This article first appeared in Professional Adviser.

‘A buyer’s market’

Looking at the ‘buyer’s market’ of adviser recruitment, while salary is important, making sure people enjoy coming to work is vital…

In spite of weakening economic growth, the job market is busy. The latest labour market statistics show the number of vacancies across the UK to be at just under 1.27m, according to the Office for National Statistics, with full-time employment hitting repeated highs throughout 2022.

The financial advice industry is no exception, and it’s giving advice firms a real headache when it comes to recruiting new advisers.

The Retail Distribution Review saw many IFAs leave the industry, and this raised the bar for those looking to enter into the profession. This has been a welcome change to the industry but has also limited the number of new recruits.

More recently, adviser businesses have started to digitise and automate administrative and back office processes. Not everyone can adapt to this new environment and advisers can be stubbornly wedded to old working practices.

The pandemic and its aftermath have also created difficulties for advisers who need to recruit, particularly those looking for more senior people. Advisers report problems at every stage of the process – fewer people applying for the job in the first place, the quality of candidates is weaker, demands for salary and working conditions are higher. When firms finally think they’ve got a winner, candidates often pull out at the last minute because they get a better offer elsewhere.

Certainly, it is a buyer’s market. Salary demands are up significantly in many cases, while potential recruits often want several days a week working from home now that the geographical boundaries have largely disappeared, so advice firms can be competing across the country for talent.

So, what’s the solution?

Holding on to the staff you’ve got now should be the first priority. Aside from anything else, this can save business owners a lot of money with the average recruitment firm charging 20-30% of a candidate’s annual salary for a placement.

While most IFAs will check the market rate to ensure salaries are competitive when recruiting advisers, this isn’t always the case when it comes to annual reviews for existing staff. How regularly – and at what level – employers adjust pay can have a significant impact on someone deciding whether they want to stay and support a company long-term. This has become even more prevalent in the current high inflation environment.

And while salaries are important, making sure people enjoy coming to work is also vital. Enlightened advice firms have found ways to build in flexibility for their advisers without compromising their service to clients – reducing working hours, for example, working from home where possible, or even moving to a four-day working week.

This can also be a tool for recruitment, which helps to build a firm’s reputation in the marketplace. Being known as a company that takes care of its staff and having existing employees happy to act as advocates for the business, can only make attracting talent easier.

In addition, the government’s apprentice scheme can allow firms to forge links with training groups in their area and find new recruits. Building links with local universities and schools can encourage people at the start of their career to consider financial advice. These are slow-burn options, but training from scratch may prove less labour-intensive than trying to recruit experienced hires in today’s febrile environment.

Accepting that there’s no magic bullet

We believe it’s also important to accept the environment in which we are operating. Good candidates will have a range of options, so it’s important that business owners are clear about what makes their business unique.

Is it the warmth of their culture? The breadth of the client base? The work on offer? Scrimping on salaries and benefits will almost certainly get you off on the wrong foot too.

It is worth asking whether any of the same results could be achieved through technology.

Financial advice businesses that are heavily reliant on paper-based systems, will look clunky and inefficient to anyone under 40, so investing in technology can be both an alternative to recruiting new staff and a means to attract new people to your business.

There is no magic bullet. Everyone is finding it tough going. Recruitment takes real commitment in today’s market – starting early and exploring a range of options is a necessity. Advice firms need to get creative.