Employee retention linked to career paths and training

Half of advice firms have no formal guidance for client service

Oct 14, 2017 @ 6:00 am

By Jeff Benjamin

As competition heats up among independent advisory firms for both clients and financial advisers, training and guided career paths are emerging as crucial components of recruiting and keeping advisers on board.

Yet at a lot of advisory firms, ongoing staff development is often lacking or woefully inadequate, according to findings in the 2017 InvestmentNews Adviser Compensation & Staffing Study.

While many firms cite capacity issues that have them struggling to keep up with the current pace of client needs, independent firms, on average, risk falling further behind by not properly hiring and training the next generation of advisers.

According to the study, which included a survey of 353 advisory firms, only half of all firms said they have formal training or education structure for developing the client service skills of staff.

In terms of business development training, almost half the firms rely on ad hoc mentoring by senior-level advisers, and a third have no business development program in place.

Less than 30% of the firms surveyed have a formal leadership program for advisers.

(More: How to use technology for business development)

Mark Tibergien, chief executive of Pershing Advisor Solutions, said overlooking fundamental training and career development virtually guarantees turnover and underperformance by employees.

"Firms should be able to identify the steps in a career progression," he said. "One should have to go through rungs on a ladder, and at a minimum, there should be five rungs."

Mr. Tibergien said advisers should be able to understand a progression from learning the job, to learning the clients, to building relationships, to leading teams, to leading the business.

climbing the ladderSource: Mark Tibergien

"Be conscious of the nature of the work you're expecting from someone, and train to that," he said. "We find through studies that what compels young people to stay with a firm is not just the opportunity to learn, but the opportunity to grow, and when you're clear and you can teach to it, it gives people the feeling they are moving forward."

As might be expected, larger firms have the resources to make staff development a bigger priority. The kinds of advisory career tracks Mr. Tibergien described are evident at about 90% of the largest firms surveyed, those with $10 million or more in annual revenue.

But the adoption of clear and structured career tracks declines along with firm size.

Vanessa Oligino, director of business performance solutions at TD Ameritrade Institutional, said it is often less about the specifics of what a firm teaches young advisers than it is about how the message is delivered when they join a firm.

(More: Advisory firms have to stop treating all advisers the same)

"We recommend a range of experiences to further development, including on-the-job activities, mentoring and job shadowing, and formal training through continuing education and industry conferences," she said. "Firms need to foster a culture of development and career progress if they want to retain younger advisers and groom them to be future leaders. We tell advisers to customize their approach because millennials aren't all the same."

Anand Sekhar, vice president of practice management and consulting at Fidelity Clearing & Custody Solutions, has seen what he describes as a "war for talent," suggesting firms will have to be extra diligent if they want to keep their best employees from leaving.

"What has transpired at some firms is, after investing in staff development, a lot of firms will see the new advisers walk out the door," he said. "We are seeing some firms do staff development in more creative ways, but there are still advisers that have been in the industry for decades who still believe you start by creating a book of business."

Gabriel Garcia, a managing director at Pershing Advisor Solutions, agrees, saying the old ways are not going to work if the goal is to build an enduring firm.

"See what I do, watch what I do, and copy what I do is not a training program," he said.

0
Comments

What do you think?

View comments

Recommended for you

B-D Data Center

Use InvestmentNews' B-D Data Center to find exclusive information and intelligence about the independent broker-dealer industry.

Rank Broker-dealers by

Does your pay stack up?

The Adviser Research Dashboard

Based on data collected through InvestmentNews' annual adviser research studies, this interactive, customizable tool allows you to view detailed data on compensation, staffing and financial performance practices from across the industry.

Learn more »

Upcoming Event

Nov 13

Conference

Best Practices Workshop

For the sixth year, InvestmentNews will host the Best Practices Workshop & Awards, bringing together the industry’s top-performing and most influential firms in one room for a full-day. This exclusive workshop and awards program for the... Learn more

Featured video

Events

InvestmentNews celebrates diversity & inclusion in the financial advice business

Highlights of the Excellence in D&I Awards, showcasing the achievements of 26 individuals and firms that are moving the needle when it comes to diversity and inclusion.

Latest news & opinion

Don't be fooled by the numbers — the industry is in a dangerously vulnerable state

Last year's stock market gains helped advisers turn in solid growth in assets and revenue, but that growth could disappear in the next market downturn.

Divided we stand: How financial advisers view President Trump

InvestmentNews poll finds 49.2% approve of his performance, while 46.7% disapprove. How has that changed over the course of his presidency?

10 states with the most college student debt

Residents of these states have the most student debt when you consider their job opportunities.

Invesco to buy OppenheimerFunds

Deal brings Invesco another $246 billion in assets, as well as high-fee actively managed funds.

Dawn Bennett found guilty of $20 million Ponzi scheme

Jury took less than five hours to convict the former financial adviser and radio host.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print