Open Season for Poaching: The Talent Retention Problem
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All of us have our daily rituals, right? For many of us, it’s that first hot cup of coffee, prepared to our specifications by a friendly neighborhood barista. So, suppose that tomorrow morning, when you walk in and order your usual caffeinated beverage with your prescribed number of espresso shots and other customizations, the barista told you, “We don’t have that anymore. It’s gone. Unavailable.”
Sounds like the beginning of a bad day, doesn’t it? When something or someone you depend on suddenly isn’t available, it can bring about a lot of negative emotions, ranging from momentary annoyance to flat-out panic.
Now, replace your missing morning latté with the absence of a trusted, reliable, highly competent colleague or team member who has been lured away from your firm by the offer of a more lucrative position with another company. Likely, this person is your Rock of Gibraltar – the one who always knows where your notes from that last client meeting are; who regularly receives thank-you notes from clients for thoughtful acts that you didn’t even know about; who makes the back-office operation hum like a new Mercedes. The person your business can’t live without is… gone.
What do you do?
The pandemic and the poaching problem
The pandemic changed everything about the American workplace. One of its greatest effects was the nearly instant, worldwide shift toward acceptance of – indeed, outright reliance upon – remote work. Jobs became borderless; you could work for anyone, anywhere, and you could do it from anywhere. In other words, people living in Pierre, South Dakota can now log in every morning and work for an employer in New York. And they can get paid New York rates, but still live in Pierre, if they want. It’s not hard to see why, in places like Wilmington, South Carolina, Sarasota, Florida, and Spokane, Washington, applications for remote work are far outpacing those in places like New York, San Francisco, and Seattle. According to LinkedIn, openings for remote work are attracting more attention than on-location jobs, even though those positions account for only 20% of the postings.
In other words, employers are now forced to compete with companies all over the country to retain their most prized employees. But that’s not the only problem.
What happened to my referral network?
Financial advisors and wealth planners pride themselves on their ability to refer clients to dependable legal, tax, and other experts as needed. In fact, this is one of greatest value-adds many of us bring to the table, especially for our HNW clients. But what happens when you refer a client to your favorite CPA, and the client is told that the CPA can’t accept any new clients because the firm is short-handed? Similarly, you might recommend an estate-planning attorney, only to learn that the attorney is completely bogged down due to the loss of an ace paralegal who just resigned to take a job with another firm that was offering a better pay or benefits.
In other words, the poaching problem doesn’t just affect your firm – it affects your referral network, too. The accounting industry is currently being severely hampered by a shortage of qualified professionals, and many firms are struggling to handle growing demand for services with fewer people available to provide them. And according to recent reports from the Bureau of Labor Statistics, the problem isn’t likely to ease any time soon, since the unemployment rate in the financial services sector is a very thin 1.6% (down from 2% in April 2021 and 3.8% in April 2020 – not an encouraging trend, from a capacity perspective).
The ones you count on most
Much like law firms, financial advisory practices are highly dependent on competent, professional, and efficient mid-level team members. These are the people who onboard our clients, keep the data entry up to date, make sure quarterly statements go out on time, field service requests from clients, maintain the compliance files, and do everything else that keeps the firm running smoothly so that the advisors can spend the majority of their time meeting with clients and prospects.
Guess what? You aren’t the only one who knows how valuable these people are. Attorneys already understand this all too well. A recent survey identified “staff poaching” among the foremost threats to law firm profitability. And if you think it’s only law firms, think again. Recent statistics indicate that the turnover rate in banking and financial services, at 18.6%, is among the highest in major industries.
What can you do?
If you wait until your key employee comes in to give two weeks’ notice, you’ve already lost. The solution, as with most things in maintaining a successful practice, is to be proactive, and most of that involves common sense. Keep an eye on your compensation and benefits packages to be certain you’re in line with competitors. And think beyond financial benefits; perks like flextime, the ability to work from home one or two days per week, shortened office hours near holidays, periodically providing meals, days off for birthdays or other important personal events, and others can create an atmosphere of loyalty, comradery, and appreciation that helps to stave off headhunters. Make sure that your team knows there is a clear career path and opportunities for training, growth, and development; people who think they’ve topped out start to look for other prospects.
We all know, deep down, that the most important resource in our practices isn’t assets under management; it’s the people who help us manage the assets. It’s a whole lot less expensive to keep them happily onboard than it is to find and train another crew member. And if we can also nourish our referral circle – keeping an eye out for likely candidates we can send their way, checking in every so often to see how things are going, and just generally trying to maintain the ecosystem – we can keep doing the job our clients need most: providing them with access to state-of-the-art professional services and the individualized attention they have come to expect.
Kimberly Foss, CFP®, CPWA®, CFT-I™ candidate, is president and founder of Empyrion Wealth Management, an RIA with offices in Roseville, CA, and New York City. Her book, Wealthy By Design, is a New York Times bestseller. She has been a commentator for NBC, ABC, Fox News and The Wall Street Journal. You can reach her at [email protected]
- Greg Lewis, “In a First, Remote Jobs Attract a Majority of Applications on LinkedIn,” LinkedIn.com, April 7, 2022, https://www.linkedin.com/business/talent/blog/talent-acquisition/remote-jobs-attract-majority-applications-first-time
- Tim Holmes, “Accounting Industry Is Grappling with a Shortage of Talent,” LinkedIn.com, May 17, 2021, https://www.linkedin.com/pulse/accounting-industry-grappling-shortage-talent-tim-holmes/
- US Bureau of Labor Statistics, Finance and Insurance, May 2022, https://www.bls.gov/iag/tgs/iag52.htm
- Zack Needles, “Law Firm Staff Poaching Is Becoming a Problem,” Law.com, November 29, 2021, https://www.law.com/2021/11/29/law-firm-staff-poaching-is-becoming-a-problem-the-morning-minute/?slreturn=20220821211321
- Elise Gosse, “Turnover Rates, Financial Services,” JoinAShare.com, November 16, 2021, https://www.joinashare.com/post/turnover-rates-financial-services
- Art Markman, “What to Do if Your Employees Keep Getting Poached,” Harvard Business Review (online), March 24, 2022, https://hbr.org/2022/03/what-to-do-if-your-employees-keep-getting-poached