Attracting talent to your firm

4 Ways RIAs Can Thrive Amidst a Skills Shortage

William Freedman

Topics: Investment Advisors

With everything else that went on in 2020, this was an easy news item to miss: The major online brokers saw a 170% surge in new accounts over the course of the first quarter. That is, the quantity of investors entering the market almost tripled in the three months leading up to the coronavirus shutdown. If you’re looking for a reason why the stock market experienced a V-shaped – no, make that a checkmark-shaped – recovery while the rest of the economy saw starkly mixed results, that’s a big part of it. 

It’s hard to tell how many new investment advisers joined the ranks during those three months, but it wasn’t 170% of the baseline. That’s what it would have to be just to keep up with organic growth, but that isn’t even the biggest issue contributing to the skills shortage among registered investment advisers. 

There are more Certified Financial Planners over age 70 than under age 30. According to Cerulli Associates 111,500 advisers – that’s roughly 40% of the total  are planning to retire within the next 10 years. That’s a lot to backfill. 

It’s not impossible, though. This is, after all, the Financials sector. Being out of work on Wall Street pays better than having a job anywhere else. There should be no shortage of hungry, young go-getters eager for their turn at bat. 

And of course, there are – greenhorns who re-watched The Wolf of Wall Street a dozen times and have the eighth-grade education required to be coachable enough to pass the Series 7. So what’s the problem? 

Standards. RIAs aren’t looking to fill a boiler room. They’re fiduciaries, which requires ethical and intellectual thresholds that exceed those for firms which subscribe to the suitability standard of care. 

So how can an RIA go about recruiting, training, credentialing and supervising new reps while minimizing compliance and reputation risk?  


Remember you’re hiring them, not their friends and family 

Once candidates become advisors, rookies are often expected to harvest leads from their own network to build a client base, which proves disadvantageous to those from less affluent socioeconomic backgrounds,” according to Cerulli. 

So find ways to not set them up for failure. With retirements looming, perhaps now is the time to hand leads to the newbies rather than telling them to hand them to you. 


Focus on retention 

Ask anyone in retail: It’s not about getting new customers – it’s about keeping them. Similarly, RIAs should focus on the lifetime value of each representative rather than just their annual contribution to the firm. 

When working with firm owners, I typically hear, We don’t have people with the right skills for the demands of this business. Conversely, when I interview employees of advisory firms, I often hear, This firm doesn’t take advantage of half of the skills that I have to offer,’ according to San Francisco-based financial planning consultant Kelli Cruz. 

She suggests that a lack of career development and training often leads to ship-jumping. Ironically, the firm not only has to backfill the individual who left, but frequently has to fill a senior position for which that person was qualified. 


Leverage technology 

This is kind of a gimme, because just about every firm is doing this already – finding ways to use fintech tools to improve results. 

But maybe RIAs aren’t using machine learning’s full capability. While it has been a great boon to firms’ ability to identify emerging investment opportunities, it hasn’t been directed as squarely at making the advisers themselves more efficient. If you can use technology to enable an adviser to effectively represent 100 clients instead of 50, that’s another seat you don’t have to fill. 

The coming years will see technology that is more scalable, accessible and useful in the consumer-advisor relationship,” according to Kevin Keller, CEO of the CFP BoardIt will streamline many of an advisor’s time consuming and repetitive tasks, allowing them to expand their role from a coach who provides solutions to both a coach and counselor who helps clients understand and navigate their lifelong financial journey. 


RIAs are on notice that this skills shortage is going to get worse before it gets better. Goldman Sachs just poached two of the RIA space’s leading recruiters, suggesting that a round of consolidation is coming – one that’s more likely to reduce the number of managerial positions while surviving firms continue to thirst for experienced representatives and fresh talent. 

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