Updated Dec 30, 2020
Talent retention remains a significant challenge for investment firms — some lose a financial advisor as soon as a new one is recruited. By focusing on advisor engagement and satisfaction, firms can prevent their top-performing advisors from jumping ship to another firm, taking their expertise and clients with them.
In a 2017 financial advisor study by J.D. Power, research showed that top performers, advisors with more than $1 million in annual production, are the least satisfied employees. According to Mike Foy, director of the wealth management practice at J.D. Power:
“Firms need to continue to raise their game to keep these high-producing advisors happy and productive, both to retain client assets and revenue in the short term, and also as a key part of a longer-term strategy to mentor and team with the next generation of advisors.”
Numerous studies have shown that engagement is highly related to positive business outcomes. Regardless of the industry or type of employee, satisfied and engaged employees translate to a better bottom-line.
Implement these 5 best practices to keep your team of financial advisors engaged.
1. Leadership and Mentoring
Leadership and mentoring have been, and always will be, a key trait of successful managers. That said, how successful leaders lead is evolving. The days of pounding on the table and exhorting employees to do better are thankfully behind us. The best mentors bring out the best in others, invest in their employees, and develop the talent of their team members. Mentoring plays a vital role in talent retention.
According to Harvard Business Review, there is an increasing amount of research on positive organizational psychology showing “that not only is a cut-throat environment harmful to productivity over time, but that a positive environment will lead to dramatic benefits for employers, employees, and the bottom line.”
This cuts across all types of companies and industries and certainly applies to the financial advisors in your branch office. Do you manage or mentor your employees?
How to be a positive leader and mentor:
- Foster a culture of recognition. Show your advisors (and other staff) that you appreciate them and the effort they put forth. Recognize small wins, not just significant accomplishments, and avoid mixing praise with constructive feedback—it can send a mixed message.
- Adapt your coaching. As a leader, it’s critical to adjust your management style to each team member. Managers with high emotional intelligence foster a culture where advisors feel valued, which in turn boosts productivity and engagement.
- Concentrate on the sales process. Focus on the activities that your advisors should be doing in terms of generating new business and retain current clients, rather than solely focusing on the consequences of not meeting goals.
2. Sense of Ownership
Providing employees with autonomy and a sense of ownership in their jobs is a steadfast tactic in talent retention across a range of functions and industries. Lack of independence and feeling micromanaged can severely demotivate your advisors.
At its core, being a top financial advisor requires an entrepreneurial spirit. The best advisors think and act like a business owner. They are creative in acquiring and building relationships with clients and utilize team members to assist in serving their clients. They continually hone their own personal investment strategy, listen to client needs, and design appropriate financial solutions for them. These tactics make their clients feel valued, increasing client retention, and generating referrals.
Naturally, your advisors have rules to follow and parameters to stay within. The financial advice industry is regulated, and your firm has its own internal compliance rules as well. These rules help ensure the advisors remain “within the lines” and that your valued clients are well-served. As a manager, it’s important to make the right balance of setting expectations while fostering a sense of ownership.
3. Smarter Meetings
Meetings can be a forum to communicate important industry information, company/office updates, and many other things. However, meetings can also be the bane of an employee’s existence, and this certainly pertains to your financial advisors. In a 2018 survey by Salary.com, 47% of U.S. workers cited “too many meetings” as the top time-waster.
Meetings don’t always have to mean that everyone gathers in the same room. There are many remote conferencing services, video capturing apps, screen sharing tools, and other modes of remote communication that can link your team together. These tools are especially helpful if you manage several advisors working in remote locations. This saves not only on travel costs but doesn’t obligate these advisors to use a day or two to travel to the meeting location.
Beyond meetings, don’t forget about utilizing communication tools like Slack or Evernote to consolidate notes about clients or other topics of interest to various members of the team. These tools can cut down on repetitive emails and lead to smarter meetings.
4. Incentive Compensation
Incentive compensation has been a mainstay in talent retention best practices. However, incentives can take many forms. Cash bonuses for achieving goals such as sales/production, client satisfaction, or reaching a certain level of assets under management can be great incentives to drive performance. Goals to reach these incentive levels should be clear and understandable, as should the incentive compensation for attaining them.
Incentive compensation can be paid in other ways besides cash. For example, an advisory firm based outside of Chicago offers employees with at least five years of service with the firm the opportunity to take a paid four-week sabbatical from work at any point during the twelve months following their fifth anniversary with the firm. The firm encourages employees to disconnect from work altogether. Their “adventures” are discussed at employee meetings when the employee returns to work. The goal of this program is attracting and retaining top talent, and so far, the program has been well-received by employees.
Think about the types of incentives, both financial and non-financial, that will motivate your advisors. Increased compensation is always welcome. Beyond that, though, perhaps extra time off in some format would be attractive. Perhaps, providing paid time off to an advisor with a young family to do some extended travel or for an advisor who would like to volunteer with an organization whose mission is meaningful to them. Getting to know your team as individuals will help you learn what is important to them and the types of incentives that are meaningful.
5. Technology Support
Technology is a crucial part of the advisory business today and will only continue to grow in importance. Providing your team with cutting-edge technology tools allows your advisors to grow their business and their compensation, which plays a large part in talent retention and cultivating a group of engaged advisors. According to J.D. Power’s Financial Advisor Study, your top-producing advisors have even greater technology needs than some of their peers.
Whether attracting younger advisors or retaining current advisors, technology is essential. A recent study by Fidelity Investments found that tech-savvy advisors tended to have higher levels of AUM, higher AUM per client, and were more highly compensated than less tech-savvy advisors.
With the wave of advisors projected to retire from the business over the next decade, usable, business enhancing technology will be a vital consideration in attracting and retaining the next generation of younger advisors.