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Talent – or the lack thereof – has long been a top-of-mind issue for wealth management executives. But concern about the topic has become even more pressing as the industry finds itself facing mounting growth, demographic and regulatory challenges.

Indeed, last month’s influential bi-annual industry survey released by PricewaterhouseCoopers’ “Anticipating A New Age In Wealth Management” threw a harsh spotlight on the subject, warning that “top quality people are becoming more valuable, more difficult to source and more expensive to train.”

Recruitment, reward, retention and motivation of staff have never been more critical for business success,” the study concluded. Making matters worse, almost 40 percent of respondents to PwC’s survey of top wealth management executives from 275 firms worldwide expressed dissatisfaction with their client-facing advisors, saying those advisors were only doing an average or below-average job of meeting clients’ needs.

A newly released best practices study on human capital from Redlands, Calif.-based Quantuvis Consulting underscored the challenges facing the industry. The highest-performing firms, according to the study, hired more support staff, spent one-third more on compensating advisors than other firms and institutionalized formal hiring, training and career development processes.

“The pool of exceptional talent isn’t meeting the demand of firms,” said Natalie Dass, research manager for Quantuvis. As a result, she said, firms need to focus on recruiting experienced advisors and offering them a support team, generous compensation and a well-defined advancement track.

And as baby boomers continue to age and begin to retire, recruiting young people is becoming increasingly important, Dass said. (Of course, Registered Rep. reported in its April edition—The Myth of the Vanishing Advisor—that the perceived scarcity of financial advisors may be overwrought.) “They are looking for a clear path and direction,” she said. “Firms who don’t have programs in place to accommodate that will find themselves challenged.”

Poaching “Catalyst Hires”

The tried-and-true industry stand-by of solving talent problems by poaching from other firms isn’t going away anytime soon, but is evolving, according to Steven Crosby, Americas leader for PwC’s private banking and wealth management leadership team and a co-author of the industry report. More firms are pursuing what Crosby calls “catalyst hires,” who he described as “seasoned players who can energize an entire team.” Such veterans, who work particularly well with clients, have a “halo effect,” Crosby said, “and raise everybody’s game.”

He cautioned, firms also need to revise compensation structures based on assets advisors are bringing into their new firm. “Key performance indicators,” such as being able to give good advice, catering to client’s long-term objectives and being fully compliant with government regulations, should also be used, the PwC report suggested. “Firms should consider whether their existing compensation models accurately track and reinforce appropriate behaviors,” the study recommended.

The importance of recruiting, training and mentoring was underscored by both reports. In fact, no less than the industry’s largest player is currently pursuing an aggressive recruiting and training drive to attract both experienced and younger advisors, as well as career-changers, to its 16,000-person force.

“Welcome to the A-Team,” Merrill Lynch’s ads begin, going on to tout the credentials of the Bank of America unit and inviting advisors and those “ready for a career that can change lives” to “join our team.”

Stephens’ ‘University’

Smaller firms are also looking to bolster their ranks and sharpen advisors’ skills.

Little Rock, Ark.-based Stephens, Inc., for example, currently has 110 advisors in its private client group and hopes to nearly double that number in the next few years. The firm has also introduced an innovative education and training program that requires all advisors to complete a 16-day curriculum at “Stephens University” held four days at a time four times a year on the campus of Wake Forest University in Winston-Salem, North Carolina.

Courses including such topics as “income taxes and their role in decision making” and “advanced financial management” are taught by Wake Forest professors, and senior Stephens executives describe the inner workings of the firms’ various businesses, such as investment banking and asset management.

And before the advisors can “graduate,” they are required to give an oral presentation of a thesis on an industry-related topic.

But becoming familiar with Stephens’ culture and learning social skills are just as important, according to Kevin Scanlon, executive vice president and head of Stephens’ private client group.

“It’s a cultural experience as well as an educational one,” Scanlon said. “We encourage professionals from other firms to join Stephens, but it’s a careful selection process and we want to make sure the cultural fit is right.”

Rubbing shoulders with senior Stephens executives socially at Wake Forest allows new employees to get a feel for the firm and better understand how it works, Scanlon said. Executives also hold forth at popular “fireside chats” in the evening and pass down firm folklore and history.

In addition, advisors can brush up on their social skills at “personal etiquette” classes and take a wine course to correctly pair the right wine with the right food.

The program has also helped Stephens identify young rising stars, Scanlon said. “We found one of our best young branch managers at the University,” he said. “We noticed that at every class or social setting he was in, he stood out and people deferred to him. He turned out to be a natural leader.”