It is still very hard to recruit good financial planners.
That is the verdict of both the recruitment consultants and dealer groups.
“The market is very tight for financial planners,” Financial Recruitment Group managing director Judith Beck says.
“The same percentage of good candidates is always there on the shortlists.”
Ipac head of financial planning Sally Manion agrees.
“I don’t think for anybody finding good people is easy,” she says.
“We are finding it a real challenge in a competitive world.”
AXA national manager, dealer groups, Andrew Waddell says it is always hard to find good financial planners.
“The move to quality advice is also increasing the demand and everybody is after productive, compliant, quality advisers,” he says.
“The issue is what to offer them that will make the planner want to join you.”
Waddell says having different types of dealer groups is one solution.
At AXA, there is the branded model (AXA Financial Planning) and the perceived non-institutional brand Charter.
“To get someone for AXA Financial Planning is different to recruiting someone for Charter,” he says.
“If you have an adviser that has accountants referring lots of clients, they tend to avoid an institutional brand.
“Alternatively, some advisers want to work for an institutional brand.”
Retaining key staff
Waddell does admit that getting quality advisers from external sources is difficult for both models, and this means the focus shifts to convincing advisers to stay.
“Either way, it is about building a relationship with that adviser to encourage them to stay,” he says.
“A lot of adviser turnover is due to hiring and firing because of a wrong fit in the group, and some advisers are not always good at making the choice of where they go.”
Low salaries
Beck says one reason why companies fail to win the best client is they take too long to make a decision and the salaries are too low.
“Good candidates have two to three opportunities for every job, so they have more power of negotiation,” she says.
“Companies have not raised salaries to compensate for the demand, so if they offer the same low salaries, then they are in denial if they want the best candidate.”
Beck says the candidates also know they are in demand and will accept the next phone call if a company is stalling on recruiting them.
“Companies need to act decisively if they have identified a candidate they want and they need to get them to the second interview quickly.”
Ipac has taken a different approach to recruitment by retaining a recruitment consultant to work exclusively for the group.
The position was initially part-time, but Manion admits it has almost become full-time due to the success of the move.
“We see recruitment as a specialist area that we don’t have the skills or time to give to properly,” she says.
“The skills required for recruitment make it hard to align the running of the dealer group, and the principal is also finding it hard to dedicate the time.”
Manion says delegating the selection process up to the shortlist is sensible, although the principal and senior executive team need to be involved in final selection.
“We hired 16 advisers last year and the difference was having specialist resources to enable this to happen,” she says.
“Part of the success was finding people who will fit into the organisation and having our own recruiter helped that process.
“There is a need to educate the recruiters as to why Ipac should be an employer of choice.”
Culture fit
Waddell says finding people that fit into the organisation has resulted in a change of perception.
“A lot of the evolution of financial planning has turned from finding someone who was personable and smart, but with low technical knowledge, to now finding a person who is technically good and can be an adviser,” he says.
“Now, to recruit an adviser they must have at least four units of DFP, and we also want people who are dedicated and a generator of income and productivity.”
Another way of holding onto good people is to let them run their own practices, and Waddell says AXA has taken a lot of advisers working in practices and given them the opportunity to run their own business through its Discovery program.
Discovery is a succession planning program that puts AXA planners into practices where the principal is either retiring or wants to create a succession plan.
However, this means the recruitment of an adviser initially takes on a different slant, as the company is looking for potential future principals.
“It means we are looking for different skills and only one in 20 have those skills to run a practice,” Waddell says.
“The rest would like to be silent employees.”
He admits there are advisers who want to run a practice, but as they begin to realise the complexity of the role their aspirations begin to diminish over time.
“Many are good financial planners but they can’t run a practice,” he says.
“You must have a model that caters for both types of adviser.”
Lack of sales skills
Manion says there is a lack of people who can run practices, and one of the problems is the lack of sales-orientated advisers.
“There is a lack of people we term ‘rainmakers’,” she says.
“Twenty years ago it was the opposite, where everything was sales driven, but now it has gone the wrong way.
“Everybody has the technical skills, but no sales skills. The pendulum has swung too far.”
Manion says the industry is missing the people who can develop a business, as they have been structurally bred out.
Beck says graduates today start in the institutions, but the more entrepreneurial ones soon start looking outside this world for the opportunities to run their own practices.
She says graduates find it easy to go to a big institution because there are more opportunities.
“But many see setting up their own practice as a goal, but unfortunately they don’t always understand running a business.”
She says the ones that do understand the skills needed to run a business, and can take on the added pressures, such as finding new clients, will succeed, but the rest are happy to stay in the institutions.
But what happens to advisers who fail at running their own practices?
Beck says they rarely pass through the recruitment specialist, as the usual solution is they sell the practice to an institution and continue working for that group.
To ease the recruitment shortage, Ipac has recruited people from different areas.
“We have successfully recruited a couple of people who have people skills, but not the financial planning knowledge,” she says.
“We can teach them the financial planning knowledge, but it is very hard to teach people skills.”
So far the group has recruited two people, both lawyers, with people skills and they have quickly gained knowledge in financial planning.
But at the end of the day, the first subject on every candidate’s lips when looking for a new position is remuneration.
Beck says sign-on fees are becoming more common as people forgo their bonuses in the previous position, but still want the money at the end of the day.
“The industry is paying better bonuses, but if a candidate is waiting on the payment, they will need to be compensated if they are to move,” she says.
Manion says people move for a variety of reasons and remuneration is an important part of it.
“For many people, it is still about grading the bonus when looking at new positions,” she says.
“Getting the bonus right is important if you are trying to attract good people.”
This is also important when looking to retain staff.
Ipac allows some existing staff to draw down their bonuses early as a way of ensuring that good advisers stay.
“Keeping good people is necessary and ensuring the culture is empowering them,” Manion says.
“The key is striking a balance of conditions that is more than just remuneration.”
