More investment advisory firms are understanding the need to recruit new talent, listing it as the top strategic priority for the first time in the latest research from Charles Schwab.
Instead of acquiring new clients—which has historically been the leading priority for firms in past Charles Schwab studies—recruiting staff reigned first as the top urgency in 2022. The recent annual compensation study comes as Charles Schwab finds advisory organizations will need to hire over 70,000 professionals in the next five years to account for attrition, retirement, and new firms.
“The past few years have underscored that people are truly a firm’s most important asset. In this year’s Benchmarking Study, recruiting new staff ranked as the top strategic priority among independent advisors,” said Lisa Salvi, managing director, Business Consulting and Education for Charles Schwab Advisor Services, in a statement included in the study.
Leading firms prioritizing recruitment
The research surveyed over 1,000 registered investment advisors (RIA), including top performing firms—over half of which said recruitment and onboarding were in their talent strategy. Leading firms were listed as those who ranked in the top 20% of the Firm Performance Index, according to Charles Schwab.
As firms look for leading candidates, many are incorporating features that set them apart from competitors and organization. Forty percent of firms and 55% of top performing firms said they have a documented employee value proposition (EVP), a document that explains what a firm offers its employees in return for the skills, capabilities, and experiences they bring.
Talent and employees value compensation
In turn, employees listed compensation, employee benefits, and career path/progression opportunities as their key value propositions when exploring career opportunities. The Charles Schwab study reports that firms who motivate staff with incentive compensation can also impact the quality of talent while engaging employees. In fact, most firms surveyed (79%) compensated their staff with performance-based incentive pay in 2021.
“Compensation is one piece of the broader puzzle to attracting and retaining talent in today’s market. Compensation tied to a strategic plan is what can help set firms apart,” added Salvi in her statement.
Equity ownership was listed as an important factor of compensation, as it helps to retain talent and support firms’ succession strategies, according to Charles Schwab. At a median firm, one in three staff were reported as equity owners.
While traditional employee benefits like medical, dental and vision insurance were noted as top priorities among staff, firms were also surveyed on their ability to offer non-traditional benefits including hybrid or work-from-home policies. Seventy-four percent of top firms and 68% of all other firms said they offer remote work to their employees, and 73% of top firms and 64% of other advisors said they provide flexible work schedules.
Other benefits include paid time off (PTO), with 20% of firms offering unlimited PTO to employees, parental leave (two-thirds offer fully paid leave) and 401k (80% offer a 401k with the median firm matching or funding 4%).
Additional findings from the study can be found here.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
