The term got a lot of attention last year and there's definitely a set of challenges for wealth managers to handle. Those who do so in innovative and creative ways will win.

“The Great Resignation” was one of those terms bandied about in the media last year. And it did not refer to politicians hitting the exit. Instead, it was about employees quitting jobs in big numbers, beginning in early 2021. Lockdowns and all the disruptions they wrought, and the working-from-home phenomenon, fueled talk of a big exodus.

What’s been the story for wealth managers? How far this process has been a reality for the wealth sector is not easy to judge precisely. Family Wealth Report has picked up anecdotal reports of advisors and bankers changing jobs, but often they made a move that they would have executed anyway but had been forced to delay for the first two years of the pandemic. Our news reports of moves and appointments haven’t appeared notably busier in the past six months than, say, in the final half of 2019. The “breakaway” trend of advisors leaving banks and big broker-dealers to create their own wealth shops may have been delayed somewhat during the worst of the lockdowns, but that trend was well in play long before the crisis started.

There’s no doubt that the exodus from various sectors has been considerable. A report by consultants McKinsey & Co in September 2021 said that more than 19 million US workers had quit their jobs since April 2021 (obviously financial services are a slice of that). And its language was blunt: “Companies are struggling to address the problem, and many will continue to struggle for one simple reason: they don’t really understand why their employees are leaving in the first place.”

Whenever FWR talks to firms, the answer is often the same about the recruitment market: finding quality people is tough. (And this is the same in the UK and other parts of the world.) A related issue is that North American advisors are going to have their "big resignation" in a few years' time. At the same time, there’s a $70 trillion wealth transfer wave going on, and younger HNW clients aren’t necessarily keen to stay with their parents’ business arrangements. And the phenomenon also partly explains why making wealth management a more diverse industry – in all senses – is now a hard financial reality, not just a nice-to-have point.

“I see the next generation changing jobs frequently and from my viewpoint it is happening with older generations as well,” Charline Burgess, vice president, senior wealth education specialist, Morgan Stanley, told this news service. One of the forces driving the “great resignation” has been working from home and the shifts in work because of the pandemic, she continued. 

“There has been a lot of movement around locations and we see a focus on things like livability indices,” Burgess said. (Raleigh, NC, is the highest-ranking city in the Numbeo quality of life index for cities around the world. Seattle is the next-highest ranked city, at 11th, with Charlotte, NC, at 12th, and Oklahoma City, OK, at 13th, Austin, TX, at 15th, and Columbus, OH, at 17th. The traditional US financial capital of New York does not make it into the top 50.)

An issue related to big job shifts is also the “shift” in wealth and the need to prepare Next Gen adults to manage their inheritance and wealth. 

“The requests for wealth education and Next Gen understanding have increased since the pandemic,” Burgess said. “There is heightened interest that the Next Gen. understands what’s happening.”

At Morgan Stanley’s wealth arm, it talks to parents on how they can help their children’s career choices, including how or whether to support their children’s businesses, Burgess continued. Another issue that comes up in conversations is what do families want in terms of work-life balance, she said.

In March, Pepper Anderson, chief executive at Chilton Trust, the US wealth management house, told FWR that the battle for talent has “definitely escalated in our space…maybe [people] are not as engaged with employers, were closer to clients and talking to them over the phone. Maybe people were feeling less `tethered’. We are looking for great talent.” And she added that people in the “less glamorous” and junior roles in financial services can be hard to find, she said. “There are different, and much more, career options for people today. We are possibly drawing from a smaller pool and need to think more creatively.”

In its September report, McKinsey said too many businesses had sought “well-intentioned quick fixes” that hadn’t worked, such as financial perks or pay rises without taking longer-term considerations into account. 

Education
If firms cannot get their work environment right, it will also affect their ability to recruit and keep clients. That’s particularly important when much of the value proposition of wealth management today isn’t about hitting investment numbers – though still important – but the supposedly “softer” tasks of helping families understand wealth, preparing children for financial tasks, and so on. 

Morgan Stanley’s Burgess certainly sees plenty of demand from families for getting help with their lifestyles, finance and work. 

“Many of our clients are reviewing quality of life factors around their work – including work/life balance, childcare and education, office space in their homes, technology infrastructure, proximity to airports versus the company office, commuting, walkability, and taxes,” Burgess said. “For example, does one of the parents want to find a different job that offers more flexibility, so they are able to help with remote learning for their children? Is this a time for one parent to take a break in their career to focus on the children and their learning. Environment?”

“We facilitate conversations among family members around vital topics such as financial literacy, investing, philanthropy, career choices, and family governance – leading to more meaningful stewardship of the family legacy, values and vision,” she continued. “Crafting customized wealth education sessions for the family creates the opportunity for a dialogue between the next generation of the family, the advisors and the educator. This is a fertile moment in the process of developing effective stewards and their ability to manage their financial futures for themselves and their future generations.”