The search for talent is always challenging for advisory firms, and it has been made more so by the pandemic, according to DeVoe & Company.
If firms are to survive the negative impacts of the pandemic on their culture and their employees, action needs to be taken to move talent management to a new level, DeVoe said in its “2021 RIA Talent Management Study: Covid’s Impact and the Road Ahead,” which was released today.
Covid has “tested the power of advisory firms and their people to persevere,” the study noted. The people employed by advisory firms have “been damaged over the last 18 months.”
According to the survey of 123 advisory firm owners, principals and senior executives, firms will have to work at combating the negative effects of the pandemic. Nearly 40% of advisors felt their firm’s culture declined and employee engagement suffered due to the pandemic.
Remote working environments were partly to blame and yet 52% of advisors expect greater remote work will remain part of the work environment permanently. the firm said.
In addition, 61% have low confidence that their next generation is ready to seamlessly transition into firm leadership roles just at a time when so many firm owners are moving into retirement. However, only half of firms have started implementing a succession plan, according to the study.
“With retention loosening while the labor market tightens, the timing could not be worse for firms that were already struggling with developing the next generation of talent,” the report said. “Getting ‘people practices’ right will be paramount for advisory firms to succeed in the post-pandemic era.”
Thirty-eight percent of the firms said the pandemic had a negative impact on employee engagement. A “lack of engagement suggests some form of dissatisfaction or unhappiness, which is often associated with lower rates of productivity” and with higher turnover, DeVoe said. “Firms may need to hire at even greater rates, if team members’ weakened sense of connection with the firm leads to growing departures.” Firms also will need to show there are opportunities for employee advancement in order to attract the best talent.
The pandemic affected the thinking of firm owners as well as employees, which forced the value of continuity planning to jump to the forefront. The survey showed that some advisors took accelerated action. Seven percent indicated that they accelerated the development of a succession plan.
“DeVoe & Company has seen this first-hand based on an uptick in succession planning engagements, as well as an increase in ‘succession’ as a stated goal for many sellers in our mergers and acquisition work,” the report said. “But the urgent priorities caused by the pandemic also crowded out the initiative 9in some instances). About 8% of surveyed advisors stated that they have delayed their succession planning due to Covid.”