Many executives in the financial services industry, primarily in the wirehouse universe, are misguided when it comes to recruiting in that they view recruiting efforts as strictly an expense against income. This simply isn’t the case if done the right way. Recruiting is one of the most assured ways to positively impact the bottom line of a financial services company.
Over the years, there have been a few firms that thought the most successful strategy was to go after advisors with an open checkbook and essentially buy assets at any cost. That strategy usually doesn’t deliver the financial results which sustain a positive return on the investment. Interestingly enough, many of these firms are the same firms that have announced they are getting out of the recruiting game and broker-protocol. However, there are some firms that are managing these one by one “business acquisitions”, which is what recruiting truly is, correctly and not overpaying for advisors that may not deliver the returns they are hoping for.
Take the example of Ameriprise, which recently announced strong Q2 numbers that held the additional promise of future sustainable growth. Ameriprise attributed their success not to merger & acquisition strategy, as many of their peers did, but to strategic recruiting coupled with technology investment. Raymond James is also another example of a company confident in the financial returns which will be yielded by investing in recruiting. Raymond James has released its 2018 plans to spend $247 million on forgivable recruiting and retention loans with no qualms that the investment will be recouped. Understanding in what ways recruiting can have a positive impact on your company’s financials is key to applying the successful principles used at Ameriprise and Raymond James to reap those same benefits for yourself.
First and foremost, recruiting strategically can achieve revenue gains for a company by providing a targeted hiring effort, seeking out only highly skilled advisors with solid client lists and verifiable results. This is in lieu of the broad stroke ‘place an ad and see what comes of it’ approach which sadly many firms still utilize and which yield little talent while resulting in a significant waste of time and ultimately revenue. By seeking out the alternative and partnering with a recruiting firm or establishing an internal company recruiting protocol that brings in only the best of the best, you insure that your investment in hiring is returned multiple times once the talented advisors you have selected become part of your organization.
Additionally, recruiting can impact financial returns via the ancillary marketing achieved through such efforts. Actively recruiting creates a perception among advisors and customers alike of company growth, strength, and stability. These sentiments naturally lead to a more satisfied and secure client base and greater market recognition, which bring with it the prospect of new customers and thus additional financial growth.
Recruiting strategies also result in positive financial gains for a company in that, when appropriately executed, they prevent future attrition within a company’s ranks. Recruiting strategies are meant to not only find talented individuals, but to insure those individuals are aligned with a company’s culture, goals, and strategic vision. Hiring a financial advisor who is not only talented but optimally matched to your firm’s ideals sets the stage for a long-term relationship that thereby yields long-term profits.
Recruiting and hiring skilled advisors is not only beneficial in terms of the new hire themselves, there’s also the phycological impact of existing advisors seeing more and more quality advisors joining their firm. As the saying goes “financial advisors vote with their feet” and when advisors see a firm a like Ameriprise, Raymond James, Stifel, and others hiring one large team after another, advisors across the industry start to take those firms more seriously than those not growing through successful recruiting, or worse yet, losing advisors. The opposite is true as well with firms like Wells Fargo, Morgan Stanley, and LPL where we see advisors “voting” to leave for greener pastures. If the firm doesn’t have the culture that was promised, advisors will quickly turn on the firm that they were so happy to join based on false promises. They may not be able to leave immediately, but they will remain at the firm and spread an air of anger and contempt.
These few examples are merely the tip of the iceberg when it comes to how recruiting, when well-planned and thoughtfully executed, can result in a marked financial shift for your company. In the current financial services climate, it will be those firms – both large and small alike – that through putting this guidance into practice have the best opportunity to gather serious assets and generate the profits that assure their companies are built on solid financial ground now and well into the future.
For more information on Elite Consulting Partners, visit www.eliteconsultingpartners.com.
