Recruiting, retaining and compensating top financial advisor talent may revolve around ideas as basic as employee fitness benefits and help for their pets, according to an expert panel.
The challenges of succession and competing with other registered investment advisory firms for advisors is playing out differently than at
RIAs seeking to attract productive advisory teams and build succession bridges to the next generation of planners are using other perks, incentives and equity stakes to get an edge with advisors and plan for the future, according to three speakers at this week's
"What we found is that our team members wanted two very specific things: They wanted a quarterly wellness bonus — to be able to spend on a new treadmill, to be able to spend on new running shoes, a massage, whatever it might be — and pet insurance," said Shannon Spotswood, CEO of Birmingham, Alabama-based RIA firm
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"I share that because, at the surface level, that's so easy, it is so accessible," she continued. "And so if you take this top-down view that, as leaders, it is your responsibility to provide clarity around the mission and your purpose, and then you get really down into the guts of what is going to help your people feel very valued and feel very connected to that mission. And it can be as simple as pet insurance and wellness as a part of the overall equation."
In that regard, holding sessions that recognize teams for executing on their growth targets and explaining their methods can help encourage organic expansion among the other advisory practices across a given firm, said Alison Burkett, the head of enterprise solutions with New York-based independent wealth management firm
"We offer on our monthly partners' call for one of our top growers to share a story," Burkett said. "So bringing it down to a realistic story of how you're growing your book. From a compensation standpoint, there are incentives around payment structures for those new clients, for those net new assets. But I think, for our structure, one of the most important drivers is this alignment of incentives that I mentioned earlier: organizationally, our advisors, our partners and equity holders in the firm. And so for us to share stories of success is really important as a motivation factor."
The 19 RIA firms that investor Emigrant Partners holds minority, non-voting interests in recently carried out a change in their growth policies that encourages more generational collaboration among advisors, Emigrant
Since "not all growth is good growth," the companies have capped their lead advisors' number of client relationships at no more than 100, he said.
"That creates some sort of incentive for the advisor to start transitioning smaller accounts, to an assistant or to the level-two, level-three advisor," Bruno said. "The lead advisor goes upmarket, goes after the larger client relationships. The younger advisor or the service-support advisor is starting to build his or her own book, too. So when you think about alignment, you think about plans, it won't necessarily solve all of your problems. But it's the little things that you can do to create these right behaviors."
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Advisors may be thinking bigger than that, however, and Bruno noted that most commenters on his LinkedIn post ahead of the panel wanted to know about forms of equity compensation.
The ideas that "not everyone needs to be an equity holder in your firm" and a mix between tangible requirements around factors such as assets under management, relationships and charitable boards and less concrete requirements that "tie back to your values" can prove helpful to many firms, Spotswood said.
"That equity program doesn't need to be all or nothing out of the gate," she said. "I like it where there's a way that you can build into equity as you continue to grow as leaders and as partners, because then you ultimately have that longer term alignment, which is absolutely critical to not finding yourself in a boardroom with everybody with lawyers on either side of the table trying to unwind your partnership because you weren't really aligned on vision, you weren't aligned on the future and you weren't aligned on your values."
Equity incentives represent an "extremely important" way for firms to acknowledge and recognize the contributions of advisors and other valuable employees, Burkett agreed.
"There are very similar equity-like incentives," she said. "So you have profit-sharing, you have different types of contribution plans that align with an equity-like program. It's not giving away the equity, but it is insight in terms of how the company is operating, how the company is performing, and you're aligning the employee's interests with those of the firm. So I think profit-sharing is an incredible tool that's very equity-like and has long-term strategic growth for our employees."
