Nine out of 10 independent registered investment advisors say their roster of clients has increased or remained steady in the past 12 months and that has them looking to add staff in the year ahead to sustain that growth.
According to TD Ameritrade Institutional’s Advisor Index Survey, 57% of new client assets continue to come from full-commission firms, up from 55% last year.
According to the quarterly survey of 502 RIAs, nearly 40% of advisors are considering adding staff in the next six months. Of those advisors looking to hire, a quarter will look to hire a female advisor to help attract and retain female investors. Nearly 80% of advisors have experienced no turnover in their offices in the past year.
“Adding staff is a very important process for each advisor,” said George Tamer, the director of strategies relationships for TD Ameritrade Institutional. “As business owners, RIAs share a common goal of finding a balance of talent, skill and personality to fit within their current culture and values. The survey mirrors what we’ve been hearing from advisors, who say successfully cultivating new staff in an advisor’s business can be a difficult task, but in the end, it is essential for growth.”
Hiring (22%) and firing (18%) topped the list of the top human resources’ challenges advisors are facing. Developing (12%) and training staff (12%) were also top concern. Compared to a year earlier, advisors are increasing their spend on human capital, including professional development (43%), staffing (40%), and salaries and bonuses (50%).
According to the survey, 87% of RIAs say that they are good people managers and 90% believe their employees would rate them as a good manager. However, 82% of advisors spend less than five hours managing staff and human resources-related tasks.
Advisors recognize that there is room for improvement and cite the need to improve organization (30%), empower employees (25%), and work on communication skills (16%) to be a better manager.
“Advisors can be pulled in a thousand different directions daily,” Tamer said. “Taking the time to cultivate staff and provide them with the opportunity to succeed is beneficial to an advisor’s business and gives the advisors more time on what they do best, helping their clients meet their financial needs. Advisors need a disciplined approach to hire, train and retain the best people.”
Advisors are mixed on their use of human resources tools. Sixty-nine percent of advisors report they have a current employee manual and 56% have formal, written job descriptions for each role in their office. However, only one-third of RIAs outline a career path for new employees.
To improve their human resources tools and management skills, RIAs rely on their peers (52%), benchmarking studies (32%) and industry whitepapers (32%) for guidance.
“Properly managing the human capital in your business is just as important as managing the bottom line numbers,” Tamer said. “It’s in the best interest of your clients and the success of your business to provide meaningful training and opportunities for growth to attract and retain the best talent in the industry.”