Advisory firms are in a hiring mode, and that means financial advisers are very much in demand.
About three-quarters of advisory firms plan to hire new employees this year, according to the
2011 InvestmentNews/ Moss Adams Adviser Compensation and Staffing Study. Of those hiring, 41% said that their prospective hires will be filling new positions, up from 30% last year.
Only about 5% of the firms that responded said that they expect to lay off employees this year; 9% of firms reported laying off people in 2010, according to the report, which is based on surveys completed by about 600 advisers in April through June.
Even though the economy is still struggling, advisory firms seem to have made necessary cutbacks in recent years and are now focused on growth, according to the report. They need skilled people to support an increased number of clients and help the firm lure new ones.
Opportunities exist for talented people who want to move up and on in the business, the report shows.
“There are a lot of options for advisers right now, and the transition packages are bigger and better than they've ever been,” said Mindy Diamond, an industry recruiter.
Advisers are finding opportunities to run wealth management businesses at independent advisory firms, wirehouses, regional firms, boutiques and banks, she said.
The market for advisers who have a portable book of business is especially robust, Ms. Diamond said.
HIRING ON THE RISE
Of the firms that are hiring this year, 40% plan to add advisory professionals, 32% are hiring technical specialists and 27% expect to bring on more support staff, according to the study. Last year, 33% of firms hired advisory professionals.
Advisers generally are slow to bring on new employees, because hiring is a big expense, said Gregory Friedman, founder of Private Ocean, an advisory firm with $726 million in assets under management.
But it is an investment that firms need for growth, he said.
INVESTING IN TALENT
“The divide between well-run firms and those that struggle is that the well-run firms invest in talent, and that talent produces and performs for them,” Mr. Friedman said.
In fact, the firms that plan to make new hires this year are about 50% more profitable than those not expecting to hire employees in 2011, the survey showed. These firms also expect median growth of about 23% in assets under management and a 6.5% boost in clients, compared with a 14% increase in assets under management and 4% increase in the number of clients for firms that don't expect to hire this year.
With so many firms looking to bring on new hires, competition is on the rise to attract those with the strongest skills.
“There is definitely a demand for talent,” Mr. Friedman said. “There is a shortage of all levels of adviser talent, especially for those who can sell themselves and have the high analytical skills to do the planning.”
It seems as if more people who enter the profession are focused one way or the other, concentrating either on the analytics or on the “softer side,” Mr. Friedman said.
He sees more professionals coming in to the industry with analytical skills than those who can present the firm's skills and bring on a new client.
Mr. Friedman's firm recently hired a junior adviser.
SPECIALISTS IN DEMAND
Of the 32% of firms that expect to hire specialists this year, almost half are doing so for the first time, the report said. Most of these are larger firms, and they are looking to hire tax specialists, estate planners and portfolio managers.
The trend suggests that having such in-house specialty resources is seen as a competitive advantage, the report said.
About 40% of advisory firms hire recent college graduates, and most of those are large firms that can afford to train inexperienced people, according to the study. Of those who tap this market for new employees, 43% employ interns, a resource that can be a win-win for the firms, which gain cheaper labor (advisory firms pay interns an average of $13.50 an hour), and the individuals, who gain work experience, and exposure to firm culture and values, the report said.
Fox Joss & Yankee LLC, a firm with about $307 million in assets, has hired paid interns for the past five summers.
The firm taps the Texas Tech University undergraduate and graduate
financial planning programs and the undergraduate program at Virginia Polytechnic Institute for intern candidates, said principal Jon P. Yankee.
“Our goal for the intern is that by the end of three or four months with us, that they are doing the work of an associate planner,” he said.
After some training, interns gradually take on more client work, such as helping to prepare information for meetings, Mr. Yankee said.
Interns sit in on four to six client meetings during their internship, an important part of their working education, he said.
“At the client meetings, interns see the relationship that the adviser has with the client and can see how their work behind the scenes is presented to clients,” Mr. Yankee said.
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