In Practice June 4, 2015

Look to LinkedIn for Adviser Recruits

LIMRA research finds promising alternatives to hiring from online job boards.
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“Social” seems the way to go when screening young candidates for adviser jobs. Whether by way of social network profiles or just a social contact, such hires often have more staying power and success in the job, according to a new report from LIMRA.

“It’s a well-known industry challenge that in addition to the large turnover of financial professionals who leave early in their careers, the number of established advisers close to retirement is at an all-time high,” LIMRA wrote in a recent blog post.

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The report, which discusses current efforts to attract and retain new talent for sales careers in financial services, employs statistics gleaned from recruiters’ use of a LIMRA assessment tool, which has effectively predicted success in financial services sales, the company says.  

Aspiring financial professionals answer a series of questions on work and life experiences for a rating that estimates the likelihood of success in the career. 

Social networking sites such as LinkedIn and Twitter represent just 5% of all candidates, yet 6 in 10 who discovered the adviser career through these sites rank high or very high as measured by LIMRA’s assessment tool. By contrast, Internet job boards such as Monster and CareerBuilder generate 20% of all candidates for these jobs, with 66% rating as low quality—the poorest number from any recruitment source. 

At the other end of the spectrum, personal recommendations also yield impressive results. Among today’s young advisers, 31% were recruited or recommended by someone they know. Personal sources also deliver quality, as 7 in 10 rate high or very high on their likelihood to succeed. 

In Practice June 4, 2015

Robo-Advisers Still Spark Adviser Ambivalence

Advisers’ views are nearly tied on whether digital advice is irrelevant or competition to their business.
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According to the Third Annual “Study of Advisory Success: Confidence and Concern in the New Digital Age,” advisers are fairly evenly divided between viewing digital advisers—also known as robo-advisers— as competition or irrelevant to their business. Perhaps most surprising: only 19% of advisers think digital advice can complement their practice.

The conflict that robo-advisers ignite is nothing new. A recent study found that almost as many advisers believe the two models can co-exist as see the new tech as a threat.

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“There is no question that digital platforms are transforming the industry,” says Ben Harrison, head of business development and relationship management at Pershing Advisor Solutions. “Though most advisers are familiar with digital advice, a relatively small percentage of advisers are currently using this technology. The biggest opportunity we see for transformation is for advisers to automate low-value tasks, expand their reach and profitability.”

Other findings in the survey are:

  • Just over a quarter of advisers surveyed (27%) believe digital advice is irrelevant to their practice;
  • Nearly a quarter (23% percent) feel that digital advice represents competition;
  • One-third (33% percent) of the advisers ages 18 to 34 consider digital advice to be competition, and only 9% think they can complement their business; and
  • 27% of advisers between the ages of 35 and 54 view digital advice as competition, while only 16% of advisers over the age of 55 view them as competition.

NEXT: Will robo-advisers compress fees even further?

In general, advisers cited price as one of the most threatening factors of digital online financial providers. More than three-quarters of those surveyed say the low cost of digital advice will pose some sort of threat to their practice. This data is underscored by the finding of a different study that found more than half of investors surveyed agreed that the investment advice most financial advisers offer is not worth the1% fee.

The study suggests a number of action steps for advisers to transform digital innovations into drivers of positive change and business growth.

Plan your approach to technology adoption. Advisers should understand where they sit on the digital spectrum and create a plan for where they want to be. Most begin by automating repetitive or low-value- tasks in their business. Once implemented, only then should they systematically work towards adopting increasingly sophisticated tools.

Make high-touch practices even more efficient and more personal. Digital tools, like those that automate client communications can help preserve the “high touch” experience many advisers are known for, but in a more efficient and more personal way that is customized to clients’ specific interests.

Articulate your value. As investors and advisers both respond to digital advice trends, it is more important than ever for advisers to educate their clients about the work they do on their behalf– and the distinct value and wisdom the adviser offers in relationship to the fees they charge.

Be realistic about focus of the practice. If advisers have an appetite for tech-enabled growth, they should invest time and money in the latest capabilities. If not, their focus should shift towards financial planning or serving wealthy or hands-off investors.

“It is short-sighted to limit the ways technology can complement a business to only digital advice,” says Kim Dellarocca, managing director at Pershing. “Digital advice is important, but it is only one area where a firm needs to evolve their technology strategy to deliver a wealth management experience that mirrors the expectations of today’s consumers and workforce.” 

Pershing’s third annual “Study of Advisor Success: Confidence and Concern in the New Digital Age” can be obtained from Pershing’s website.

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