Schwab RIA Talent Study

Transcription

1 Schwab RIA Talent Study September 2014 Media contact: Rob Farmer For general informational purposes only. Independent investment advisors are not owned by, affiliated with or supervised by Schwab & Co., Inc. (Schwab). All rights reserved. Member SIPC. ( ) Schwab Advisor Services serves independent investment advisors and includes the custody, trading and support services of Schwab

2 Table of Contents Page Highlights 2 Detailed Results 4 Becoming an RIA 5 Being an RIA 13 Career Management 20 Methodology 25 1

3 Highlights 2

4 Highlights The career paths of women investment advisors are similar to those of the men, with a few exceptions, including that women are more likely to have past roles in operations, administration, service/technology, or education outside the financial services industry. The top reasons for deciding to work at a registered investment advisor (RIA) firm include interest in working for a smaller company, work/life balance and earnings potential. Younger advisors are also motivated by opportunities to contribute to firm growth and to their own career advancement. The RIAs in this study emphasize the importance of improving the financial wellbeing of their clients, having authority to make decisions and having close relationships with clients as benefits of their current stage of their profession. Most firms recruit new advisors through networking. Training and development of advisors at firms is primarily done informally and provided on-the-job. Four in ten advisors responding to this study are aware of diversity discussions at their firms, and most give their firm passing grades on diversity programs. 3

5 Detailed Results 4

6 Becoming an RIA 5

7 One-third of investment advisors first learned about a potential RIA career from colleagues/friends How First Learned About a Potential Career at an RIA Firm Total Advisors 32% Heard about it from a colleague or friend Especially among younger Advisors: Under 40 39% % % 12% 9% 7% 6% Recruited Read about it in the media Heard about it at an industry conference College or university course/curriculum 25% Other Includes family owned business, started my own firm, had industry experience 9% Total Can t recall Men and women report similar sources with no significant differences Q1. Which of the following best describes the way you first learned about a potential career at an RIA firm? (Base: Total = 571; Under 40 years old = 78; = 332; 60+ = 153) Arrows indicate significant differences at the 95% confidence level. 6

8 On average, investment advisors have worked in financial services for 22 years, and have worked for 12 years at current firm Average # of Years Worked at: Total Advisors Financial Services Industry = 22 years Any RIA Firm = 15 years Current Firm = 12 years Total Q5. Please fill in each of the columns below to indicate how long you have worked at a) your current firm, b) any registered investment advisor firm, and c) in the financial services industry? (Base: Total = 571; Male = 470; Female = 101) Male Female 7

9 Half considered another investment-related firm prior to their current position at RIA Types of Industries/Positions Considered Before Working at Current RIA Firm Total Advisors Any financial services firm (net) = 73% Investment related firm (net) = 49% 23% 22% 10% 14% 15% 14% 12% 10% 11% 3% 18% Wirehouse firm RIA firm (other than current one) Brokerage firm Other investment management firm Banking Accounting Insurance Other financial services Nonfinancial services Can t recall No others considered No significant differences between men and women Q3. What other types of industries or positions did you consider just before you started working at your RIA firm? (Base: Total = 571) 8

10 Younger RIAs were more focused on investment firms prior to their current role Types of Industries/Positions Considered Before Working at Current RIA Firm Total Advisors - by Age 35% c Other financial services firms Investment related firms Age: Under b a 27% c 26% c 26% c 60+ c 22% c 22% a 11% 11% 18% c 17% c 11% c 5% 5% 19% 14% 14% 17% 14% 13% 11% 9% 9% 15% b 10% 8% 13% 10% 12% 4% 2% 3% 18% 9% Wirehouse firm RIA firm (other than current one) Brokerage firm Other investment management firm Banking Accounting Insurance Other financial services Nonfinancial services Can t recall No others considered Q3. What other types of industries or positions did you consider just before you started working at your RIA firm? (Base: Under 40 = 78; = 332; 60+ = 153) Letter designations indicate significant differences at the 95% confidence level. 9

11 RIAs exhibit some job mobility mainly in the financial services industry Women were more likely to work at other RIA firms and less at brokerage firms Types of Firms Worked in Past Total Advisors Any financial services firm (net) = 87% Investment related firm (net) = 63% 29% 29% 14% 17% 18% 16% 14% 15% 12% RIA firm (other than current) Wirehouse firm Brokerage firm Other investment management firm Banking Insurance Accounting Other financial services Have only worked at current RIA firm Especially among women (38% vs. 27% among men) Especially among men (16% vs. 6% among women) Q6. Please indicate what other types of financial service firms you have worked at in the past. (Base: Total = 571) 10

12 One in three investment advisors consider their current position a first career For about 4 in 10, this position is a second career Number of Career Paths Total Advisors Similar patterns for men and women More than a third career 4% Not sure 2% 31% 26% First career 2 or more careers = 68% Third career 21% First career 30% 42% 48% Second career Third career Second career 43% 21% 19% More than a third career 4% 5% 2% 2% Male Female Not sure Q4. Do you consider your current position to be your first, second, third, or more than third career? By career, we mean a specific career path. (Base: Total = 571; Male = 470; Female = 101) 11

13 Men and women at RIA firms have held advisory, management and marketing roles in the industry Women have less experience in sales and as brokers, but more in other areas Position Held at Another Financial Services Firm Advisors with past experience at another financial services firm Advisor Sales Stock broker / Trader Stock or investment analyst Operations C-Level Management Administrative Marketing Legal or Compliance Service position/technology HR 4% 7% 15% 14% 13% 20% 17% 23% 34% 32% 54% Male a Female b 55% 48% b 38% 15% 35% 16% 24% 17% 17% 34% 18% 15% 14% 23% 14% 14% 13% 16% 6% 13% 3% 6% Includes mentions Other 16% 14% a 27% such as CPA, Portfolio Manager, Financial Planner Q7. In what type(s) of position(s) have you worked at any financial services firm in the past? (Base: Advisors with past experience at another financial services firm = 499; Male = 413; Female = 86) Letter designations indicate significant differences at the 95% confidence level. b a a a Women more often have held positions in Operations and Administration 12

14 Being an RIA 13

15 Working for a smaller company (vs. large corp.); work/life balance; earnings potential are top reasons for choosing an RIA career Reasons for Working at an RIA Firm Total Advisors 49% 47% 41% 37% 32% 26% Includes mentions such as to be independent, ownership/to be my own boss, to better service clients 32% 5% Interest in working at a smaller company Greater work/life balance Potential for greater earnings/ compensation Opportunity to contribute to firm growth Greater choice of financial products Opportunity for greater career advancement Opportunity to re-build a career after being away from the workforce Other Men and women report similar incentives, with no significant differences Q2. We have heard that advisors may have different reasons for working at an RIA firm. Which of the following were important reasons to you for becoming an advisor at an RIA firm rather than at another financial services firm? (Base: Total = 571; Personal Compensation <$100K = 82; $100K-$250K = 192; $250K+ = 190) Arrows indicate significant differences at the 95% confidence level. 14

16 About two-thirds of RIAs under age 40 are interested in working for a smaller company (vs. a large corp.) and in having work/life balance Reasons for Working at an RIA Firm Total Advisors by Age Age: Under 40 a bc 68% bc 62% bc 55% c b 48% 48% c 41% 38% 45% 43% 36% c 38% 26% 39% 34% 30% bc 47% c 27% 34% 30% 28% 14% 0% a 5% a 9% Interest in working at a smaller company Greater work/life balance Potential for greater earnings/ compensation Opportunity to contribute to firm growth Greater choice of financial products Opportunity for greater career advancement Opportunity to re-build a career after being away from the workforce Other Q2. We have heard that advisors may have different reasons for working at an RIA firm. Which of the following were important reasons to you for becoming an advisor at an RIA firm rather than at another financial services firm? (Base: Under 40 = 78; = 332; 60+ = 153) Letter designations indicate significant differences at the 95% confidence level. 15

17 RIAs compare their industry favorably to others mainly for eliciting long-term commitment and for offering growth opportunities However, they do not see it as better on key diversity aspects RIA Industry Compared to Other Financial Services Total Advisors Being an industry where I would want to remain for the long term 76% 24% 1% Offering challenges and opportunities for growth and learning 58% 39% 3% Providing appealing career opportunities to a diverse talent pool 40% 49% 11% Having recruiting policies that encourage a diverse workplace 14% 69% 17% Better About equal Worse Q21. How would you compare the RIA industry to other types of financial services industries on each of the following? (Base: Total = 571) 16

18 When it comes to job skills, women RIAs rely more on relationship building and on being well-organized than men do Top 3 Skills that Contribute to Being Successful in your Position Total Advisors A strong work ethic in general Building and nurturing relationships Able to develop the business/grow our clients and assets Having a strategic view regarding our firm's future Good quantitative/numbers "skills" Being well-organized Acting as a leader Ability to listen Being detail-oriented Working in a consultative capacity Ability to network/have wide circle of business/social contacts Collaboration and teamwork Showing empathy Loyalty to my firm Other 6% 4% 4% 15% 14% 14% 18% 22% 21% 21% 21% 26% 31% 35% 33% among <40 33% among <40 53% among <40 44% Building/nurturing relationships Male a (n=470) Female b (n=101) 33% 46% a Being well organized 19% 32% a Ability to network, etc. 16% b 8% Q12. What are the top three (3) skills, strengths or characteristics that you personally contribute toward being successful in your position? (Base: Total = 571) Letter designations indicate significant differences at the 95% confidence level. 17

19 RIAs emphasize client offering and ability to make decisions as key benefits; work/life balance and team spirit are key secondary benefits sought after Importance of Benefits at Current Career Stage Total Advisors Team spirit and feeling recognized are more important to women than men On the job training, mentoring, and clear career path are more important to younger RIAs Very important Somewhat important Not at all important 93% 7% 81% 79% 17% 19% 2% 2% 52% 57% 53% 49% 34% 34% 9% 14% 15% 28% 27% 22% 45% 38% 39% 14% 34% 14% 14% 14% 40% 34% 46% 52% Q13. How important are the following as potential benefits at your current career stage? (Base: Total = 571) 18

20 Work/life balance, team spirit, giving back and recognition are sought as career benefits more often by women (vs. men) Improving my clients' financial well-being Having authority to make decisions Importance of Benefits % Very/Somewhat Important Base = Total Advisors 100% 100% 97% 99% Current Position Provides Benefits Very Well Base = Benefit is Very/Somewhat Important 89% 86% 85% b 72% GAP Male Female Having close and on-going relationships with clients 98% 96% 83% 85% Firm policies and environment promote work/life balance 90% 94% 71% 66% Making a lot of money overall 86% 90% 43% 46% Team spirit/ successful collaborations with others in the firm 85% a 93% 58% 60% A sense of social responsibility - feeling like I'm "giving back" 85% 90% 51% 52% Feeling like I'm recognized for my accomplishments 69% a 86% 44% 52% Having a clear and achievable path to career advancement 65% 69% 49% 46% Ability to receive on-the-job training 53% 62% 33% 37% Having a mentor - someone who can guide me in my job and along my career path 46% 55% 24% 18% Male a Female b Q13. How important are the following as potential benefits at your current career stage? (Base: Male = 470; Female = 101) Q14. Now thinking about your current position, how well does it provide these benefits? (Base: Advisors reporting benefit is very/somewhat important = varies) Letter designations indicate significant differences at the 95% confidence level. 19

21 Career Management 20

22 Networking is by far the most common means of finding new advisors; formal recruiting is less common Higher AUM firm RIAs report the most varied sourcing efforts Staff Sourcing Activities Firm Total Advisors by segments Networking/word of mouth 60% Develops and promotes employees from within the firm Job postings on industry web sites and publications Direct/unsolicited applications from candidates Internship programs Professional recruiter College campus recruiting and events Other Not sure 32% 25% 20% 19% 12% 9% 13% 18% Q18. How does your firm find qualified advisors when recruiting? (Base: Total = 571) Letter designations indicate significant differences at the 95% confidence level. 21

23 Most RIAs say their firms provide career assistance programs; training (usually informal), paid conferences and certification programs are most common Programs Offered by Firm Total Advisors Informal on-the-job training A formal, structured in-house training program 10% 70% In-house training (net) = 71% Any training (net) = 77% Access to outside training programs Paid conferences and/or networking events Paid certification or credentialing programs 57% 60% 55% Specific assignment of a mentor to each employee 12% None of these 18% Not sure 2% Q16. As far as you know, which of the following does your firm offer its employees? (Base: Total = 571) 22

24 Only 4 in 10 say they are aware of any diversity discussions at their firms When discussed, age mix and gender balance receive about equal attention Diversity Areas Discussed at Firm Total Advisors Not sure 14% Not Aware/ None 43% Any Diversity Discussion (NET) 43% Achieving a mix in terms of age groups 25% Achieving a balance with respect to gender 22% Achieving a mix in terms of ethnicity 9% Inclusion of specific groups (Veterans, Disabled, LGBT, etc.) 3% Generally having formal policies and guidelines to promote diversity in the work place 5% All of the above, about equally 9% Females are more likely to say diversity has been discussed at their firm (50% vs. 41% among males) Q19. Which diversity area(s) have been discussed at your firm, if any? (Base: Total = 571) 23

25 RIAs most often give their firms only passing grades on their diversity programs Lack of knowledge or awareness about policies is widespread Firm s Grade on Diversity Programs Total Advisors Really not sure what our programs or policies are on diversity 32% Outstanding 15% Disappointing Over zealous 6% 1% Satisfactory 46% Females are more likely to say firm s diversity programs are disappointing (11% vs. 5% among males) Q20. How would you grade your firm when it comes to programs and policies with respect to diversity - that is, hiring and developing a group of advisors who vary in terms of gender, age, ethnic group or some other characteristic? (Base: Total = 571) 24

26 Methodology What When Who An online study among a Schwab-provided national sample of RIAs was conducted by Koski Research Koski Research is neither affiliated with, nor employed by, & Co., Inc. The 2014 RIA Talent Study from was fielded in February, The study contains self-reported data from 571 firm advisors or staff employed by advisory firms that custody their assets with Schwab. Schwab did not independently verify the self-reported information. Survey length was approximately minutes 571 RIAs completed the study (response rate 5% 6%) The breakout of the respondents was: 470 men and 101 women Owners were 86% of the sample in total. 25