The Talent Pipeline

PLANADVISER: How does your firm seek to bring in and cultivate new talent? What has worked well in this effort?

Julie Ragatz: I think we’ve all seen the statistics in the financial adviser space talking about the aging of the profession and about how many financial advisers are over the age of 80, and how many assets they control. More than one-third are set to retire within the next five to 10 years. Taken together, these advisers manage some 40% of total industry assets. Around 25% don’t have a set plan for transitioning their assets, according to the Financial Planner Board of Standards.

If the industry is going to live up to our commitment to offer financial advice for retirement and make that an accessible good for American families, we’re not yet set up for success. There is such a great opportunity to partner with like[-minded] folks, with organizations in financial services that are trying to move the needle because there’s so much work to be done.

Darrell Ellisor: I’d agree that the industry is not consistently attracting new advisers and not offering clearly articulated paths for them to be successful, or mentorship. At Peak Financial, we pair new advisers with a mentor early on to help their success rate. That’s one thing our industry has tried to do haphazardly, but it hasn’t been that successful.

We identify people who are passionate, hardworking and coachable. It doesn’t matter what industry they come from necessarily. But we also use centers of influence to start that initial screening process. If somebody comes to us and says, “Employee X is awesome—she’s just not happy where she is,” we’ll have a conversation with that employee.

I think sometimes our biggest issue and challenge is explaining to novices what we do on a day-in, day-out basis. We thought people understood what we did, but we realized that’s not true. We’re kind of famous for saying there’s no manual we’re aware of that articulates, line by line, what we need to do and need to know. There’s some training but there’s nothing like real-world experience.

Sara Matlock: At SWBC Retirement Plan Services we work hard to try to continuously build our adviser base. And Julie really framed it up well. We are solely focused on retirement plans, so we have a little different adviser market. It’s not quite so sales oriented as more of a typical RIA [registered investment adviser], but that makes us a very niche industry and harder to hire for. The lowest-hanging fruit for us when picking up new advisers is to pull from our research side, where we’ve had young talent come in and learn the reporting and get a really solid foundation of just how finance and retirement plans work. We look to see if they have motivation, and maybe the personality to build relationships as well.

Another thing we’ve done is look to our vendor partners, especially recordkeepers. There have been so many mergers, and there was so much discontent and fatigue with the pandemic, that we’ve seen many people who know our industry who want to transition to a new role. Or maybe they’re being forced [due to a takeover] to transition to the next step in their career. That’s where we’ve really found success—in pulling people into our firm who have a great knowledge base, want to connect with people and like the idea of focusing on retirement plans.

Our third area is in a beta testing phase. We’re looking at people [outside the industry] who again may have that pandemic fatigue but are highly motivated, great at relationship building, and are also somewhat detail oriented—such as people who’ve been in health care or been teachers. Those people have these great skills that advisers need for presenting to and working with committees. So we’ve started talking with a lot of them to pull them into this adviser space and then train them in the ways our firm works.

PLANADVISER: Financial services can get a bad reputation, particularly with younger generations who—at least via surveying—seem to value a work/life balance. What are some challenges you face in regard to this?

Matlock: It’s funny—the work/life balance is something you have to explain to them. I’ve had younger people ask, “Do you all have the market on all the time?” I do think there’s kind of a TV version of what an adviser does. And I tell them, “We’re not traders. You’ll be scheduling as much as you’ll be looking at the market from day to day.” So I think that’s helping them get a real understanding of what skill set they need and what work life really looks like.

But to show them that [retirement advisement] is a career where you can control much of your schedule is a benefit [is a great idea]. We all have meetings and presentations and things that come up and everything seems to fall on the same day sometimes. But [retirement advisement] can lend itself to be a very healthy environment. That’s something that definitely speaks to the generations coming up, and it’s good that we can do that.

Ragatz: One thing our industry does well is to be purposeful about flexibility for different segments of the workforce—I’ve done a lot of research on women in financial services, and I’d absolutely align with the fact that often that is absolutely true. There are also many cases where it’s not—for instance having a job without maternity leave if you’re in a more sales-facing role, or having a job where you have mandatory 7:30 a.m. check-ins.

We have a model of flexibility that’s worked really well for the financial advisers who have typically been in this industry. This upcoming generation will really challenge us to broaden that definition of flexibility to be less about personal autonomy over scheduling and more about accommodating the things I need to do in my life. I think the firms that get flexibility right, like figuring out the maternity-leave question, will be the ones that capture and retain new talent.

PA: The retirement plan industry, as well as the investment adviser space, faces continued consolidation, in part from aggregation. What does this mean for cultivating junior staff members? What are the advantages or disadvantages of having larger organizations vs. independent firms?

Ragatz: This question speaks to what Carson has done in a really unique way. I’m a recovering academic—I was a professor for 20 years, and I still teach. I have a Ph.D. in philosophy. Who would think I’d be good at this? And one thing I know the leadership team at Carson believes is that we have the resources to make what we’d call a 100-year investment in our firm. That means bringing in a development program that’s truly a development program for new advisers.

They come to Omaha for two years. They learn the business through rotating through our Advanced Solutions team, which includes our retirement plans division, our trust team, our tax team, our planning team. They work as a pair, with a senior adviser, for some of the tax and wealth advisers, both here and around the U.S., and they’re paid a salary.

They get their CFP [certified financial planner designation], they get their [Series] 65 license, and that attracts a certain sort of person too—somebody who says, “I’m ready for finishing school. I’m ready for two years of a fellowship to learn this business.” But it’s also a tribute to where we are as a firm in terms of our ability to make these kinds of investments and long-term plays. It’s the resources, the commitment and frankly a long-term point of view that can make a difference, [along with] maybe thinking outside the box in terms of training and development.

PA: SECURE [Setting Every Community Up for Retirement Enhancement] 2.0 and state mandates have the country poised to bring on new startup and small plans. Is there an opportunity there for cultivating a new generation of advisers?

Matlock: Anytime there’s something new or changed, that will be an opportunity, especially for somebody new coming into the industry. We have to balance that with making sure we’re not asking somebody new to do something that’s beyond their skill set and will set them up to fail.

But as to the implementation of the SECURE Act, we’re all starting this race together. It’s over 90 provisions, and it’s constantly being updated, whether you’re hearing new guidance, something about petitions or about groups of recordkeepers now attempting to delay things. So if you’re new and looking for something to be an expert in, this is where you could be a great resource, not only for the new prospective startups but for your more seasoned clients and more seasoned advisers at the firm. You can update the team as these things are coming out because maybe you have more time to be getting those updates, to be sitting on those calls to get that information.

The startup and small plans are the hardest plans to work with. They’re by far the most labor intensive because usually they have people working on them who don’t have much experience. Typically, you have somebody coming from a larger organization, but they now have more limited staff and potentially limited experience dealing with that. So you’re helping them through that, and it’s a great way for young advisers to learn. They’ll get very good at saying, “Let me look that up for you.”

Ellisor: I’d say advisory organizations [historically] ignored this market. Startup plans were mostly not something we wanted to do. But they do provide a learning ground for junior advisers.

What we’ve done as a firm, or a group of firms, is we’re saying, “Let’s not make you do this one-on-one. We’ll create a small-market solution where you can use that platform to run this business through our pooled employer plan.” Ten years ago, could we have done this? Probably not. So I think SECURE has helped us, from that perspective.

Now a junior adviser can say, “Here are some solutions that make sense in these instances. Let’s work through that and see where to go next from it.” I can see some of our younger advisers starting to build a decent block of business within a pooled employer plan environment, for example. So I think there is a ton of opportunity.

PA: What are the qualities you look for in junior staff for future leadership? And along with that, what advice would you give someone wanting to make a career in the space?

Ellisor: What we do is we basically look at a candidate and what they have done up to this point in their life. Have they taken a leadership role, maybe in sports or in other endeavors? How have they handled adversity? What happened when something bad happened—did they take personal responsibility [if that was warranted], or push the buck off on somebody else? We start looking at people that way, and we look holistically—not at one specific metric or one specific thing.

We’re trying to find people who have the criteria and the mental makeup to be successful, but not necessarily as a salesperson or as a plan adviser, but finding the right people to plug into the right roles within the organization.

All of us were affected by someone in our career who brought us in and helped us along the way. So if I were [recommending the industry,] I’d say, “If you have a choice of going to firm A or firm B, which has the best mentorship opportunity—someone who’ll take ownership of the relationship with you, show you all the tools and resources, be 100% committed to your success? When you find that person, you’ve found the right firm.” That’s what we’d probably say. We are very passionate about that piece. To improve the success rate for new advisers, we think mentorship and tying people together and not putting them out on an island makes all the sense in the world.

Ragatz: I used to say that I looked for three things in potential advisers. I looked for coachability, curiosity and work ethic. And you can find evidence of those in a number of things [people do].

I was talking to a student who ran the rush for her sorority over Zoom, and I asked her about that and the ability to manage volunteers through influence, which is a really valuable skill. I don’t think she realized how impressive she was. The ability to influence people when you don’t have reporting authority over them is something I’m always looking for.

But out of those three the important one for me is curiosity, because curious people ask questions. When you ask questions, you build empathy. And when you build empathy, you can help meet people’s needs; everything else besides that can be taught or there’s software.

But I’d add a fourth thing, and this is my favorite story about this. Last summer, we had about 10 interns, and we used to match them up to work on projects throughout the organization. In the last week, I said, ”You can all write in whom you’d like to work for, and all but one wrote in this one person’s name. This taught me something important, which is that what I’m really looking for is someone who’ll make everyone else better—because I don’t need one superstar. I need a group of people performing well, and there are those amazing people who elevate everyone else.

Do you have the curiosity, and the generosity of spirit, to encourage other people’s success and understand that we all rise together? I think, if you look for that, the rest of it becomes just technical knowledge. We have a very charismatic, caring leader who heads our retirement plan business. And a wonderful group of leaders in general. But I know people in my program who are more interested in working in retirement plans because they want to be around Matt, and that just goes to show, when kids graduate from college, they don’t know whether they want to go into retirement plans. They don’t even know what that is. But if they’ve got that leader, that mentor, this can direct them to a career they might have never thought of, solely on the basis of the personality and passion of the person they’re working for. So we can’t underestimate the importance of leaders really influencing people’s career paths, especially in those first, early stages.

Matlock: I think Julie really summed it up. We need people who will help each other, be open, collaborate. That’s really the important message when you’re looking for a firm. Look for one that will help you and structure your compensation to your daily activities in that manner, that will help you not only survive but thrive as you move through your career.