Hiring and Retention Trends

PizzichilloFrank Pizzichillo, AIF®, RIA Regional Director

The long-term viability of an independent RIA rests, in large part, on its ability to attract and retain top talent. The fact that 12,000 to 16,000 financial advisors will retire for the next ten years has fueled intense competition to attract the next generation of stewards of our nation’s wealth.

As a result, many RIAs have had to rethink their employment practices in recognition of the shared characteristics of the four generations now in the workforce.

Compensation is a critical lever an RIA must get right when it comes to building long-term sustainability into their firm. To get compensation right, an RIA must consider the generational and motivational factors that drive your employees’ approach to work.

WHAT WILL MOST LIKELY CONTRIBUTE TO YOUR FIRM’S SUCCESS IN THE NEXT 1-2 YEARS?

Elite_Advisor_Survey

Source: BlackRock, The 2015 Elite RIA Study

Generations and Motivations

Many factors shape the way people approach work, including when they were born. Some RIAs have employees spanning four generations:  The Silent Generation (born between 1925 and 1946), Baby Boomers (1946-1964), Generation X (1965-1980) and Millennials (born after 1980). Each generation has distinct attributes, shaped by their life experiences and the values they have embraced along the way.

Take Baby Boomers as an example. Generally speaking, Boomers have been defined by their work. They take pride in knowing they’ve done a job well done, and for the most part, believe rewards will follow. Employment perks and titles have meaning to those in the Boomer generation. The concept of a work/life balance as critical to overall well-being didn’t come into acceptance until long after they had established their professional identities.

Generation X employees have a different approach to work. They tend to be less formal, and question authority. They were born during a time of declining population growth and lived through downsizing environments. They are global-thinkers, self-reliant and resilient. These characteristics make them adaptive to job instability. They value time spent away from work, and would be willing to sacrifice pay to strike the right work/life balance. Money and perks don’t hold the same allure for Gen X as they do for Silent Generation or Baby Boomers.

Total Rewards System

When building for sustainability, an RIA should aim for a total rewards system with cross-generation and motivation appeal. A total rewards system integrates pay, benefits and overall experience . . . the key elements that employees value the most. Done right, a total rewards system provides the benefits employees value greatest, while also reinforcing the RIAs culture and enhancing the overall work experience. Non-compensation programs which become key components of a total reward system include work-life initiatives, such as wellness programs, flex time, and work-from-home initiatives. They also include training and development programs, and peer and corporate recognition opportunities.

A multi-generational team working towards a common goal can provide an RIA with a significant competitive advantage.  The key is to embrace the perspectives and approaches each generation has to offer and create a flexible work environment and total rewards system that values and motivates everyone, regardless of age.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, a Registered Investment Advisor.

Surviving the Middle

Sue BerginSue Bergin

One of the dynamics advisors face with many clients in the retirement planning process is a loss of interest or focus.  During initial meetings, clients seem gung-ho to organize their financial lives organized and plan for the future.  They eagerly meet with their advisors and gather any documents or paperwork the advisor needs to initiate the process.

After about the second meeting, suddenly things slow down.

Sometimes they even grind to a halt.

The same phenomenon occurs with other tasks that people view as chores.  After all, who hadn’t looked around a driveway littered with everything that formerly inhabited the garage and wondered why they got involved in the project in the first place?

A research team at Northwestern University’s Kellogg School recently proved that there is such a thing as a “stuck in the middle” phenomenon.

Study participants had to read and find the errors in nine essays.  The first time they read essays, they found an average of .122 errors per second.  The next time they only .092 spotted errors per second.  Their accuracy was the best on the third and final try.  They found .124 errors per second in the third set, which they knew would be their last.

What this study demonstrates is that people are motivated at the beginning of the chore, and at the end – because it is almost over.  The middle is the attention vortex.

Keep this in mind when you structure your process.  If possible, front and back-end load the tasks that you need the client to complete – like filling out fact finders and locating documents.  Also, let your clients know when they are nearing the end of the planning process (and entering the active monitoring stage), so you both can benefit from extra burst of energy.