Landing a new job in the advice industry has been arduous for financial advisor Paul Monax.
The certified financial planner, who worked with Transamerica for six years before launching his own practice four years ago, said his search for a new job has been fraught with challenges. The most worrisome are job requirements that demand applicants bring as much as $30 million in client assets with them. He said a third of the listings he’s seen require book minimums of at least $20 million or more just to get in the door.
The mandates have become commonplace in recent years and are quickly becoming a high hurdle for early-career advisors or for those who have primarily built themselves up in smaller markets. “Companies that are looking for transferable AUM are really looking to acquire someone else’s business without having to buy it,” Monax said.
Bookends
It could become a serious problem as the industry looks to bring in the next generation of financial advisors. An estimated 90% of firms have asset requirements for potential new hires, said Elite Consulting CEO Frank LaRosa.
“It’s going to be a real challenge if the only parameter to hiring sub-35 year olds is that they have $30 million in AUM,” he told The Daily Upside. The benefit for employers is that a built-in book of business can offset onboarding costs. It also allows firms to start generating revenue right away.
Making matters worse is that some RIA firms, with smaller budgets and overhead, are also forgoing training programs for new recruits altogether. Despite research that predicts the industry will need to add some 70,000 new employees over the next five years to keep up with demand, it seems some advisory practices won’t be interested in hiring them.
“The old joke about training is that the firm gives you a phone book and a landline and says ‘Go dial,’” said Jason Diamond, executive vice president of recruitment firm Diamond Consultants. “That’s sometimes the extent of some of the training programs we see today.”
Stop that Train. Smaller RIAs tend to have very disciplined bottom lines, and it can be challenging to budget for a substantial training program, Diamond added. Often they indirectly rely on bigger firms to make sure younger advisors gain experience. “The Morgan Stanleys and Merrill Lynches of the world can afford that,” he said. “The current model is you learn how to be an advisor on their dime and then move to the RIA space.”
The good news is that RIAs may be starting to take notice. David Demming Sr. of Demming Financial said his firm hires young planners with no expectation of assets or revenue generation in the near term. “We train and mentor them with our experienced planners to learn financial planning from the ground up,” he told The Daily Upside.
