The regulatory climate is cloudy. Markets are uncertain. Retirement priorities are evolving. It’s hard to keep up with new technologies. There’s pressure to change business and revenue models.
Amid all that, one question has vexed large RIAs and institutional firms more than any other: How can they recruit and develop the next generation of advisors?
According to BNY Mellon Pershing’s most recent “Elite Advisor Poll,” hiring and talent development are the greatest business challenges facing large advisory firms. It was named by 41 percent of respondents of the poll, gleaned at the firm’s March Elite Advisor Summit.
“Talent shortage is by far one of the biggest threats to growth among advisory firms,” said Gabriel Garcia, managing director of advisor solutions at BNY Mellon Pershing, in a statement. “It is critical that advisory firms start putting in place measures that will increase their appeal as a ‘best place to work,’ build their reputation in the marketplace and, perhaps most importantly, help them tap into new and diverse talent pools.”
Three-fifths of the RIA executives surveyed, 59 percent, said that it was challenging to find potential hires who were the right fit for their firms. Only 5 percent of the respondents reported having no problems with recruiting.
One in five respondents said that there is a lack of talent in the marketplace right now.
This year marks the third year Pershing has conducted the poll, and the third year that recruiting and developing talent has been named as the top challenge of large advisory firms.
The executives polled said that diverse talent is particularly hard to identify, with 41 percent of the respondents saying they are not entirely satisfied with their firms’ efforts to hire women and minorities. The biggest problem in hiring diverse talent, according to 59 percent of the respondents, is identifying qualified candidates for their firms.
Yet it may be an issue of large RIAs not looking for diverse candidates where they have naturally resided: 47 percent of the respondents reported not adopting best practices for finding diverse talent, like recruiting out of schools with a diverse population, removing subconscious biases from job descriptions and implementing some form of diversity training.
In March, only 28 percent of the respondents said that they have expanded their recruiting efforts to include schools with a diverse student body.