We look across the wealth management jobs market to examine recruitment trends, remuneration and changes wrought not just by the pandemic but by other forces affecting the sector.

Pandemic or not, the competition for wealth management talent remains fierce and demand for good advisors and executives far outstrips availability.

“Top advisors continue to be in demand because they generate top line revenue and control the revenue stream,” said Mark Elzweig, a New York-based executive recruiter. “Firms would definitely like to hire as many good advisors as they can. It’s not the same as hiring other employees who are adding to overhead.”

The seller’s market for advisors was underscored when LPL, the largest independent broker-dealer in the US, announced a generous compensation deal to try and lure more advisors to join the firm as employees.

LPL is offering advisors who generate $350,000 in annual revenue a 50 per cent payout, which increases to 60 per cent for revenue over $1 million and 70 per cent for revenue over $5 million. That could mean a pay increase of as much as 33 per cent for advisors who are employees of wirehouses like Merrill Lynch and UBS.

Most RIA hires, however, will come from other independent advisory firms, according to the latest RIA Benchmarking Study from Charles Schwab. Nearly 40 per cent of respondents to the survey said they are hiring from other RIAs.

What’s more, despite the pandemic, nearly 75 per cent of advisory firms said they plan to hire more advisors this year.

What are hiring firms looking for?
Larger firms usually want advisors who can generate at least $1 million in revenue, according to Louis Diamond, executive vice president for New Jersey-based Diamond Consultants. Advisors who have a CFP certification and niche practices catering for markets like doctors and divorcees are also in high demand, as are women and minorities, Diamond said.

Younger, NextGen advisors who can replace the aging Baby Boomer demographic are also highly sought after, recruiters said.

Advisory firms are increasingly looking for younger talent at universities, those who have a financial planning degree and graduate programs said Lisa Salvi, vice president in Charles Schwab’s Advisor Services division. 

RIAs are increasingly hiring executives from other industries with specialized skills to fill positions such as tech and marketing, Salvi added.

“Wealth management firms want to hire advisors on their way up,” according to Elzweig. “They want people who will grow and who have a multi-generational connection with a family. They’re not as big on older advisors with declining production.”

Advisory firms which are filling senior level executive positions are looking for executives who can demonstrate that they are “passionate leaders,” according to Kathy Freeman, who runs her own California-based executive search firm. 

Most firms which are hiring senior executives still want to meet candidates in person, Freeman added. “These positions are too important for Zoom calls,” she said.
 

---

What are advisors looking for?
Advisors, especially Millennials, want to see a career path laid out, according to Salvi.  

“They want to see specific career goals written down, not just generalities,” she said. “They’re looking for growing firms that will invest in them and sponsor them for CFP certification. They want to see opportunities and the process firms have in place.”

Clients’ wellbeing is also becoming a much more important consideration for advisors.

“Deals have to be better for clients now,” says Danny Sarch, president of Leitner Sarch Consultants in White Plains, New York. “Advisors want to make sure clients will be taken care of.”

Mike Papedis, co-founder of Fusion Financial Partners, a California-based consulting and recruiting firm, agrees. 

“There’s been an interesting shift,” Papedis explained. “Recruiting used to be just about what the advisor gets. Now we’re seeing the clients’ compatability with the new firm come into play. Advisors want to be sure the new firm will be a good fit for their clients as well.”

Wealth management firms would also be well-served to make sure that their websites are up to date, Schwab’s Salvi said.

“I can’t over-emphasize the website enough,” she said. “A website is the new front door, especially now when everything is virtual. Firms have to make sure it’s appealing to talent. If advisors, especially Millennials, don’t see images that are inclusive and welcoming, they’re going to turn away.”

Advisory firms can access Schwab’s Talent Resource Center for tips, she said.

How has the pandemic affected recruiting?
The coronavirus pandemic hasn’t slowed recruiting so far, executive recruiters said.

“We’re getting a ton of business,” Diamond said. “The crisis highlighted the lack of depth at a lot of firms who want to fill those gaps. The time is also right for advisors who want to move because there’s so much support out there and they have time to figure out what they want to do next.”

The pandemic has been a “tipping point” for both wealth management firms and advisors, according to Kathy Freeman, who wrote a commentary on COVID-19’s impact on executive search for FWR in June.

“The virus has forced people to take inventory of what they need to do for the future and how they can create a glide path for what works,” she explained. “This crisis has been an opportunity for everyone to think differently.”

But Danny Sarch thinks there may be a hiring slowdown on the horizon.

“A lot of the hiring you’re seeing had already begun before the pandemic hit,” he said. “Negotiations were already on the 50-yard line. It’s much more difficult to take the hiring process from the one-yard line to the end zone when you can’t meet the person you’re hiring in person.”

That lack of personal contact has slowed down the hiring process, recruiters said.

What used to be a fairly quick process for candidate interviews has now “been stretching into months,” Freeman said. “Staffing decisions for critical roles are being postponed until face-to-face meeting can resume.”

Before the pandemic, advisors who were candidates for new jobs could make a home office visit “and accomplish a lot in a day or two,” Sarch noted. “Now due diligence is being spread out over months. Nobody wants to make a mistake.”
 

---

What are compensation deals like now?
“Advisory firms are juicing up their deals,” Elzweig said. 

Advisors who grossed at least $1 million in the previous 12 months can get an upfront payment of 150 per cent or more of their “trailing 12” gross production in addition to bonuses in future years for metrics such as retained AuM.

Salaries for executive compensation continue to go “up and up,” Freeman said. Senior executives also expect to receive handsome bonuses for helping firms to grow, as well as “a pathway to equity,” she added.

While many advisors are also demanding equity, most want cash, Elzweig said. “Equity is nice, but you really don’t know how things will play out,” he said. “Cash is real and if a firm doesn’t do well, equity could end up not working out at all.”

Most compensation deals balance cash and equity, Papedis said. “There’s more equity with less cash and less cash with more equity,” he explained.

But for the most part, thanks to the infusion of capital into RIAs from sources such as private equity, plenty of cash is available, especially for breakaway brokers, Papedis said.

“Firms are putting money on the table,” he said. “It’s just a matter of how the advisors want to use it, whether for working capital or paying off notes they owe their previous employer.”