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Succeeding in the War for Talent

Managers are more concerned about attracting and retaining talent than anything else, according to an October 2007 Ernst & Young report called Managing New Complexities that surveyed over 100 managers.

It seems like their concern is well founded.

In the last month alone, the WealthNet has reported that twenty-one wealth management executives or top advisors have been recruited by competitors. For example, First Republic recruited a top managing director from US Trust and Goldman Sachs recruited a Citigroup wealth management chief.

As far as we can see, there is no end in sight for this “war for talent”.

“We will hire people from competitors and we will hire from other parts of the company, we do it every day and we know how to get it done," Brian Moynihan, president of Bank of America's Global Wealth and Investment Management unit, said at the Reuters Wealth Management Summit in Boston where he also announced that Bank of America plans to hire approximately 1,000 bankers, brokers, and client managers by the end of 2008.

In light of the fact that this war for talent has recently escalated to new heights, it is increasingly critical to understand the key drivers behind Regional Managers' decisions to stay with their current employer or move to a new organization, according to a recent SEI Executive Quick Poll that sought to understand the drivers for attracting and retaining RMs in private banking and wealth management organizations. In addition the poll sought answers to questions about the levels of turnover that these institutions have experienced and what impact that has had on their business.

KEY SURVEY FINDINGS: Technology Plays Key Role in Turnover

To attract and retain Regional Manager (RM) talent, more than 80% of the 70 respondents surveyed believe that a strong wealth management platform solution is critical. This indicates that firms who want to proactively attract and retain top RM talent need to provide best-in-class tools so RMs can effectively grow their book of business.

In addition, brand and reputation (seen as the most important differentiators by almost three quarters of the respondents), culture and workplace environment (69%) and the institution's strategic business direction (51%), were the most important differentiators that competing firms would use when recruiting relationship managers. Interestingly these factors came out on top of compensation, judged to be an important differentiator by only a fifth of respondents, going against commonly held perceptions.

The survey also cautioned firms about the negative impact of RM turnover. Due to the escalating war for talent, firms are three times more likely to require a recruiter to fill vacant positions this year. Plus, vacant positions are more likely to be open longer. Finally, when firms do find a replacement, they will most likely need to pay 10-30% more in the U.S. and Europe.

“Salary packages are moving up “quite dynamically” in Europe”, says Mark Somers, principal of Somers Partnership, a London-based recruitment firm. “Bankers freely talk about the equivalent of £125,000 to £150,000, excluding bonuses, becoming the base pay for middle-of-the-road advisors in the next year or so, a rise of as much as 50 percent on prevailing levels.”

HOT PROPERTIES: Who is Most in Demand?
The broad-based investment professional who can seamlessly straddle traditional and alternative investments is now the hottest property around in wealth management, according to the 10th annual survey of global asset and wealth management recruiting trends by Russell Reynolds Associates, the executive search firm, and reported by The Wealth Net.

The intensity of the competition for investment professionals, due to both organic market demand and the lure of hedge funds, has forced wealth management firms to look beyond traditional talent pools, toward law and accountancy for candidates, the survey reported.

"The resulting demand for broad-based professionals who can straddle differing investment strategies has never been greater, and the war for talent has never been more contentious," said Jeff Garrity, managing director and head of Russell Reynolds' Americas Asset and Wealth Management Practice.

"This past year has been marked by an industry-wide, global focus on convergence. Traditional and alternative investment houses are evolving and adopting each other's product and investment strategies, blurring the once clear lines that separated the two. As a result, many asset and wealth managers have begun to widen their scope, seeking more available, affordable talent from outside traditional talent pools in analogous industries."

A new generation of sophisticated high-net worth clients from U.S., European and emerging markets are demanding trusted advisors fluent in all aspects of stocks, bonds and alternative markets, who can also handle tax issues, estate planning and liquidity needs. Finding this type of professional, who also has an understanding of the local culture and network, has been extremely difficult, as professionals who can move seamlessly between traditional and alternative strategies are in short supply. As a result, many wealth managers are seeking more affordable candidates in like industries (insurance, banking law, accounting, etc.).

Those findings were confirmed in a WealthTrends survey - The 2012 Wealth Management Landscape - from the Dow Jones Wealth Management Advisory Council. The survey focused on five key trends that will shape wealth management over the next five years.

"Wealth managers are becoming more reflective of their clientele," said Michael Sawyer, Managing Director - Wealth Management, for Smith Barney. "The next five years will see an increase in women and minorities entering the wealth management field and reflect the make-up of the high-net-worth market. This will allow wealth managers to better understand and handle the needs and concerns of their clients."

The council members agreed that the next five years will see a shift in the wealth management industry requiring professionals to be more responsive and knowledgeable. Clients' need for advice will continue to grow due to an increasingly complicated financial landscape.

Tomorrow's successful wealth managers will have the support of an expert team to provide both the information and attention to detail that clients require.

"We believe that the wealth management industry is moving away from a product to a service-based business, and obviously the relationship manager is key player in this," says Brandon Sharrett, Managing Director of SEI's Global Private Banking business in the EMEA.

"From an organization's point of view, it is therefore critical that they fully equip their existing RMs with a range of tools that will enable them to service clients to the highest possible standards, thereby increasing job satisfaction and retention of not only the RMs, but also their clients."

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