It was the call of the Sixth Principal Meridian that drew one future financial advisor home, but it was the opportunity to have an impact on the firm and the lives of its clients that kept him there. That story has been told by a member of our team in numerous client meetings, but it applies to just about everyone that calls our firm home.
The Sixth Principal Meridian is a north/south line established in 1855 to survey the newly created territories of Nebraska and Kansas, including Wichita, where our firm, 6 Meridian, is based.
Wichita is not exactly a global financial center, but it’s a great place to work and live. Still, it has to compete with other cities for talent and the lure of major metropolitan areas like New York, Chicago and San Francisco. To attract talented financial advisors, this means offering something they don’t get elsewhere, and it can’t just be money.
How Has Recruitment Changed
There are three major trends currently shaping the wealth management industry and each has an impact on recruiting. First, is the increasing importance of technology. Bringing on younger, digitally native advisors can be seen as part of a firm’s technology strategy—they are often more comfortable than previous generations with social media and other forms of digital communications and can speed implementation.
Second, is the evolution of advice. Model portfolios, artificial intelligence and other tools now available allow for a highly customized approach to the investment management process, while at the same time creating efficiencies for the advisor. This means the advisor can focus more on wealth impact—the role financial assets can play in a client’s lifestyle, tax planning and philanthropic objectives, for example. This requires a broader set of skills on the part of the advisor.
Finally, there’s the question of diversity. The demographic profile of the country is changing, and the prospective client base is becoming more diverse. Introducing a younger generation of talent allows a firm to match that diversity with its own workforce, creating new avenues for growth.
Starving Young People Out
However, intentionally or not, the wealth management industry has effectively starved young people out over the years. Wirehouses, a typical entry point for new talent, often cultivated an “up or out” sales culture that created unrealistic expectations, resulting in premature departures for individuals who, with a little more patience and a different working environment, could have had long and successful careers. Twenty years later, the industry is now looking around and wondering where the next generation of advisors is going to come from.
We believe the talent is out there, but you need to give people a reason to want to come work with you. Questions these new hires will want to know include: what’s the firm’s internal value proposition? How will it support my growth as a professional? How will I interact with more senior members of the team?
Providing a clear compensation path is important, too, but it should be accompanied by a well-defined road map for assuming more responsibility. This includes both client relationships and, for those who are interested, input into the management of the firm. Internal training programs where new employees spend time in each line of business—investment management, marketing, operations—is one way to facilitate this. This kind of “big picture” training adds perspective, and allows the individual to better understand how he or she fits into the organization.
A Gallup poll from a few years ago found that only 30% of U.S. workers felt themselves to be actively engaged in the workplace. This sense of engagement was directly correlated to an employee’s belief that he or she could have an impact on the organization by contributing ideas and taking the initiative on new projects. A sense of autonomy fosters a sense of control and that directly correlates with job satisfaction, productivity and low turnover. Continually having to replace employees is a challenge in any business, but the impact is especially acute for organizations built on personal relationships where clients often follow individuals out the door.
You Can’t Coach Culture
It’s important to set a high bar regarding the education and knowledge base of new hires. You want to know that with training they will add value quickly. Personality tests can help determine how well an individual will fit into an organization. That’s critical, because the reality is you can’t coach culture. This isn’t a value judgement; it’s a recognition that every situation is not right for every person. If the new people you’re bringing on board are not performing, you either have the wrong incentives or you have the wrong person. Either way, you need to reassess your process.
Something else we’ve found: Mentorship works both ways. Experienced advisors understand client needs, have seen market cycles come and go and can provide counsel on relationship building and investment strategy. Younger advisors are generally more comfortable with technology and can help guide a firm’s transition to a more digitally enabled operation, bringing their older colleagues along. Teams built around digital natives and those who grew up in the “analog” world can help the firm evolve.
Implicit in the hiring of a younger generation of advisors is the firm’s commitment to staying relevant for the long haul. We all know that the client base is getting older, and that there will be a massive generational transfer of wealth over the coming years. Older advisors, aging more or less in lockstep with their clients, are already skilled at helping to build plans for transferring wealth; those same skills should be applied to managing the multigenerational transfer of what is in effect the wealth of the firm: those same client relationships.
In the end, an organization’s commitment to the future is demonstrated by how it prepares its next generation of leaders. For a firm like ours, this is a chance to set ourselves apart and to attract the kind of talent needed. The draw of home, be it along the Sixth Meridian or elsewhere, can be enough to attract the attention of that type of person, but there is much more that needs to be done to train and retain them, building the next generation of leaders for a firm and its clients.
Margaret Dechant is founder, partner and CEO with 6 Meridian.