While much has changed in wealth management over the last decade one thing hasn’t; the pursuit of scale and to this end the CEOs managing financial services companies continue to factor into their planning healthy growth in financial planning practices recruited into their respective organizations.
If anything the mantra of scale has stepped up a gear with wealth management companies continuing to build on their recruitment resources while at the same time working on refining their value propositions to lure practice principals they’re trying to romance. They are also more aware than ever of the attempts to recruit their own advisers from the fold and considerable work has also been undertaken to ensure that their retention programs meet industry benchmarks.
Most medium to large sized advice groups are seeking to broaden their business bases actively recruiting financial planning practices and individual advisers and while we haven’t as yet returned to the activity experienced when the war for talent was at a peak through to end 2007, there is enough pent up demand to keep recruiters and business brokers fully occupied through 2011.
The large institutional advice businesses have been bolstering their own in house recruitment resources drawing in business development managers whose sole focus is to attract financial planning practices. There are a number of institutional wealth management businesses that now have dedicated recruitment managers working across their networks while other groups have practice managers who allocate time to practice recruitment.
The new breed of practice recruiter comes straight out of retail distribution having either worked as a BDM promoting investment, platform or risk insurance. The main prerequisite to stepping into one of these roles is the ability to create and close a sales pipeline and a strong understanding of the drivers of financial planning practices.
Adding to these resources are specialist recruitment firms whose businesses are geared to the financial planning market. The recruiters in these firms have developed large networks of advice practices and individual advisers and actively work with institutional advice groups to help deliver on their recruitment targets. Often these recruiters have in their previous lives been financial planners or practice development managers and have not only an intimate knowledge of the market but readily understand their client’s requirements.
A more recent trend has emerged in the consultant space with a number of former practice recruiters who worked for institutional advice groups going on to establish their own businesses. These independent consultants now work with a targeted group of institutional clients and independent practices. Most of these consultants are industry ‘old hands’ who have extensive networks that they have developed over the last two plus decades and have advisory relationships with a range of practice principals who view them as trustworthy colleagues and long term friends.
With such activity in the market you would think that principals of financial planning practices spend considerable time fending off the overtures of these recruiters however the main targets fall into a relatively slim band of practices that number in the hundreds. Those of greatest interest have not only have built sustainable and productive client bases but that have also developed business and client administration systems that will facilitate a smooth transition of these practices to their new homes.
One of the major challenges for recruiters has always been working with and for companies that have a realistic understanding of the palatability of their service offering and have worked hard to keep their business propositions appealing in terms of organizational and client fit, flexibility in terms of exit arrangements for the principals and the sale price. Where in the past most large institutional advice businesses held to the one size fits all in their approaches to practice recruitment there have been substantive changes to the way they approach practices including more flexible terms of sale that encompass staggered equity acquisition and matching payments over periods deemed suitable to the principals.
Principals however have also been romanced by emerging advice groups that are being run by former senior advice executives who have tailored offerings specifically aimed at addressing the issue of independence and collegiate licensee ownership. Many principals who have extricated themselves from institutional licenses and now have attained their own are looking at ways to work with like minded colleagues and share in the savings from lower licensee fees. The challenge for these groups is one of scale as they now attempt to recruit practices that have relatively high levels of funds under advice.
As we move through 2011 we will see more recruitment of financial planning recruiters by institutional advice groups while specialist recruitment firms and independent consultants and brokers continue to gear up to meet their wealth management client’s requirements. If you don’t receive a phone call from one of them you may want to ask yourself why you’re not on their target list.
