The Markets December 12, 2022

Investment Advisers Seek Talent Amid Staff Shortage

Investment advisers are prioritizing talent acquisition and retention due to client growth and strong business performance, according to Charles Schwab.

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Registered investment advisers are prioritizing recruiting and retaining talent at rates not reached for more than 15 years, according to an annual compensation study released last week by Charles Schwab.

Advisers are seeking to expand their employee base’s skill set and meet capacity needs. Of nearly 1,000 respondents surveyed by Schwab in the third quarter, recruiting among RIAs rose to the No. 1 strategic priority for the first time since the study was started in 2006. The demand is being driven by strong growth for financial advice and wealth management, according to Lisa Salvi, managing director of adviser services at Charles Schwab.

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“The past few years have underscored that people are truly a firm’s most important asset,” Salvi wrote in the report summarizing the study. “Compensation is one piece of the broader puzzle to attracting and retaining talent in today’s market. Compensation tied to a strategic plan is what can help set firms apart.”

In general, firms added a new role for every $360,000 gained in revenue, Charles Schwab found. The hirings are most often to meet the needs of a dedicated client service team; specialized operational and investment roles; and executive management positions, the financial services firm said.

Wise Rhino, which specializes in retirement sector mergers and acquisitions, told PLANADVISER in a recent interview that the linking of retirement services and wealth management is driving the need for talent among advisory firms dealing in retirement savings. To engage the participants within retirement plans, it takes a skilled and robust adviser employee base, according to Peter Campagna, a partner in Wise Rhino.

“They’re looking for younger folks who can go in and engage on the 401(k) plans,” Campagna says. “The most valuable shops are able to raise a bit of an army and, alongside technology, keep growing the business.”

Help Wanted

Across all roles in RIA firms, total cash compensation increased 16% from 2017 to 2021 and 6% from 2020 to 2021, according to Charles Schwab’s most recent data. Based on current growth rates and the existing number of RIAs, the industry will need to hire more than 70,000 new staff over the next five years, even before accounting for attrition, retirements or new firms.

After recruiting needs, other top priorities among those surveyed were, in order: acquiring new clients through client referrals, acquiring new clients through business referrals and enhancing strategic planning and execution.

More than half of the best-performing firms included recruitment and onboarding in their talent strategy, Schwab found, noting that these strategies can help firms anticipate hiring needs, rather than simply react to capacity constraints.

About 40% of firms in the Charles Schwab study have a documented employee value proposition plan, as compared to 55% of top-performing firms.

Compensation, employee benefits and career path/progression opportunities are three key areas of an employee value proposition, with compensation the top value for candidates, according to the survey. Employee benefits, such as health care and dental care, came in second, and career path and progression ranked third in importance, according to advisers.

Creating an inclusive workplace that values different backgrounds, ideas and perspectives is also important in attracting talent, the study found. Half of all firms included a commitment to a diverse, equitable and inclusive workplace as part of their employee value proposition.

Schwab’s compensation report is an addendum to an RIA Benchmarking Study it put out in July. The compensation report surveyed 971 advisory firms, which employ more than 13,500 employees across 27 roles.

Deals & People December 12, 2022

SageView Acquisitions Add to Financial Wellness-Focused Wealth Manager Push

SageView CEO Randy Long discusses the firm's most recent acquisitions, and what types of advisers it will be focused on in 2023.

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SageView Advisory Group this week completed its ninth acquisition of retirement and wealth management advisers in the past 18 months with a deal for Colorado-based asset management firm Horsetooth Financial.

SageView also announced closing the acquisition of Lakeview Wealth Management, a six-woman team managing assets of $415 million, in Deer Park, Illinois.

Both acquisitions further SageView’s push to bring on wealth managers that lead their practices with “basic bootstrap financial planning” in regions of need, CEO Randy Long told PLANADVISER. But they also serve the individual client base that one of the country’s largest retirement plan advisories targets: those with savings in the $800,000 to $1 million range that many of the larger broker/dealers do not focus.

“We see this as an underserved marketplace,” Long said on a call with PLANADVISER. “A lot of the wirehouses, if a person doesn’t have $1 million, they don’t want to talk to them.”

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The acquisition push has come roughly two years after private equity firm Aquiline Capital Partners took a majority stake in SageView, noting in particular its continued push to expand its financial wellness offerings as “wealth management and retirement services converge.”

More Wealth to Come

Long says the push into managing the wealth of everyday retirement savers initially came from SageView’s plan sponsor client base.

“More and more of our plan sponsors were asking if they could get the same non-conflicted fiduciary advice to participants that we were giving to them,” Long says. “We had always done education from our retirement plan partners, and more and more of our clients were wanting that independent voice to help the participants.”

This business strategy has most recently led to an even split of acquisitions between retirement and wealth management in the past 18 months. In 2023 and beyond, however, the firm that came to wealth management by “accident” may be focused mainly on those types of add-ons.

SageView is by no means the only advisory shop that has been buying up smaller retirement advisers in a quickly aging, ripe-for-consolidation space. Rival CAPTRUST Financial Advisors, along with newer retirement, wealth management and benefit aggregators such as Hub International and OneDigital Investment Advisors have all been acquiring retirement firms, too.

“There are fewer of them left,” Long says of retirement advisories. That’s not the case, however, for registered investment advisers. “There are a tremendous amount of RIAs who are in their 60s with no succession plan.”

2023 Planning

In 2023, SageView will continue looking for firms who start with financial wellness and holistic retirement planning as a “blueprint,” Long says. The firm likes advisers with Certified Financial Planning certificates who can address the full picture of a person’s financial life, from their existing assets to social security distributions to potential future inheritance. When firms join SageView, the parent company works to integrate acquired advisers into the asset management fold within the first 12 months, the CEO says.

“We want them to take on our brand and have a consistent client experience and consistent client deliverable,” Long says. “We want them fully integrated, not just on an affiliation model.”

Diversity and inclusion will also continue to be a focus, both in acquiring companies like the woman-led Lakeview team or bringing on new employees.

“We’re looking to provide opportunities for people who have not had a chance in the industry yet, and we’re very intentional about that,” Long says.

The firm will also continue to champion developments in the retirement space, including proposed legislation in SECURE 2.0 for student loan debt payments to be matched by an employer as retirement plan contributions.

Higher interest rates, as well as market volatility, may push along advancements such as in-plan retirement income options and adviser managed accounts, Long says. Such advancements are important as more and more Americans move out of the defined contribution asset accumulation stage to figuring out how to live off their savings in retirement.

“So much of our time was focused on accumulation,” he says. “Now it’s all about the decumulation phase: how much to withdraw, where to withdraw from, tax considerations … it’s very vanilla, but people need basic financial planning.”

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