Recruitment choices today shape business success tomorrow

The problem has only been exacerbated by the move away from financial advice by large institutions.

In the past, these institutions provided a useful and structured recruitment and training process for the financial advice profession, a process that now no longer exists. Once, financial planning practices could turn to this “pool” of trained and professional advisers for recruitment options, but not any longer.

The other traditional way of recruitment was to bring future planners in at a very junior level, starting on the bottom rung of the ladder – often in some kind of administrative support role – before they gradually move their way up through paraplanner, to associate junior adviser, to having their own clients.

But those coming into the profession now don’t want to repeat the career path of those that came before them.

The challenge therefore for today’s financial planning businesses is how to find the right people and how to position themselves as the most attractive option for them. It’s increasingly becoming a pain point for many of the practices we talk with.

Not only are today’s younger, usually tertiary-qualified entrants to the profession unwilling to start out in admin roles, but they are also unlikely to spend their entire career in one business. Three years is a long time for the new generation of recruits!

They will be looking for career progression and a structured approach to professional development.

Caught up in all this is the issue of servicing clients. There is a general sense in the profession that the number of clients each adviser can look after has declined. This is largely due to the increasing compliance and regulatory burden but, coupled with the perfect storm of falling adviser numbers and growing demand amongst consumers for financial advice, it is becoming a significant issue.

The simple answer is that financial planning business will need to start being more strategic in their recruitment approach and take a long-term view. This means planning ahead, not just waiting for the “perfect person” to come along. Or, even more risky, waiting until they are too busy to cope before starting to recruit and then hoping for the best.

An ad-hoc approach of hiring when the business is overwhelmed has a number of pitfalls. One is that the business ends up overpaying for the new recruit in its need to get someone quickly. There’s also the danger that the new person gets burnt out quickly, and then the cycle starts again with higher rates of turnover and the associated expense of recruitment.

A strategic recruitment strategy looks at areas such as:

• Areas of specialisation – how can existing and future advisers specialise, to make the most of their skills and interests?
• Who are the main lead generators? And how much of their time should they be spending on generating new business? The strategy can then look at ways of freeing up their client-facing time by making better use of more junior advisers
• Following on from this, what are the expectations in terms of productivity from each adviser, and how can they be best supported in achieving this? If advisers are able to work at their highest and best use (for example, holding client meetings, developing strategies and business development) and the resource planning supports the growth goals of each adviser, they will be able to see more clients and the business will have a much greater revenue per employment costs.
• What succession planning is in place? As mentioned earlier, younger advisers expect to see a clear career path, and this means having a plan in place to retain and share equity
• What are the triggers for hiring? Is there a level of clients or a fee level that should automatically start a recruitment or outsourcing process to build future capacity?

This type of structured approach will help advisers see their own career path, the opportunities within the business for them, the areas they can specialise in, and so on.

Furthermore, adopting such a strategic approach to recruitment and capacity planning has a significant business benefit, that it will allow the firm to scale more efficiently and more quickly.

This is an opportunity for businesses to think not just about the next few years, but to look at how they can develop the next generation of advisers and have a clear pathway for them. Those businesses will be so much more valuable in the future.

David Carney, CEO, Virtual Business Partners

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.