RIAs: Now is the Time to Rethink Your People Strategy

As my team and I collaborate with RIA leaders across the country, we continue to be astounded by the creativity and resilience being demonstrated in these firms. They are finding thoughtful ways to keep connected with their teams and clients using the latest digital tools. They also are finding that technology allows them to collaborate with a more diverse set of individuals, all working from different places. Our Advisor Council tells us that they are not only adapting to non-traditional schedules and reliance on mobile devices, but that their relationships across teams and with clients have only deepened.

These insights align powerfully with what we’ve experienced across Pershing in recent months. Our methods for collaborating and communicating with clients has changed a lot, but we believe that the results have been very positive. This challenging period has confirmed what we’ve really always known: that we are in a People Business. The technology and digital tools simply help us stay connected as we learn, innovate and shape the future of our companies and our industry.

The pandemic has accelerated the adoption of digital technology, while also highlighting an opportunity to upgrade our approach to engaging the people who power our companies. The past decade marked a foundational time for staffing in the RIA industry – call it People 1.0 – when firms began formalizing their organizations and putting career paths in place. Now, as the 2020s stretch ahead of us, we’re ready for People 2.0 – when RIAs can expand their services by cultivating teams that are even more diverse, empowered and effective.

A call to action

As we pursue the next phase in the RIA evolution, we have the benefit of in-depth information about where we stand today. We recently released the 2020 update to our InvestmentNews Adviser Compensation & Staffing Study, which analyzes staffing, development and rewards approaches across hundreds of advisory firms. This update reflects 2019 data, so it offers a great foundation for creating the change our industry needs to prepare its people strategy for the future.

At a high level, the study illuminates what has been prolonged “steady as she goes” approach to hiring and compensating talent.

The study found that RIA firms in 2019 experienced strong growth in assets under management – an average of 18.2% – yet made only modest increases in staffing levels. What’s more, firms seemed to hire mainly in response to employee churn. As the chart demonstrates, attrition had a major impact all across all employee roles at RIA firms. About 27% of firms lost an advisor, 24% lost a support person, and 9% lost an operations person.

The study also suggests that advisor recruitment has become more of a closed loop rather than an open pathway to bring new people into the business. As the chart illustrates, the vast majority of RIA advisory hires are coming from competing RIAs. No doubt, this suggests a focus on getting the exact right skills and experience. However, it comes at the expense of fresh ideas and broader perspectives: Barely one in ten advisory hires comes from another industry.

The study’s finding that 37% of lead advisors are brought in through networks further diminishes the likelihood of attracting candidates with wide-ranging experiences and backgrounds.

Reimaging a People Strategy

All of us want the RIA industry to be perceived as young, growing and dynamic, yet these interchangeable hiring patterns send the message that we are a mature, stable industry that is somewhat set in its ways. This is the right time to trade in these insular approaches for open-ended strategies that can create more vibrant organizations with people who are contributing new skills in new ways.

One way to start the process of refreshing your people strategy is to ask questions. Here are a few such questions to consider, which take their cue from Journalism 101: Who, What, Where, When and How.

1. WHO will be part of your team?

Now is the time to cultivate more diverse candidate pools for your firm, with a focus on the longer term, not just when there’s pressure to fill open positions. Build out beyond your traditional networks to reach different groups and people who could lend new talents and cultural dimensions to the firm. Consider professionals from industries outside financial services who can enrich your firm with relevant innovations and working models. It’s important for recruits to understand their potential to grow and advance in the industry, so ensure that communicate clear career paths (This may offer some ideas.)

2. WHAT will these professionals do?

Leaders have the opportunity to reshape their firms so that they are not solely about advisory services. An analysis of your current and target clients, and the marketplace overall, will offer insights into potential new services that can differentiate your firm and unleash new streams of revenue. Frame out positions in the organization that could support these activities efficiently. Before you recruit, take a close look at your existing team – there may be hidden experiences and talents that would contribute greatly to your efforts.

3. WHERE will they do the work?

Why remain locked in a framework of formal offices in specific locations? Regardless of where work is performed, digital tools allow teams to communicate and integrate their work to ensure continuity and efficiency for the firm and its clients. Going forward, firms can use this technology to tap into viable talent pools beyond their immediate regions. They also can retain valuable team members who can continue to contribute even if they relocate, such as when a spouse takes a new job. Such flexibility results in more engaged and satisfied employees, which our past studies have linked to an enhanced client experience.

4. WHEN will they perform their work?

What do words like “open” and “closed” mean for a 24/7/365 financial services business like ours? During this pandemic, many firms experienced advantages from having team members flex their hours and days – early, late, on weekends – to keep the business moving and respond to client queries. Preserving such flexibility post-pandemic could sustain those advantages, and a firm might even want to provide clients with an extended-hour option: “Speak to a team member seven days a week.” This would be a market differentiator, and open the door to recruiting talented people who want or need more flexibility to attend to important personal responsibilities.

5. HOW will they collaborate and deliver service?

We have all grown adept at using digital methods to run our businesses more efficiently under the toughest circumstances. Rather than anticipate a return to “normal,” why not plan now to expand and improve upon virtual methods for team collaboration and client service? Such an idea opens up avenues for new roles and career opportunities. For example, a team member could be assigned to help clients set up and operate their Zoom programs. Imagine a client’s delight at mastering the technology, and how easy it will be for their advisors to “meet” with him or her with much greater spontaneity. Think about the goodwill that would create.

Putting People First

Regardless of the method you apply, taking a fresh look at your people strategy is certain to highlight areas to innovation that will drive greater engagement, diversity and performance. The 2020 InvestmentNews Adviser Compensation & Staffing Study update can help in this regard, offering extensive benchmarking data to ground your strategy. Here at Pershing, our teams are also innovating with the goal of delivering even higher levels of service in this dynamic environment. We know that you share our commitment to providing America’s investors with the trustworthy advice and reliable products that will help them weather today’s storm and keep on course to reach their financial goals.

About the author

Christina Townsend is a Managing Director and Head of Platform Strategy, Relationship Management & Consulting for Advisor Solutions at BNY Mellon | Pershing. She, and her team, work collaboratively across the enterprise to develop, implement and support the strategy, solutions and platforms available to wealth managers, registered investment advisors, multi-family offices and trust companies. She has a team of dedicated business and technology consultants working with prospects and clients to optimize their businesses. She is also responsible for the relationships with the consultants and vendors who support our target market segments. Christina is a member of the Advisor Solutions Executive Committee.

Prior to her current role, she led the Managed Investments product and transition teams and served on the Managed Investments Executive Committee. She was responsible for the product strategy, roadmap and implementing client’s managed account solutions.

Christina joined Pershing in 2000. She started her career in the corporate intern program and then spent a number of years supporting business process improvement efforts for the firm. She managed a team that was responsible for delivering large-scale technology and new client conversion projects. Christina is the North America Co-Chair of BNY Mellon’s Women’s Initiative Network and is a member of the BNY Mellon WIN Executive Council.

Christina earned a Bachelor of Science degree in Economics from Bates College. She completed the Securities Industry Institute® program, sponsored by Securities Industry and Financial Markets Association (SIFMA), at the Wharton School of the University of Pennsylvania.

Connect with Christina Townsend on LinkedIn

Learn more on Think Advisor: When People Come Last

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