The financial services industry is well aware that there is an aging body of advisors in all four of its channels. What it can’t agree upon is how to attract new blood.

“[Recruiting] tends to happen in a very ad hoc way,” says David Chalmers, a financial advisor with Vancouver-based Rogers Group Financial Ltd.

Chalmers has trained, mentored and a sold part of his book of business to two protegés who are now full advisors at the firm. And he’s working with another two trainees.

He’s happy with this system in spite of the downside of training advisors — the cost, the time and the chance that the recruit will leave or not have the appropriate skills and attitude for the job. “There’s a whole skill set that goes way beyond [the technical one],” Chalmers says.

Chalmers is a member of RAMS, which stands for recruitment, apprenticeship, mentorship and succession. It is an eight-person Advocis committee created to address the problem of regeneration in the financial services industry. Conceived at Advocis’s annual general meeting in Halifax this past May, RAMS has three goals: to make young people aware of the industry, to help established advisors provide mentoring and succession advice, and to match mentors with protegés.

Advocis is already involved in attracting the next generation of advisors. Members regularly attend the Sheridan College career fair in Oakville, Ont., for example, and provide guest speakers for the school’s certified financial planning classes. Advocis also has a working relationship with the University of Calgary’s CFP program and other financial services courses.

These and other initiatives inform students about careers as financial advisors. But a problem remains: how does a job candidate, let alone the company hiring that person, know if the profession is the right fit?

Only time and experience will answer that question.
“Even if they don’t join us right out of university, perhaps they’ll pursue other interests and join us later,” says Paul Hauk, a Calgary-based independent insurance broker and chair man of RAMS.

The financial services industry attracts people from all walks of life, which is one reason why a coherent recruiting effort is difficult. Some candidates come directly from university, but these aren’t the majority. Most people who enter the industry arrive in mid-career, when they feel ready to enter a profession that offers them the opportunity to work independently.
Midstream career changers tend to have sales or business experience. Some accountants,
for example, become advisors to branch out into a new line of business or to offer clients additional services.

Referrals represent another large group of recruits. Clients, friends, family — especially the sons and daughters of advisors — who show interest in the business are often trained and mentored by established advisors.

Recent graduates, on the other hand, tend to head for the banks’ retail divisions, a channel that hires greenhorns in large numbers. There they can begin as personal bankers for walk-in clients and move on to more senior roles as account managers or advisors to wealthier clients.

Most of the firms surveyed in Investment Executive’s 2005 Report Cards are on the lookout for talent this year. And, regardless of industry channel, all have similar shopping lists of what they are looking for in advisors.

At the top of all the lists is relationship management and sales skills. Industry leaders consistently say they are looking for advisors who excel at these traits, which are key to bringing in new clients and keeping assets in-house.

After that comes a strong sense of ethics, discipline and drive, and education and accreditation. Also prized is maturity, despite the talk about developing raw recruits.

“If [an advisor] is discussing retirement planning with a 45-year-old business person, there is more credibility if [he or she] has some experience,” Chalmers says.

All six big banks and the credit unions are hiring this year. This industry channel offers neophyte advisors the greatest level of support in terms of brand/name recognition, education and training, and a ready book of clients. The trade-off is those advisors are strictly employees of the firm; they have little room for independence and their client lists belong to the bank. Still, the account managers surveyed report, on the whole, that they are happy at their firms and would recommend them.

Insurance distributors are also in hiring mode, although they tend to prefer their recruits to have business experience. And building a business can be difficult. Waterloo, Ont.-based Clarica Financial Services Inc. says that, typically, 60% of its new advisors leave within the first few years. Candidates who arrive with contacts from previous jobs will find the transition easier.

@page_break@Insurance firms are also keen that advisors understand and share company values, and young candidates aren’t always ready to make that commitment. Advisors who remain tend to buy into the company philosophy and stay loyal.

Still, insurance companies are feeling the pressure to bring in new recruits. The average age of insurance advisors surveyed by IE this year was 48, the oldest of any channel. The average age of the 1,430 advisors surveyed across all four channels was 46.

Mutual fund dealers, too, are looking for experienced advisors who can bring in books of business of $5 million-$50 million. They are also interested in advisors who know how to run businesses and are experienced enough to know whether the company’s value offering matches the advisor’s particular style. Fund dealers tend not to hire raw recruits; instead, they hire people from the retail banking level, insurance companies and other planning firms.

Experience is big at the investment dealers, too. They are looking almost exclusively for experienced advisors, especially big producers. As accounts make the transition to a fee-based model from a transaction-based one, book size takes on greater importance. Almost all the firms surveyed for the Brokerage Report Card are hiring, but all have minimum book sizes. Winnipeg-based Wellington West Capital Inc. , for example, requires recruits have a minimum of $50 million in assets under management.

The bank-owned brokerages draw on their rivals for new advisors, as well as referrals from their own network of retail bank branches. And the non-bank-owned brokerages also target their rivals’ advisors.

“Our biggest target is disenchanted employees of the banks, which is most of them,” says Peter Brown, CEO at Vancouver-based Canaccord Capital Inc. “We are hiring good guys from the banks and from retail and capital markets every week.”

The need to replace retiring advisors will force the industry to recruit from a variety of areas. “If tonnes of baby boomers leave the business, new people will appear,” Chalmers says. “Although there is no cohesive organization, it will work out.”

And the entrepreneurial nature of the business will always attract individuals who have the drive to build something of their own. “What’s great about the industry is it’s open to anyone who is disciplined and determined,” Hauk says. IE