Even as advisors jump ship, top execs are staying put
Top industry talent is staying put — for now.
Only 10% of high-ranking executives from wealth management, asset management and fintech companies reported moving to a new firm last year, according to an annual survey of talent trends by Kathy Freeman Company, a California-based executive search firm.
That's the lowest number reported in the past seven years, when the percentage of executives surveyed switching jobs ranged from 22% in 2010 to 15% in 2015.
Professional satisfaction appears to be greater at the top. While executives are mostly staying put, more than half of lower-ranked financial advisors have either switched firms in the last five years or are seriously considering a move, according to a recent Fidelity study.
"Life is good for top executives," said Kathy Freeman, principal of the eponymous firm. "People are getting paid well and if there's no pain point, why move? Why blow a good thing?"
Indeed, 49% of respondents said their total pay increased last year, and an equal number expect their compensation to rise again in 2018.
But that could change quickly if there's a bear market. "Compensation will inevitably come down and people will start looking around," Freeman says.
In the current environment, however, firms looking to attract top talent will have to go the extra mile.
"When considering a change, a candidate's key concern is always the sustainability of the firm," according to the report, titled "Late Adopters Finish Last: Why Change is Critical in Today's Talent Market." "Potential candidates will be looking for reassurance that they won't get caught in a last-hired, first-hired scenario if the market has a sizable correction."
Assuming compensation meets competitive standards, nearly half of the executives surveyed said a continuous challenge in their current role was the main reason they haven't moved. "It's not just about money," says Freeman. "In a market where pay is trending up, competitive compensation is a given rather than a meaningful motivator for a transition."
"Ask candidates to help frame out what the job can be," says recruiter Kathy Freeman.
Firms seeking to lure department heads and corporate leaders should consider having a broader framework for responsibilities when recruiting established executives, Freeman says.
"That level of talent is interested in opportunities where they can be creative," she explains. "Let them help fill in the blanks when discussing the parameters of a new position. Ask candidates to help frame out what the job can be. They want to see examples of fresh thinking."
All firms, including those who want to retain top talent, should review existing compensation models, the report recommends.
The industry is beginning to see structural changes in compensation, Freeman says, with more to come. Indeed, over one-third of executives surveyed anticipated a change in compensation structure this year. Legacy compensation packages may no longer be sustainable, the report warns.
Some firms are beginning to pay a higher base salary because variable compensation can be so unpredictable, Freeman says. "We're seeing more specificity around what firms pay so there are no surprises at the end of the year," she notes.