Talent Management Trends

Art by Eric Hanson

It is no secret that the adviser population skews older. Perhaps for that reason, suggests Mike Foy, senior director of wealth and lending intelligence at J.D. Power, firms are increasingly focused on talent management. 

According to his firm’s data, he says, “Firms are thinking through succession plans and are also putting more resources behind improvements in the adviser experience, whether that be through technology and platform upgrades or by adding more flexibility into work schedules.” Those are some things that will keep current advisers on board and support efforts to bring on new talent, he says. 

“We see a bigger focus on ‘teaming,’” Foy continues. “With a team-based advisory approach, younger advisers are getting paired with senior professionals, so information is being shared across the organization. A team-based approach also can benefit clients,” for instance, letting a client service relationship continue with relative ease if an adviser transitions out, he says. 

Stephen Caruso, a research analyst on the wealth management team at Cerulli Associates, notes that “sell and stay” programs are gaining popularity. These allow senior advisers to sell out of their book, but the adviser also has a built-in phase-out plan, so she can transition client relationships over time. “Firms want those transitions to be as seamless as possible,” Caruso says. “We’re seeing a lot of work going into making sure the changes aren’t abrupt.” 

“Firms want those transitions to be as seamless as possible. We’re seeing a lot of work going into making sure the changes aren’t abrupt.”

As advisers realign for the future, many are considering how best to structure operations, whether that means centralizing in a home office or operating in a more spread out format through branch offices across many cities. 

“Firms we’re working with are focusing on how best to manage internal resources,” says Sean Kenney, head of defined contribution at MFS Investment Management, whose Advisor Edge program helps adviser firms manage their team. 

The way firms choose to allocate resources can influence where they hire from—and whether advisers ultimately stay on, Kenney says. A more centralized model will limit the pool of potential candidates to the areas around the firm’s offices. A more decentralized model could provide a larger pool of potential candidates but make it harder to establish and maintain a strong firm culture. 

Shauna Mace, head of practice management for SEI’s adviser business, says many firms are looking closely at compensation to attract and retain talent. 

Due to consolidations many advisers are finding themselves at a new firm with a different compensation model, she says. 

“If you’re coming from the wirehouse channel, for example, you could see a combination of salary plus some component of incentive compensation. But if you come from the RIA [registered investment adviser] world, it could be salary plus a team-based bonus.” 

A change in compensation terms can cause friction, she says, noting that firms should have better systems, enabling the leaders to understand and respond to compensation changes for incoming talent. 

“This is critical if you want to avoid attrition and/or to bring on new people who may not be used to your compensation model,” Mace says.  

Sources also agree that adopting a diversity, equity and inclusion strategy is a critical means to attract talent that represents the total potential client base. 

“Firms get caught up in the metrics of DEI,” Kenney says. “Once the numbers look good, they think they’re done. But firms have to focus on inclusion or these diverse candidates aren’t likely to stay.”