McKinsey & Company's most recent study concerning the state of retail wealth management found that the acquisition of new clients by a firm’s existing financial advisors (FAs) has not been a substantial driver for growing firms’ total assets under management. Advisors’ ability to close new business varies widely, and the study concludes that average net new asset growth has been flat. These findings suggest that when managers face the imperative to increase their firm’s AUM, growing existing FA business is advisable, but not enough.
To grow at scale, firm managers must also invest in the continuous recruitment of new, top-tier advisors with strong books of business. The recruitment approach, which is quite often a mandate, is not new; but it remains a challenge for many managers and warrants a strategic approach.
So, what does a Recruitment Strategy comprise? Placing calls to prospective recruits is the fundamental front-line tactic; but it’s as nuanced as it is singular, and it should be supported by well thought-out messaging and a larger recruitment ecosystem that considers the objective itself, the prospect, the message, the brand, and long-term retention.
The Objective:
Is your strategy informed by a short-term or long-term view? For example, are you considering AUM alone, or the generational spread those assets come from? When vetting a team candidate, are you focusing on teams with a built-in succession framework? And does your strategy deliberately seek out advisors who are cultivating the younger demographic that's set to receive substantial transfers of wealth?
The Prospect:
Who is your ideal FA and what’s the existing or generational longevity of their current book? What conditions or traits make their recruitment most viable?
The Message: What is your firm’s value proposition? Is it cultural or material? What are the talking points derived from these propositions, and how are you expressing them to ensure both relevance and authenticity?
The Brand: How are the firm’s brand touchpoints, communications efforts, and community platforms being leveraged to support recruitment efforts? Do these need to be re-worked, promoted, or distributed through new channels?
Retention: The Financial Services industry, like many other advisory and bespoke service categories, serves a small and rarefied clientele, but it is not without unrelenting competition. Recruitment is sometimes only half the battle. The other side of the value-based recruitment coin that should not be over looked is retention. FAs are competitive so loyalty is not so much about peer-to-peer camaraderie as it is about peer-to-firm identity, shared values, and the firm's efforts to build and steward its reputation.
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