Leaders of some of the nation’s largest advisory firms acknowledge that they face mounting challenges in identifying the right talent, expanding their talent pools and implementing initiatives that help drive diversity, according to a new poll.
For the third year in a row, hiring and developing talent is viewed as the top business challenge and biggest driver of growth for elite advisory firms in the next few years, BNY Mellon’s Pershing found in its 2019 Elite Advisor Poll.
Conducted among executives attending the 2019 Elite Advisor Summit, the poll reveals that nearly 60% of the leaders at the country’s most preeminent RIA and institutional firms are finding it challenging to find the right fit for their firms and 41% are not fully satisfied with their firms’ efforts to hire women or ethnic minorities.
For the majority (59%) of executives responding to the poll, the main challenge in hiring women and ethnic minorities is the lack of enough qualified talent from these pools. Yet, when asked what their firms are doing to reach a more diverse talent pool, nearly half (47%) of respondents indicated that they have not implemented some of the best practice initiatives and programs, such as recruiting at schools with a diverse student base, removing subconscious biases from job descriptions, and diversity training.
“Talent shortage is by far one of the biggest threats to growth among advisory firms,” notes Gabriel Garcia, managing director of Advisor Solutions at BNY Mellon’s Pershing. “It is critical that advisory firms start putting in place measures that will increase their appeal as a ‘best place to work,’ build their reputation in the marketplace and, perhaps most importantly, help them tap into new and diverse talent pools.”
Other key findings from the poll:
- Recruiting: Only 5% of advisory firm executives say they have “no challenges with recruiting.”
- Retention: 55% of respondents say providing “opportunities for career growth” is deemed to be the most effective way to retain employees, but only 16% say “competitive salary” is an effective tool for retaining employees. Additionally, only 7% of respondents say an equity stake in the firm is an effective way to retain employees.
- Diversity: Slightly more than a quarter (28%) of respondents say their firms are expanding recruiting efforts to include schools with a diverse student base, while only 9% say they offer diversity training and only 14% say they are reviewing job descriptions to remove any subconscious biases from the hiring process. In addition, only 2% of executives say their firms are measuring progress on diversity.
The poll was conducted live via mobile phones during the 2019 Elite Advisor Summit, which took place March 11-13 in Ft. Lauderdale, Florida among 86 executives from the nation’s largest RIA firms, representing an average AUM of $9 billion and a median AUM of $1.8 billion. An average of 42 executives responded to the talent-related questions.