Advisory firms serious about hiring in 2023 say they are offering equity to seasoned professionals, establishing a pipeline through a local college, and mining networks for interns and career switchers.
But recruiters interviewed for this story said the one thing they are not doing is going after another firm’s employees.
“This is a very important conversation for the industry,” said Tim Gerend, executive vice president and chief distribution officer and lead on Northwestern Mutual’s advisor recruitment program for the Milwaukee-based firm. “There is an increasing need for advice, and yet we have an industry of aging advisors. We need to bring in a lot of new advisors to replace those who are retiring and to fill increased demand from the consumer.”
According to a study by Charles Schwab & Co., independent broker-dealers and registered investment advisors need to hire 75,000 new workers—advisors, investment managers, support staff—by 2027 to keep up with client demand. So the pressure is on to widen pipelines and use creativity to fill openings.
“All groups need to do this, otherwise they just keep stealing employees from each other without creating new employees,” Gerend said. “That’s a zero-sum game. The marketplace needs to be bringing in more people and growing.”
Holly Mazzocca, president of Cincinnati-based Bartlett Wealth Management, said she also takes this mandate seriously. “If I take from another a firm, I’m not improving the industry,” she said simply.
Even the industry’s busiest recruiters have noticed that while they’re focused on helping firms fill positions that need experienced advisors, the better firms are making huge efforts to swell their ranks where they can with talent they’ve nurtured themselves.
And in this environment, which, according to Jodie Papike, a recruiter at Cross-Search in Encinitas, Calif., is as competitive as she’s ever seen, said relying on inhouse talen is important.
“Safe to say the most successful RIAs or branches of independent broker-dealers who are focused on growth are also focused on doing a little bit of everything when it comes to recruitment,” said Papike, who specializes in the RIA and independent broker-dealer space. “You have to do that in this environment. There just aren’t enough people to go around.”
Recruiter Louis Diamond, of Diamond Consultants in Morristown, N.J., agreed.
“The more successful firms that are hiring talent are doing exactly this. They’re being very proactive and intentional,” he said, adding that the kind of growth a firm is experiencing will dictate what’s possible.
“Firms that are growing faster than the norm, they’re going to have to hire someone experienced who can get to work right away,” he said. “But firms that have the organic growth puzzle figured out have the time to develop someone to exemplify their value proposition.”
For those firms, the multipronged approach to recruitment can ultimately be very gratifying as a firm grows, and its people with it.
“You want to see as many candidates as possible so you can pick the best one,” he said. “Be very thoughtful and clear about expectations, and reward the right behavior.”
Hiring 2,500 People A Year
One of the country’s largest independent broker-dealers, Northwestern Mutual leans on a national internship program to help with recruiting and developing a younger advisor force.
“We have an increasing growth of teams within our system, and lack of access to human capital is the greatest obstacle to that growth,” Gerend said, adding that Northwestern Mutual hires around 2,600 advisors a year with less than 2% coming from other financial firms.
Last year 48% of new recruits were women and people of color, he said.
“There’s no question that diversity is the answer. When you have a tight market, you have to look at the whole talent market, not just one market,” he said. “The people you can bring in might not look like everyone else on your team, but that’s the point. We’re getting into markets we hadn’t been in. That’s growth.”
Young people aren’t just looking for a job, he said, they’re looking for a career, impact, and cultural fit. Each year Northwestern Mutual opens up internships to college students and gives them a chance to experience what it means to be a financial advisor and business owner.
A few hundred of them convert to a contract after graduation, which guarantees a steady flow of talent that may start in a more entry-level position but that already knows where they want to end up, Gerend said.
“These former interns are more likely to make it a career, and more likely to do field leadership. Right now half of our leadership, up to the highest level, came from our internships,” he said. “If you invest early in people and keep investing over time, you can help them build a real life in this business.”
Even firms so small there’s no human resources contact or structured internship program can find ways to recruit in a way that makes sense for them, he said.
“All small firms, particularly the successful ones, have curated their own value proposition and culture. They have it with their clients, and they can translate that for a recruitment candidate,” Gerend said. “Then I would encourage them to think about the career progression for these candidates. Think about mentoring and support, especially in client relationships.”
Welcome To The Team
At Bartlett, Mazzocca said, one of the big differentiators is that all clients are served by a team of advisors, one on the planning side and one on the investment side. The firm has about 70 employees and more than $7 billion in assets under management.
“No conversation is just an investment conversation or a planning conversation. They go together,” she said. “As it relates to recruitment, I find it’s really helpful for younger advisors. They know they’re not going to be given a phonebook. We need them on a team with clients we already have.”
The firm hired 11 employees last year and expects to hire another five at least this year, including advisors, support and operations. “We will hire as many people as it takes to deliver a legendary client service,” she said.
Recruitment at Bartlett includes everything from internships at the high school and college levels, talking to local business associations and signaling to ancillary services that there could be a home at the firm.
“I think hand-to-hand combat is still the best way to do recruitment. You have to get out there and roll up your sleeves,” Mazzocca said. “We just hired a CPA with family office experience. This person will be an advisor, but is starting on the accounting/tax specialist side.”
Any firm that is growing is going to be in a constant evolution with staff and should take great pride in giving advisors exposure to different aspects of the business to increase their skills and capabilities, in addition to helping with tuition assistance for accreditation and licensing, she said.
And while they’re doing that, they shouldn’t forget about the entrenched veterans.
“We’ve added ‘stay interviews’ so we can avoid shiny-new-penny syndrome,” she said. “It reminds us of what our existing staff needs, and this way the older folks don’t feel the younger folks get all the good benefits.”
When The Client-Staff Ratio Is 8:1
Bordeaux Wealth Advisors is a boutique firm with two offices in Menlo Park, Calif., and about $4.5 billion in AUM among 200 families.
“We’re a holistic wealth management firm where we do a deep dive with clients. We’re looking at every asset they have and making sure it’s meeting their goals in taxes, wealth planning and estate planning,” said James Hering, managing partner and COO. “Investments are very important, and we’re sophisticated in that area. But it’s not the only thing that we need to do.”
Right now the firm has 29 employees, and has doubled in size since 2020. To keep that pace and a client-to-staff ratio of 8:1 (most firms staff at 30:1 or more, Hering said), he works with recruiters, sources through his own network and posts jobs on LinkedIn.
“It depends on the role. There are a lot of tools out there, and we use them all,” he said. “The biggest impediment to growth is finding talent, and the last thing we want to do is degrade. It requires that when we grow, we staff, and we staff in advance.”
The firm has a summer internship program, and it tries to get in front of students who might be aware of the CFP designation through business and finance classes they’re taking. Michigan State and Texas State are two higher education systems in their pipeline. And when they have an opening, they might attract an advisor from a competitor, or someone from tax or estate planning wanting to make a slight switch.
“You don’t want to be hiring people just to have them transition out,” Hering said. “By being authentic in who you are, you’ll get the talent that fits your firm. But you have to be prepared, have your culture and vision clearly articulated, and be able to show the career path.”
Bordeaux uses a chart with different levels based on role and longevity, where recruits can see there’s a path to developing their career, all the way to the partnership level if that’s what they want. In addition to this transparency, everyone in the firm is mentored by someone at least one level ahead for a year, a program Hering said is a great differentiator for the firm.
“Everyone is either coached or coaching,” he said. “Everyone wants to be heard, and everybody wants to be developed.”
Small But Mighty
A 50-year-old firm with 18 employees and $1.2 billion in AUM, James Investment in Alpha, Ohio, sees internships as a significant contributor to talent flow, said company President Brian Culpepper.
“Our best route is finding young people interested in an internship. They get to see what it means to be a financial advisor, and we get to test out the person’s skills,” he said, adding that in addition to the internship pay, an intern can earn a bonus if they do well.
That testing includes determining whether this person should be client-facing or doing great work behind the scenes.
“There are these two different types of financial advisors, and both are important.” Culpepper said. “If you bring them in as an intern, you get to see this up front, and you get to train them the way you want them in the role they’re best suited for.”
Hering agreed that getting to know the candidates helps ensure the right fit, and suggested that firms that have yet to develop their talent pipeline should look in the mirror before blaming the labor market.
“Firms that are struggling maybe haven’t done the work yet. Have your vision and value proposition in place,” Hering said. “Do the work. If you’re not growing, you’re dying. You don’t stay the same.”