The battle for talented wealth managers continues to be strong and a report seeks to shed light on what is driving demand, and just as importantly, how to retain skilled professionals.

Building teams, technology, regulatory compliance and proposed rule changes governing how clients’ best interests are served are some of the topics driving recruitment and retention of wealth advisors, a report says.

The report, by Cerulli Associates, tries to work out why advisors are being recruited in particular fields and how well or poorly the wealth industry is faring in keeping such professionals on board. The study comes amid continued concerns that the average age of advisors in the US is going up, raising questions of where fresh blood is going to come from to serve the next generation of wealth holders.

The report looked at broker/dcealer firms and registered investment advisors.

"Pain points are often at the root of an advisor's decision to change firms. The choice may be triggered by factors such as restrictions on product use, client fees imposed for small accounts, changing compensation, unreliable technology, or minimum account size mandates," Kenton Shirk, director at Cerulli, said. 

"Because recruiting a large multi-advisor team is more complex and time-consuming, large broker/dealers are promoting teaming as a retention strategy and adjusting compensation to favor teams,” Shirk said.

A number of independent broker/dealers have brought in their own RIA platforms in reaction to how advisors have jumped ship to work for RIAs. 

Having their own platforms allows advisors to make use of them while an advisor holds a separate and independent RIA. Multi-channel broker-dealers are positioning their RIA platforms as a new way to attract advisors and serve them throughout their lifecycle regardless of regulatory structure, the report said.

Culture matters
Culture is becoming a critical differentiator in these sectors, Cerulli’s report continued. Of advisors in employee channels who switched firms in the past three years, 51 per cent indicate that the quality of their broker/dealer’s culture had a big influence on their decision to move. Similarly, technology is becoming an increasingly important factor when advisors choose a new firm. 

"Advisors are beginning to recognize its large impact on productivity and client experience," Shirk said. "Cerulli believes technology will become an important aspect of a broker/dealer’s value proposition as fewer advisors serve fewer, wealthier clients and expect highly productive and integrated systems for both themselves and their clients,” Shirk continued.

Among wirehouse advisors who would prefer joining the independent model if they leave their current firm, nearly half indicate that assuming additional compliance (48 per cent) and operational (47 per cent) responsibilities are causes for worry. RIA aggregators and platforms use concerns about operations and compliance to win breakaway advisors in wirehouses who want to go independent but desire a turnkey infrastructure.

The findings come from the May 2017 issue of The Cerulli Edge - US Edition.

Back in 2014, Cerulli noted that the average age of financial advisors is 50.9 and 43 per cent are over the age of 55.

This publication has been told that the age profile of US advisors is a potential problem given the need among Millennials for financial advice from those who can understand – or say they can – their concerns. 

For example, in 2015, it was reported that a poll – taken at Fidelity Institutional’s Executive Forum in Arizona - found that most organizations are using “standard” methods of recruiting. However, more positively, many of them are starting to recognize the need to cast a wider net when looking for candidates, and 72 per cent believe their industry's talent pool is shrinking, that study said. 

Family Wealth Report, in talking to US wealth managers in recent months, has been made aware of how significant an issue this talent crunch is. One senior manager in New York told FWR that it is one of the most serious challenges the sector faces. There were industry concerns over an aging advisor workforce. In 2014, another report by Cerulli, its Advisor Metrics 2014: Optimizing Distribution Channel Resources report, said RIA and dually-registered channels were the only segments to have increased headcount during this time.