Last month in part two of our research survey series, we looked at what activities new planners cited as most fulfilling, what their expectations for promotion to lead planner were, and their view of management’s commitment to their career development. This month, we will look at the factors that job seekers prioritize when looking for a new career opportunity in the first place, the most requested and valued employee benefits, and factors that drive retention of the next generation of financial advisors.

When we asked new planners what were the top priorities for considering a new opportunity both Gen Z and Gen Y had similar preferences. We listed the top seven below with location, culture, and current team member personalities rounding out the top three. We do tend to see this manifesting in candidates asking for us to help them find positions in “cool… hip… exciting” and larger metro areas that are growing like Nashville, TN, Charlotte, NC, Austin, TX, Chicago, IL, Washington, DC, Triangle Area, NC, Boulder/Denver, CO, Portland, OR, Boston, MA, New York, NY, Dallas, TX, Atlanta, GA, and Phoenix, AZ. That’s great news if your firm has a location in one of these areas, but not everyone does so make sure to catch the tips we have for recruiting to smaller markets.

We also collected a few data points on preferred mediums for job seekers when trying to find opportunities. What was interesting to us was the survey responses, and corresponding research by Jason Ryan Dorsey and Denise Villa on Gen Z and how they are looking for YouTube ads from hiring companies. We don’t see this yet in the independent financial planning space, although the use of videos on firm’s websites is increasing, so could be a way for you to potentially reach a candidate you might not otherwise have. Consider recording videos of what it’s like to work at your firm, and video bios to convey the personality of your team (and their prospective future teammates!).

Employee Benefits Most Requested

There are numerous industry studies available that provide guidance on cash compensation for financial planners, but we thought information on employee benefits expectations beyond salary alone was lacking.

When hiring firms ask us what their employee benefit package should be, we ask them what they think their employees value most. Since many firms aren’t clear, we decided to ask and share the highlights here.

It isn’t surprising that the leading benefit for Gen Y is health insurance, since most have aged out (oldest Gen Y’rs are ~44 and youngest are ~24) of their parent’s employer’s coverage (typically dropping when they turn 26). PTO is highly desirable by both groups, and a component that job seekers ask us about frequently. One other interesting notable here is that Gen Z emphasized incentive compensation more than Gen Y, which could be interpreted as Gen Z’s increased entrepreneurial tendencies.

Retaining Your Valued Team Members

One of the toughest parts and largest risks to a small and growing relationship business is hiring, training, and then the person you have spent significant time with leaving to join a competitor or start their own firm. This, among other reasons, is why a good portion of financial planning firms never extend beyond a solo and/or lifestyle business. For firms that want to grow, constant investments must be made in human capital to serve the increasing number of clients.

It is not surprising that as Gen Y ages and progresses in their careers, the number one retention factor is equity ownership. Partnership deals can literally be structured hundreds of ways, but the deals that we see that end up working out have these characteristics in common: 1) Firm owner uses a value that is affordable to the next generation (for advisors who value the continuity to clients more than just trying to get the biggest check they could receive from a PE/Aggregator firm); 2) The shares are purchased largely through a seller-financed loan (that ideally can be paid back primarily via the additional profit distributions a new owner receives); and 3) The payback period length, and share tranche level percentages are flexible and meaningful enough in size for the new owner.

Gen Z cited mentorship as the item that will be most likely to retain them, which coincides to their career stage and hyper-focus on learning the business and adding value (so one day they can become an equity owner).

Keep in mind that anyone can leave at any time to start their own firm as their needs change, but in our survey less than 3% of Gen Y and Gen Z stated they would start their own firm no matter what. Their goal is not to get hired and trained to leave, it really is to get hired and trained to become your partner someday!

The key takeaway is that you might have to employ a multi-factor approach for retention purposes, and utilize several items on this list on an ongoing basis. Retention is not a once-and-done situation, as some firms have learned that training and mentoring has to continue throughout the new planner career lifecycle. As we said last month, people want to feel they are growing in skills, responsibility, and income, and don’t tend to start “looking to see what is out there” until and unless these areas of their career become stagnant.

Stay tuned for next month, when we will be diving into what the timeline is for equity ownership, what it takes for them to feel they are fairly compensated, and what type of increase would it take to feel fairly compensated if they’re not.

Feel free to contact us at blog@newplannerrecruiting.com if you have any questions and/or would like to hear more about how we have alleviated many of the headaches over the last 15 years that plague financial planning firms when hiring.