Sponsored by American Bankers Association
By Carol Manning
We’ve all heard about it—the looming exodus of wealth management professionals about to retire. Between this “brain drain” and the tendency of younger wealth managers to jump from shop to shop, it’s clear our industry is facing some formidable human capital challenges. As we enter a new year, consider your strategy for building a sustainable pipeline of motivated and qualified talent.
How significant is the brain drain issue? According to Colin Korzec, National Estate Settlement Executive for U.S. Trust, the emigration of talent boils down to several factors, including the competition created by alternative providers and technologies. In addition, mass numbers of financial advisors are Baby Boomers, who are retiring at a rate of 10,000 per day according to Pew Research.
Paul DeLauro, Senior Vice President and Manager for Wealth Planning at City National Bank, sees a deeper problem. “The number one human issue in the industry today is fear—fear that the advisors who are exiting the field will no longer be relevant or needed thanks to robo advisors and other industry disruptors,” he says. “But that fear is almost entirely unsubstantiated.” DeLauro argues that many wealth managers, including Millennials entering the field, misunderstand the business they’re in, focusing primarily on the transactional aspects of trading stocks and bonds. “If you see yourself solely as a mechanical manager of money, your future may be in danger,” says DeLauro. “What you really need to be is a financial advisor who can build relationships with clients and help them meet their goals—and that takes training.”
Korzec agrees that professional development is key. “There are at least two ways to brace for and counteract the loss of skilled talent in our industry,” he says. “One is to simply hire new skilled talent; talent that is already on par with the talent that’s been lost.” The challenge, however, is that highly skilled talent is in demand and more vulnerable to competitor poaching. The alternative, Korzec says, is “to put in the time and effort to develop a strong bench. Junior members of the talent pool must be groomed to become future leaders.”
The good news is that this new generation wants to learn. “They’re seeking knowledge, and if we don’t provide them with opportunities for professional development, they’ll leave and find it somewhere else,” says Greg Firek, Mid-America Regional Fiduciary Manager at Regions Private Wealth Management.
Jon Gross, Senior Vice President and Wealth Management Division Head at Union Bank & Trust, agrees that training is a worthwhile investment. “Given the cost of replacement and increased difficulty in hiring, firms have a vested interest in keeping quality people,” he says.
“At the most basic level, success means retaining the clients we have and gaining new clients,” says Firek. “And doing that takes a team of highly skilled associates who know how to interact with today’s more knowledgeable and engaged breed of client.”
The experts all seem to agree on two strategies for success: to always be recruiting and to always be grooming your existing talent. “This growth process takes time and effort,” says Korzec. “It requires a thoughtful, well planned approach to identify and evaluate talent, and a time and resource commitment to allow the individuals the environment and the structure to continue to grow and learn within the organization.”
Carol Manning is Vice President, Trust and Wealth Management in the American Bankers Association’s (ABA) Professional Development Group. ABA is the voice of the banking industry and offers wealth management and trust training and events.
Learn more at www.aba.com.