The News: The profound demographic trend that is boosting demand for investment advice — the millions of baby boomers retiring or planning their retirement — also threatens the financial advisory sector with a talent shortage. Read More »

In an increasingly commoditized wealth management marketplace, competitive advantage lies more than ever with the quality of frontline talent. Firms too often navigate the challenges of today’s talent marketplace and the complexities of their frontline strategy without a clear map of their talent management strengths and weaknesses.

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Talent is driving up FS expenses. This is just one finding from our inaugural Financial Services Business Barometer survey.

In Q3 2011, CEB surveyed top cross-functional executives from the financial services industry about their 12-month outlook on key drivers of economic performance. In line with the slowdown seen in the global economy, survey results indicate that executives in the financial services industry have low confidence in revenue growth in the coming year and concerns about costs.

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The News: According to a PricewaterhouseCoopers survey 33% of wealth management firms experienced an advisor attrition rate between 20-40% over the last two years.

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In a recent VIP Forum Community poll, almost half of respondents report that between 5-20% of their firm’s advisors attrite every year. Firms continuously struggle to retain top advisors, which may not be surprising given that 75% of executives report competing firms as their primary source to acquire new talent.

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The News: Julius Baer Wealth recently reported that Asia will more than double the number of millionaires currently in the region by 2015.

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Even the most talented new hires can underperform when firms fail to onboard them effectively. VIP Forum research finds that new hires typically take three years to meet their firm’s median revenue production. Inefficient onboarding not only leads to unrealized revenue opportunities, but also to higher advisor attrition: high-performing new hires are much more likely than core performers to stay in their current position for five years or longer. Read More »

Thirty-three percent of advisors report they might switch firms in the next two years. Such high advisor churn rates force firms to incur the expense of new hire searches and onboarding many times over. More importantly, advisors leaving their firm may take valuable clients with them, or reduce the loyalty of remaining clients left in the lurch by their departure.

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The crisis created a momentary calm in the war for frontline talent. Now, global economic recovery and the upcoming retirement of baby boomer advisors are draining the advisor talent pool. Many firms have responded by poaching top advisors from competitors, driving an unsustainable inflation of advisor compensation. Moreover, VIP Forum research shows that advisors’ past performance and book size are weak indicators of advisors’ future performance at a new firm. Read More »

In efforts to quickly fill frontline positions with tenured advisors who automatically will bring clients with them, firms tend to assess advisor candidates on hard metrics, such as past sales performance or book size, which fail to measure the behavioral attributes and core competencies necessary for success at the firm.  VIP Forum research shows that advisors’ past performance and book size are weak indicators of advisors’ future performance at a new firm.  In fact, advisors who demonstrate behavioral attributes that align with a firm’s culture are not only more productive, but are also likely to stay with the firm longer.

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