Recruiting for the Right Roles: The Future of Wealth Management Hiring Is Here
In the rapidly changing world of financial services, it’s important for wealth management firms to find, hire and retain the right talent in the right roles. Digital transformation, a recovering economy from COVID-19 disruptions, and remote work have all impacted the way wealth management firms are doing business, recruiting talent, and prioritizing business needs.
Let’s dive into the data and trends surrounding recruitment in 2022, including how demand and global context impacts hiring, which positions firms are focusing on now, and what the future of recruiting looks like.
A Changing Landscape for Recruiting
The last two years have been a rollercoaster, to say the least. With the onset of remote work, and now hybrid work, wealth management firms have had to be adaptable to a changing work environment. How did the changing landscape affect recruiting activity?
According to data from InvestmentNews, recruiting activity in 2021 for nearly all staff positions was 5%, with higher rates (12% and 25%) for advisors. This is pretty steady, considering the challenges to hiring remote workers and adopting new remote infrastructure in the last year.
Despite these steady rates, recruiting numbers are actually quite low when contrasted with the growth rates wealth management firms have been experiencing. Indeed, independent financial advisory firms grow revenue by a median of 8.4% in 2021 — nearly double the recruiting rate.
Clearly, despite increased business, firms are not feeling the demand to keep recruiting at the same pace as revenue growth. InvestmentNews reported that two-thirds of firms say they have enough capacity to grow before recruiting more advisors. Perhaps by placing more trust in existing staff and supporting technologies?
One thing is for certain: Economic uncertainty from the pandemic, volatile market conditions, and logistical challenges of hiring in 2021 all affected recruitment patterns and demand. As we’ll see below, certain positions were the focus of recruitment activities in the past year because of these conditions.
Why Firms Are Focusing on Lower-Level Recruitment
Of firms actively recruiting, which positions were their biggest focus and why?
InvestmentNews data shows that most firms focused on lower-level position recruiting in 2020. Almost a quarter of firms (24.1%) recruited for Support Advisors—the entry level position for the advisory career track. Service Advisors was the next highest in demand, at 15%. Higher-level positions were much less of a focus, with only one in eight firms (12%) recruiting for the Lead Advisor position.
In order to see this bottom-to-top recruiting trend, here is the percentage of firms recruiting for each position according to InvestmentNews:
- Support Advisor (24.1%)
- Service Advisor (15%)
- Lead Advisor (12%)
- Portfolio Manager (3.8%)
- Senior Portfolio Manager (3%)
- Chief Marketing Officer (2.3%)
- Practicing Partner (2.3%)
- Business Development Officer (1.5%)
- Chief Compliance Officer (1.5%)
- CEO (0%)
- CIO (0%)
- President (0%)
Additionally, examining the average time between advertising and filling a position shows that the lack of recruiting isn’t due to a lack of qualified candidates. A normal time frame can be considered around 3 months, and the numbers don’t lie. It took firms 3.8 months to fill Lead Advisor positions, 3 months to fill Service Advisor positions, and only 1.7 months for Senior Portfolio Manager roles.
Overall, all positions saw very low recruitment numbers. Most openings were “ad hoc” rather than part of structured recruiting processes. This preference for lower-level hires may also indicate a preference for internal recruitment, placing more emphasis on upskilling current employees rather than recruiting externally.
Recruiting for the Future: Tech, Diversity, & Upskilling Important
Is the future of your company already working there? Focusing on lower-level hires, asking existing employees to do more (perhaps by adopting aiding technologies), and upskilling current employees in an increasingly aging workforce are all important pieces of the recruitment puzzle facing the financial services industry in the next 10 years.
McKinsey predicts that “advisors will gradually shed their role as investment managers and become more like integrated life/wealth coaches who advise clients on investments, banking, healthcare, protection, taxes, estate, and financial wellness needs more broadly.”
With this new focus, McKinsey advises wealth managers to fundamentally rethink their recruiting and training programs. First, firms need to reflect the communities they serve, including diversifying hires by age and ethnicity. Next, a focus on upskilling will help firms retain and invest in talent.
In conclusion, recruitment in the wealth management industry is low as the world recovers from the pandemic. Firms are not hiring as actively as they are growing, and they’re focusing on hiring for lower-level roles rather than senior ones. If they’re to survive in the future, relying on technology, upskilling, and looking for diverse employees will all help.
That’s where Docupace comes in. Docupace offers technological solutions to help wealth management firms optimize their back-end office operations, onboard new advisors seamlessly, and save valuable time and energy with compliance, and more. Learn more here.