Why Wealth Management Employees Are Moving Firms

The wealth management and financial planning industry has always been fiercely competitive, but recent trends have intensified the race to secure and retain top talent. The ongoing talent shortage across various positions in financial services has made it increasingly difficult for firms to fill vacant roles swiftly.

However, unlike other industries where professionals might leave the field entirely, wealth management sees a different pattern: employees usually stay within the industry but move to other firms. This introduces a unique challenge for wealth management companies, which must not only compete for new talent but also understand why their current employees are leaving - and how they can prevent it.

The Cost of Not Understanding the Competitive Hiring Market

For wealth management firms, recognising that the talent market is competitive is just the beginning.

It's crucial also to identify who the competition is and why employees are choosing to move elsewhere. The failure to do so could have long-term repercussions. As the industry grapples with an ageing workforce, senior positions are becoming vacant with alarming frequency, and there often isn't a clear successor ready to step in.

This not only interferes with the firm's efficiency but its overall performance.

Understanding the market dynamics is key to retention. Firms must develop strategies that address why employees might leave and how to keep them engaged and loyal. Otherwise, they risk being caught in a vicious cycle of recruitment and turnover, exacerbating the talent shortage and undermining their long-term success.

Here are the top reasons professionals are moving firms:

Better Positions and Responsibilities

One of the primary reasons wealth management professionals move to new firms is to secure more senior roles, take on broader responsibilities, or find a position that better aligns with their career aspirations such as progression into a Paraplanning or Financial Adviser role.

Many employees feel they have reached the ceiling in their current firm, and without clear pathways for progression, they are more likely to seek opportunities elsewhere.

To combat this, firms must implement strong career development plans that look beyond the immediate future. By investing in the long-term growth of their employees and offering them opportunities to advance, firms can keep their top talent engaged and reduce the desire to move on.

This might include mentoring programs, study support, leadership training, or simply more transparent communication about potential career paths within the organisation.

Company Culture and Values

Company culture is another critical factor driving employees to change firms.

According to a 2023 Chartered Management Institute (CMI) survey, nearly one-third of UK workers have quit their jobs due to a negative workplace culture (HR Magazine). Similarly, a 2023 FlexJobs survey found that 21% of workers are actively considering quitting because their company’s values don't align with their own (People Manager).

For wealth management firms, this is particularly concerning as younger generations, who place a high value on culture, will soon make up a significant portion of the workforce.

To retain employees, wealth management firms must prioritise creating a positive, inclusive culture that aligns with the values of their workplace. By doing so, firms can build loyalty and reduce turnover, particularly among younger employees who might be more inclined to leave if they feel the culture isn't right.

Access to Better Resources

In wealth management, the ability to serve clients effectively is critical, and having access to the best tools, research, technology, and support can make a significant difference.

Employees are often drawn to firms that offer better resources and systems such as Intelligent Office, FE Analytics, Voyant/Cash Calc. These are industry-leading systems in their own field and allow for more efficient and effective wealth planning advice.

To remain competitive, firms should not only look into improved resources and tools but also provide ongoing training and support to ensure their employees can use these tools effectively. By doing so, you not only enhance the service you offer to clients but also create a more attractive work environment for top talent.

Financial And Job Stability

Financial stability is a fundamental concern for wealth management professionals. Rumours of mergers, acquisitions, or financial difficulties can create uncertainty and drive employees to seek more secure employment. It's an industry where stability is key, so professionals are naturally drawn to firms that offer a secure and stable environment.

If you are in a good position, communicate clearly and transparently with your employees about the company's financial health and future prospects. By cultivating an environment of trust and stability, firms can reduce the anxiety that often leads to turnover.

Increased Salaries and Packages

Salary is always a significant factor in employee retention, and wealth management professionals are acutely aware of the opportunities available to them in the market. Firms must stay informed about market rates for all positions and strive to offer competitive salaries.

However, it's not just about money.

While increased salaries are a common attraction, many professionals also move for better overall compensation packages, including benefits like health insurance, retirement plans, and bonuses. Additionally, a well-rounded compensation package that includes non-financial benefits can be a powerful retention tool.

Flexibility and Hybrid Working

Flexibility has become a norm in many industries, but wealth management firms have been slower to adopt flexible working arrangements. This has led to significant turnover, as employees seek out firms that offer the work-life balance they desire.

We've found that the firms who offer remote or hybrid working options have found it easier to attract and retain top talent, despite the high competition. This is because it can be uncommon to find a firm that offers it.

For employees, it offers a better work-life balance, reduces stress, and can make it easier to manage responsibilities such as childcare. For employers, it can lead to increased productivity and higher employee retention rates. While some positions may require being in the office, firms can develop structures that allow for a balance, ensuring that employees are in the office when necessary but still have the flexibility they need.

By understanding why employees are moving to other firms and addressing those issues head-on, wealth management companies can not only retain their top talent but also ensure long-term stability and success. The key is to stay informed, be proactive, and invest in the factors that truly matter to your employees.

- Written by Dan Butler & Eloise Adams

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