill open positions, they are reevaluating recruiting channels, pay scales, and benefits packages to stay competitive in the hiring market.
Large RIAs, who hire dozens of contributors each year, often have better defined recruiting and hiring processes. Smaller firms often rely on personal networks to identify candidates, while larger firms dedicate resources to the hiring process and target a talent pool beyond the networks of team members to fill open positions. This results in slightly more diverse advisory teams. At firms over $1B, 87% of RIAs have female advisors, versus 78% at firms smaller than $1B. At firms over $1B, 60% of firms have advisors of color, while only 42% of firms under $1B have an advisor of color.
As recruiting advisors with experience is difficult, I see RIAs building diverse teams and focusing on development as they recruit people who are not currently advisors. Many of my clients have had success in hiring career changers into associate advisor positions and developing them into productive lead advisors. Other firms have looked internally at contributors in operational or service roles who may have the interest and aptitude to become advisors. For this to be successful, firms need to clearly define training and development for all roles in the organization, and outline career paths to ensure there are clear expectations.