WM Market Reports

Recruitment, Retention Top Of Mind For US Wealth Advisors - Study

Tom Burroughes Group Editor September 25, 2023


While not a new insight, a study of more than 100 wealth managers across the US emphasizes the critical squeeze on talent. Consequently, firms are seeking to fix the labor shortage, for example, by using technology, flexible working practices and raising employee benefits.

A survey of 102 US wealth management businesses across 28 states found that two-thirds (66 per cent) of them think that recruiting and keeping employees is a top concern, with 65 per cent identifying cybersecurity and 64 per cent meeting client needs as the most urgent considerations.

The findings, from a 32-page State Of the Wealth Management Industry report from Wipfli, the Wisconsin-based financial advisory firm, point to how the squeeze on talent is uppermost in wealth managers’ minds. 

“The wealth management industry is facing the same crisis as nearly every other job sector. There are simply not enough qualified workers to go around,” it said. The report went on to cite figures from the Bureau of Labor Statistics showing a record high number of job openings last year – a trend continuing into 2023. It said some reports “suggest there are nearly twice as many job vacancies as there are available workers in the US.”

The study found that 60.78 per cent of firms have allocated 2.1 to 3 per cent of annual budgets to recruitment. Some 21.57 per cent have allocated 3.1 to 5 per cent to hiring, and 14.7 per cent of firms said they are spending between 1 and 2 per cent. 2.94 per cent of them said they are allocating less than 1 per cent of their annual budget to finding new people.

Firms that are concerned about recruitment and retention are trying to fix the labor shortage by using technology, flexible working practices and raising employee benefits. Survey results, the authors of the report said, suggest that businesses should move further in this direction. 

Almost half (48 per cent) of firms said they’re prioritizing workplace flexibility. But the report said this goal may be endangered by firms’ operational policies – 64 per cent of businesses said they expect staff to be in the office five days a week.

The report’s findings come at a time when, in the aftermath of Covid-19 and the spread of digitalization, there has been a move toward “hybrid” ways of working in the world’s wealth management industry. For example, back in 2021, Gartner, the research and advisory group in the US, said return to work policies for firms largely fell into three camps: those happy to remain remote-first; those adopting a hybrid model; and a third group pushing for most people to be in the workplace most of the time. As heard by this news service in its recent family office tech conference, the squeeze on talent, and a need to augment advisors to sustain productivity, partly explains the fascination with AI tools, for example.

The study found that more than half (54 per cent) of firms use technology to save time on routine work to make advisors’ lives more agreeable and boost productivity. 

The report also examined what firms’ clients said they expect from advisors. For example, 63.73 per cent of them said they expect “greater transparency and communication, with clear fee structures and regular updates on portfolio performances.” Some 18.6 per cent of firms said clients expect “customized advice and personalized service tailored to individual needs and goals,” 11.7 per cent said their clients expected “access to a broad range of investment options and strategies, including socially responsible investing,” and 5.88 per cent said they expected “increased use of technology to streamline processes and make it easier to manage finances.”

As far seeking new clients is concerned, the report found that 71 per cent of wealth managers said client acquisition has had a “major effect” on their ability to achieve their goals. This was the top-named factor driving goal realization, above managing, and implementing change (62 per cent) and funding for technology investment (62 per cent).

Elsewhere, 59 per cent of firms said that technology has made their client onboarding and account management more efficient; 58 per cent said it has enabled more use of data analytics to inform investment decisions. Some 45.1 per cent said they spend between 6.1 and 8 per cent of their annual budget on tech.

As for M&A activity and the possibility of a transaction, 63 per cent of firms said: “preserving [the] culture of the firm” was extremely important.”

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