The wealth management industry is transforming and disruption has become the new norm.
Established financial advisors and relationship managers are squeezed by burgeoning regulations, and forced by new entrants to reduce costs, set out as independents – or altogether pack up.
Surviving and thriving in this new environment therefore means firms need to reassess their approach to managing top talent; and this includes a refresh to the way they engage, motivate, and retain their employees.
Our extensive employee research shows that:
Highly engaged sales forces exceed sales goals by 4% on average
Highly engaged employees are 36% more likely to stay at an organization
Intrigued by these findings, we used our proprietary global databases to identify five key ways firms can improve their employee engagement:
Although top tier wealth management firms still have strong recruiting caches, the industry’s ranking as a whole is slipping on graduate wish lists.
When it comes to persuasive value propositions and engaging work environments – technology firms have the competitive edge, connecting talent across geographies and opening up more opportunities than ever before.
To attract and retain the very best talent, wealth management firms must boost and reframe efforts around their branding, articulating clearly a value proposition that combines latest tech enhancements with traditional personal relationships.
While historically not a strong driver of engagement, a firm’s ability to enable and empower their advisors – especially the younger managers – is growing in importance.
Today’s rising talent is already very much accustomed to having the latest resources and technologies at their fingertips. Financial services firms are notoriously outdated and underinvested in many of these areas – although this is starting to change. Firms must therefore ensure they keep up with the infrastructure needed to allow advisors to do their best work. After all, digital tools are no longer a nice to have, but an expectation.
Rewards and Recognition
Competitive pay is a basic expectation for advisors. However, direct compensation is only one of many rewards and recognition levers firms can pull – especially in this age of cost control.
Firms are now looking at both short- and long-term incentive options to reward their talent. Considerations include creative recognition programs, mass customisation of benefits offerings, and more subtle lifestyle or workplace enhancements.
Brokerage firms are masters at this with recognition clubs, events that include spouses, and visible trophies and awards. So while competitive pay remains a strong foundation, private banks also need to actively think about providing more creative options in rewarding and recognising talent – and, where appropriate, build on the successes of other industries.
Millennials – the largest generation in the modern workplace – feel stymied when they don’t see opportunity. Given recent disruptions across our industry, it’s now more critical than ever that leaders provide a clear vision for how they expect their key client facing roles to evolve and how rising talent fit into this.
Young talent need to know they not only have a place at the table but also a strong future in this industry. Indeed, for many of them ‘opportunity’ goes beyond job levels and promotions. Instead, diverse work experience and internal mobility are increasingly top of mind.
As such, thoughtful career paving, intentional development activities, special projects, and access to senior leaders are all avenues that firms should explore to enhance their employee experience and range of career opportunities.
Differentiating ‘the best’ from ‘the rest’ is critical to engaging top talent. Nothing is more disengaging for the highest performers than seeing their lower performing peers skate by under the radar.
In fact, we find that 80% of new business is generated by the top 15% of performers. This is an area that some brokerage firms have excelled in leveraging e.g. by creating leader boards to bring a competitive edge and clarity to how talent stacks up. Private banks are more discretionary, making differentiation a real challenge.
Brokerage firms often use commission plans to manage performance, but this can all too often create line managers who shy away from being strong goal-setters and coaches.
It is therefore critical that firms learn from their peers’ successes and proactively manage performance differentiation based on each employee’s achievement against goals and their potential to take on higher levels of leadership. Spreading the peanut butter was never a winning strategy – all the more so when pay is limited.
The most successful firms know that talent is their most powerful lever to grabbing that competitive edge.
By connecting employee engagement data with competitive performance data, firms are able to strengthen their knowledge and business case of which engagement areas are most worthy of investment.
Firms that successfully harness a combination of these key drivers will find themselves edging ahead of competition.
* This article has been adapted from an earlier piece written by Peter.
To learn more about engagement opportunities for wealth management firms, please click here.
News from the world of wealth:
- How outsourcing stacks up for advisors – FT Adviser
- What is the long-term plan for robo wealth firms – CityWire
- JP Morgan Chase pumped $600m into FinTech in 2016 – FinExtra
- Fidelity launches first smart beta ETF – Investment Europe
- Moneyfarm partners with Allianz Global Investors – WealthAdviser
Thought of the week:
“When people are financially invested, they want a return. When people are emotionally invested, they want to contribute.” – Simon Sinek
Author: Peter Keuls, Partner, Global Head of Wealth Management at McLagan and Scorpio Partnership.
Expertise: Peter advises leading wealth management firms on performance and pay optimisation through client experience improvements that enhance sales effectiveness and productivity improvement. He also consults on firm economics, cost reduction, branch distribution effectiveness and incentive plan design.
Background: Prior to joining McLagan, Peter was at Merrill Lynch where he was the Director of Marketing Strategy and Planning in the International Private Client group. Peter has a MBA from INSEAD in France and a Bachelor of Commerce from Queen’s University in Canada. And at the weekends: Peter enjoys hitting the ski slopes as often as possible. He is also an avid collector of modern art.