Pandemic accelerates wealth management industry’s “war for talent”

This article appears in the February 2022 issue of Advisor’s Edge magazine. Subscribe to the print edition, read the digital edition or read the articles online.

In a typical year, Brett Evans spends his early winter gearing up for the recruitment industry’s busy season, the holiday period of late December stretching into the new year.

“It’s traditionally one of the only times when people get an opportunity to reflect on their work lives. Frequently, the result is that they want a new job,” said Evans, the director of trading, capital markets and wealth management at recruitment agency Bay Street Staffing in Toronto.

But since the Covid-19 pandemic struck almost two years ago, confining most of the country’s workforce to their homes, every day is like Christmas for recruiters.

“There’s lots of time to step back and to think about how you provide for your family. Lots of people are deciding they’re not putting up with any more crap, and looking for something better,” said Evans, who helps North American wealth management firms with all aspects of their operational and front-line staffing.

In the U.S., a recent wave of staff departures across industries has earned the labels “The Big Quit” or “The Great Resignation.” More than four million workers left their jobs voluntarily every month in the third quarter of 2021, for an overall resignation rate approaching 3% per month, according to the U.S. Bureau of Labor Statistics.

The trend is less conspicuous north of the border, where Statistics Canada’s similar “job-changing” rate over the same period was close to its pre-pandemic average of 0.7% per month. But the number of job vacancies in Canada reached an all-time high in the third quarter of 2021, up by more than 62% from a year earlier.

Kendra Thompson, the leader of Deloitte’s Canadian wealth and investment management practice, said there is evidence of a “war for talent” within the country’s wealth management space, particularly when it comes to filling more junior positions and certain specialist posts.

“It’s much more pronounced in areas like digital technology, or where you have what we call ‘hot skills,’” said Thompson, a consulting partner in the firm’s Toronto office. “It’s also obviously impacting any roles where there is a lot of fungibility or transience.”

Burlington, Ont.-based Aligned Capital Partners Inc. has avoided much direct impact from the Big Quit so far, according to managing director Michael Greer.

Still, the firm has taken no chances with its retention efforts, recently boosting its employee assistance plan to increase the range of benefits available and improve access to mental-health supports provided by third parties.

“We’re very aware of what I think is a rebalancing in how employees are looking at life today compared with pre-pandemic,” Greer said. “Since the day we started this firm, we recognized that the human component can be a big differentiator and competitive advantage for us, so we try to invest in our staff whenever we can.”

At Wellington-Altus Financial Inc., the widening of the talent pool it can draw from is one of the Covid-19 pandemic’s more welcome side effects, according to president Shaun Hauser. He credited the firm’s investment in its technological infrastructure for allowing advisors to work from wherever they want without needing to relocate for jobs.

“Our mantra is ‘find the right person.’ We’re indifferent to where they live,” said Hauser, noting that many of his most senior personnel are based in Calgary, Toronto and other locales far from the company’s Winnipeg headquarters.

Such an approach may not have been feasible as recently as a decade ago, around the time Hauser’s previous wealth management firm, Wellington West, was acquired by National Bank for $333 million. Back in the early 2010s, neither employers nor employees had the same ability or inclination to enable remote work, he explained.

“Right now, we’ve got around 500 employees for $20 billion of assets. At Wellington West, we had more than 600 employees for about half the assets, so technology has been a gamechanger in allowing us to move faster and farther with fewer resources,” Hauser said.

As far as advisors are concerned, Wellington-Altus’s focus is decidedly external: the firm is hoping to provoke a Big Quit by poaching talent from the bank-owned dealers dominating Canada’s industry.

Indeed, much of the firm’s explosive pandemic-era growth has been driven by hires from larger institutions, Hauser said.

“In many cases, the Covid-19 pandemic has been the straw that broke the camel’s back, pushing advisors to leave,” he said. Hauser said the firm has doubled its assets under administration to $20 billion since the pandemic’s onset in March 2020. The number of advisor teams has grown from 39 to 64 over the same period.

Thomas Raidl, the chief administrative officer for the private client group at Raymond James in Vancouver, said pre-pandemic work on the firm’s recruitment pipeline has paid off. Raymond James has 15 more advisors than it had in March 2020, and assets under administration have grown from $47 billion in March 2020 to $69 billion.

“We found that, with advisors working from home, they were able to fully understand the advantages of our independent platform and our firm’s culture while at the same time re-evaluating their need to stay within their current environment,” he said.

If anything, Evans said he would have expected a higher flow of advisors to innovative brokerages in recent years, considering the amount of discontent he hears from those in more traditional settings. Having spent 20 years in capital markets on both sides of the border before getting into recruitment, Evans put the lack of movement down to the introspective and conservative nature of Canada’s financial services industry.

“In the States, people will cross the country for the right opportunity at the drop of a hat,” he said.

Still, Evans predicted the pace of change will pick up in the coming years as an approaching wave of retiring baby-boomer advisors floods the Canadian market, looking to monetize practices built up over decades.

“It’s a good thing. The industry needs a shakeup,” he said. “On the independent side, people are getting very creative in terms of setting up financing for advisors to buy books and other out-of-the-box thinking that pushes business back and forth.”

As well as appealing to those in the twilight of their career, Investment Planning Counsel’s Pinnacle Advisor Program is designed to create much-needed opportunities for younger talent in a profession whose demographics have long skewed older than the general population’s, according to John Novachis, the firm’s executive vice-president of corporate growth and development.

The program’s two streams help advisors exit their practice on a short- or longer-term basis, transitioning clients to IPC over either a two- or five-year time frame. Those prepared to stick around longer share in the continued growth of their book and can play a bigger role in selecting a successor.

“For entrepreneurial advisors, they get flexibility in the way they want to transfer the legacy of their business,” Novachis said. “And for younger advisors, they get to service the business without having to secure financing to buy themselves in.”

Advisor succession is a big part of Hauser’s discussions with prospective recruits. The firm has developed a sponsorship program to help senior figures find promising successors.

“Our model is based on attracting seasoned, experienced advisors, but we also want to help them find and train the right people to go around them,” he said. “A succession done well is one that is curated over many years. If clients are integrated over long periods of time, then trust can be built in a really durable fashion.”

Playing the long game

Retention of talent is also a long game, according to Deloitte’s Thompson, who said firms that want to hold on to their best and brightest advisors must recognize the needs of their staff at different stages of their careers.

“When we work with the heads of sales or the executive team, what we’re really trying to help them understand is the advisor experience itself, and the advisor career path is something that needs to be nurtured all the way along,” she said.

Those in their peak years have likely been rattled by the scale of change ushered in by the pandemic and may need extra backing soon, Thompson added.

“Maybe they’re starting to realize they need to get into a place where the firm that is supporting them is focused on lowering the cost to serve or improving digital experiences — something that would never have been on their mind before,” she said. “Those folks are still meaningfully building and maintaining a big business, but they’re looking to make sure they’re on the right platform and that they have the right support.”

Meanwhile, all the recent disruption means those at the younger end of the advisor spectrum are in for an exciting time.

“There is just so much upside in advice, but the paradigms of the industry are shifting, and so if you’re in the business for the longer haul, you have to make sure you don’t overpay for something that’s going to become harder to make money off of in future,” Thompson said.

There are “some pretty stale books out there,” she warned, as well as “some amazing” ones. “We’re very bullish about the demand for advice and the role of advisors,” she added.