Current hiring trends and key takeaways on what it means for your firm
THE NUMBERS: We continue to see robust job growth in financial services, particularly for Financial Advisors. Job openings for the sector as a whole ended the year strong with 459,000 openings in December. While it dovetailed a bit in Q1 with 285,000 openings as of the end of February, hiring remains strong. While those numbers are great, one concern is only 57% of openings are being filled. Job outlook for Advisors remains rosy with the government estimating a 15% growth rate over the next decade (thank you retiring baby boomers), more than double the total national job growth rate of 7%.
According to the Bureau of Labor Statistics, as of March 2019 the unemployment rate in the broad Financial Services sector is 2.8%, a full percentage point lower than the national unemployment rate at 3.8%. What's more interesting is the unemployment rate for Financial Advisors is 1.8%......2 full percentage points lower than the national average!
With 10,000 baby boomers turning 65 every day, demand for advisors will only go up. Independent and hybrid firms have seen the biggest increases in sales force as demand for their services has skyrocketed. This is expected to continue over the next five years.
WAGE GROWTH: Wages continue to rise albeit minimally at 1.1%. However we do see higher gains regionally with Arizona, Oregon, and Mississippi posting double digit wage growth.
ASSET FIGHT: In the Broker-Dealer space, Stifel & Nicolaus Co. brings their 2018 their asset-gathering hot streak into 2019 followed by LPL and Rockefeller Capital Management. The biggest losers in the B/D space continue to be Wells Fargo, Merrill Lynch, and UBS. It seems to a certain degree these companies are cannibalizing themselves while independent and hybrid firms take a lion's share of their assets. Companies such as Fidelity, Schwab, and TD Ameritrade continue to expand their offerings and slash commissions and fees (Fidelity offers first no-fee index funds). However, even with the worst stock market in a decade in 2018 and continued fee compression, their asset base continues to grow and they are producing record profits.
ADVISOR DEMOGRAPHICS: According to the Census Bureau and Data USA, 67.2% of advisors are male, only 32.8% are female. The CFP Board released their advisor demographic information at the end of March, which shows nearly 50% of CFP-certified advisors are above 50 years old. While only 11% are below 35.
TAKEAWAYS
1. Numbers Don't Lie
Many industries are struggling to find skilled labor in the current job market, it's no different in Financial Services. With the bulk of the Advisor population on the other side of 50 and only 11% under 35......it's clear there will be some issues here replacing talent. Bottom line: We need to do a better job attracting millennials. It's been no secret the industry has struggled to retain and attract junior advisors. For these advisors, there has always been pressure to sell, often to their personal network. Millennials have shown little interest in the sales culture required in many large financial firms. However some firms have taken note and added things such as schedule flexibility, ability to work remotely, and student loan assistance. As the workplace continues to change it is important to continue adapting to subtle changes that will allow firms to retain their talent.
2. Competition Will Remain Fierce
Advisor positions are notoriously one of the most difficult positions to fill. Firms are competing for more passive candidates in a shrinking talent pool and must adjust their tactics to attract them. I've spoken to several firms where they've had to throw in everything but the kitchen sink just for a candidate to entertain an offer. It's a great problem to have if you're a candidate. In an industry with a shortage of qualified, engaged talent, firms will have to continue to adapt to new trends and adjust how they attract passive candidates without breaking the bank.
3. Boy's Club
We need more female advisors, bottom line. As women continue to increase their wealth and increasingly become financial advisor clients, we may see a shortage of women advisors to serve them. According to FA-IQ, the lack of attraction [to financial planning] for women is likely taking place in the early phases of career decision-making. And here's why: an industry-wide failure to properly educate women on what financial advisory careers actually involve, negative perceptions about advisor pay, and career progression.
To make the industry more attractive to women during the recruitment process, firms should diversify recruitment procedures and actively fight workplace inequalities. There are many different paths to enter the advisory profession and firms need to reach women through channels other than traditional recruiting. One way is to partner with universities and professional networks to market roles to prospective female candidates.
4. Independent and Hybrids are Crushing
According to TD Ameritrade Institutional, RIA's saw growth of 18% in assets and revenues in 2018. Over half of these assets were from clients that were previously 'self-directed' or came from a commission-based platform. Clients want a relationship with someone they trust without feeling like they are being sold a bill of goods or being charged an arm and a leg. Independent firms have experience significant growth as they continue to check those boxes. Firms such as Fidelity, TD Ameritrade, and Charles Schwab have all realized this and have relationship models that are geared toward financial planning and guidance. Objectivity and an unbiased approach is paramount and will continue to win the day and I'm betting the independent, hybrids, and retail firms will see continued growth because of it.
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