The Big Squeeze: Leading Through the Talent Crisis

We are an industry fixated on assets. Assets under management, net new assets, asset gathering, asset growth. Assets, assets, assets! But have we inadvertently neglected the most valuable asset of all?

An industry-wide talent deficit looms large. From coast to coast the squeeze is on as firms struggle to find skilled candidates with whom they can negotiate reasonable compensation.

With a scarcity of experienced talent, RIA firms will face longer lead times when recruiting. As a result, firm productivity and growth will be increasingly difficult to sustain.

Since there are fewer candidates, advisory firms will have to compromise. The normal experience and qualification requirements will likely have to be loosened. Candidates are exerting their bargaining power and negotiating higher rates of pay, and industry compensation benchmarks are proving to be less than helpful.

The impact of fewer candidates, longer recruitment lead times and higher compensation has already started to hit home for advisory firms across the U.S. The pendulum has swung in favor of talent.

We are, of course, still emerging from the throes of the Great Resignation. Talented people across the economy are in motion, seeking opportunities that offer greater flexibility, compensation and benefits.

The question is, to what extent has this pandemic phenomenon affected the advice industry? According to data from the Bureau of Labor Statistics, pandemic resignations may not be all that easy to explain away.

In August 2021, the U.S. all-sector “quit rate” reached 2.9%, an all-time high...