Cheaper Ways to Lure Young Advisors
As demand for advisors continues to soar, advisory firms are grappling with how to attract - and compensate - the industry's next generation.
While the perceived talent shortage is causing rising levels of compensation across the board, we're seeing more emphasis on compensating young associate advisors and fostering career development, says Dan Inveen, principal and director of research for FAInsight, an industry consulting firm.
Median total compensation is now nearly $60,000 for support advisors and more than $80,000 for associate advisors, according to FA Insight's most recent salary study, People and Pay. A separate report, the Financial Planning Association's 2012-2013 compensation study, put median compensation for junior financial planners at $63,900 nationwide.
Firms had to pay nearly 10% more to hire new associates last year, according to Angie Herbers' Salary Advisor survey; she found total compensation rose to $71,250 for new junior-level hires.
But advisors grappling with hiring costs can take heart: Wooing and retaining young advisors goes beyond cash compensation, industry experts say. Younger workers are motivated by a variety of other factors, many of which require less upfront cash outlay. Consider including some of these benefits in your recruiting pitch. -- Charles Paikert
want to know what their career path will be, says Linda Leitz, chairwoman of NAPFA's national board and principal of Colorado Springs, Colo., RIA It's Not Just Money.
Young people out of college want a rewarding job, structured development and honest feedback, adds Craig Pfeiffer, founder and CEO of Advisors Ahead, a company that places college graduates with advisory firms.
Time balance is an important incentive for young people, Pfeiffer notes.
They're willing to work on Saturday night, but if something comes up on a Wednesday afternoon that's important to them, they want to be able to go.
Lifestyle benefits are key, says industry consultant and researcher Angie Herbers.
If you want to get good associates, give them contact with clients from the outset, Herbers recommends.
This is a generation that wants to be involved. Firms should also consider offering young associates paid time off to do volunteer or charity work, suggests George Tamer, head of strategic relationships for TD Ameritrade Institutional. This is a generation that wants to give back, and employers need to recognize that.
Across the board, Pfeiffer says, advisory firms should think beyond traditional incentives based on assets and revenue generation.
They need to change their lens and incent young people for all that they contribute, whether it's social media, client retention or bringing goodwill to the firm by community volunteer work.