2 Big Challenges and 4 Common Recruiting Mistakes
2 Big Challenges and 4 Common Recruiting Mistakes
Firms looking to recruit advisors are currently facing two major hurdles: the ultra-competitive recruiting landscape and a prevailing sense of advisor complacency. These core issues lead to a shortage of quality recruiting opportunities needed for successful hires.
The 2 Biggest Advisor Recruiting Challenges
Ultra-Competitive Recruiting Landscape: In every city and most towns, the competition for quality advisors is fierce. If you're aiming to hire an advisor earning between $250K to $1M, who has a solid base of recurring revenue, a clean compliance history, and a commitment to doing what's best for clients, know that others are after the same talent. You're up against firms of all shapes and sizes, each with unique cultures and platforms. Advisors today enjoy unprecedented choice and flexibility in their careers. If you're not fully committed to the recruiting process and ready to tackle the entire recruiting lifecycle, you may fall short compared to your competition that is all-in on recruitment.
Advisor Complacency: Many advisors are satisfied with their current situation. With recent record-high revenue and asset growth due to strong market performance, there's little incentive for them to make a change. The mindset of "if it’s not broken, don't fix it" is prevalent. This means you need to strategize for a passive advisor market. The trend of advisor entrenchment is on the rise; a Fidelity study revealed that the percentage of entrenched advisors increased from 44% in 2017 to 55% in 2023. Preparing for these challenges is essential for overcoming them.
4 Common Mistakes Small Firms Make When Recruiting Advisors
1. Underestimating the Competitive Landscape: Small firms often underestimate the fierce competition in advisor recruitment. Every day, hundreds of corporate and third-party recruiters are reaching out to advisors. Unlike typical firms that may casually seek to add a few advisors, these professionals are dedicated to recruitment full-time. They come equipped with training, extensive recruiting lists, CRMs, and marketing budgets to entertain potential hires. This competitive environment mirrors the challenges faced by firms competing with aggregators for acquisitions. If an advisor is exploring new opportunities, there’s a 99% chance they’re considering multiple firms before making a decision. Even if you feel a strong connection with an advisor, they’ll still engage with others, browse different websites, and evaluate various offers. The most disheartening scenario is when you inspire an advisor to switch firms, only to have them choose a competitor instead.
2. Overestimating Initial Success: We often hear from eager advisors excited to share their innovative recruitment strategies. Filled with pride and confidence, they believe their unique approach sets them apart. While we appreciate their enthusiasm for pursuing growth, the effectiveness of these strategies can vary. Despite the many nuances and enhancements available, there are only a handful of core recruiting strategies. Even if you believe your firm is perfectly positioned for recruitment, that alone may not be enough. Having an ideal recruiting proposition and thorough preparation doesn’t guarantee that advisors will line up to join your firm.
3. Adopting Unrealistic Recruiting Strategies: Best practices can be informative, but what works for one firm may not yield the same results for another. This may sound bold, but many coaches offering recruiting advice have limited successful experience, often having never personally recruited advisors themselves. Most have never made a single cold call in their professional lives. Why does practical experience matter when selecting a recruiting coach? Because those with successful backgrounds can differentiate between strategies that sound good but don’t deliver, and those that really work. Recently, a $1M+ revenue advisor approached us to finance a new recruiting plan aimed at building a billion-dollar RIA. His coach's strategy? Recruit ten advisors each producing $1M with $100M in assets. While this may sound logical, if you think this approach is feasible, it’s not.
4. Failing to Prepare for Success: If you have or are considering an inorganic growth strategy centered around recruiting advisors to your practice, you’re not alone. There are many challenges in recruiting advisors. If you’re going to have recruiting success you’ll need to prepare for success. To many just try to wing it and start the recruiting process half cocked and ill prepared. Recruiting advisors is part science and part art form. Many practice principals rely too much on their art form, (their personality, negotiating skills and ability to read people) but don’t have the science of recruiting down. It takes both to have success in today’s ultra-competitive market. Recruiting success doesn’t just happen for most firms. Most firms who have sustained recruiting success have planned and prepared to position their firm for success. Here are 7 ways to prepare for recruiting advisors: Determine advisor hiring goals; Prepare for current recruiting challenges; Maximize the free support provided by your clearing firm and/or broker dealer; Prepare your brand; Prepare your value prop; Recruiting resources in place; Recruiting activity; and Prepare your team to be part of the recruiting plan.
To read more details about recruiting advisors or preparing your value proposition visit AdvisorBox.
This article is authored by Darin Manis, founder of AdvisorBox, LoanBox, & AdvisorLoans.