The other drought

It’s unremarkable in itself that Cairns practice Menico Tuck failed in its one and only attempt to headhunt a planner from another city practice, notwithstanding that it failed because the planner had a crisis of conscience over his disloyalty.

The remarkable aspect of the attempt was that Menico Tuck actually forewarned the targeted practice as a matter of principle that it was about to make an unsolicited offer to one of its planners.

“We thought it was the decent thing to do to let them know,” co-principal Jo Tuck said.

Headhunting does happen in Cairns, she acknowledged, but “we are all pretty open about it here, in the understanding of the adverse impact the loss of an experienced planner can have on a practice in an era of critical shortages”.

This anecdote suggests that while regional areas are suffering the same shortage of experienced planners that is occurring in the cities, it manifests itself differently in the regions, including in its reason for being and the efforts to redress it.

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It’s a sentiment with which Matthew Gowan, senior manager of specialist recruiter Hays Banking, publisher of the Hays Banking Quarterly Recruitment Forecast, agreed.

“A massive shortage of planners in the cities is being exacerbated in regional centres, essentially by very little or no interest on the part of city planners to relocate to regional areas,” he said.

“There’s a constant if mostly unrequited demand from most of our major regional employers for qualified planners with a few years experience on the ground.”

These employers, which include the banks and some of the larger chartered accountancy firms, will “essentially take what they can get, so critical is the shortage”, Gowan said.

Hays does not usually service smaller employers, including many small to medium-sized planning practices, but Gowan believes these are also struggling to place experienced planners.

Compounding the problem are employers that “ideally want to employ planners who live in the region, know the region, and are generally committed to servicing customers in that region”.

“Add that to the fact they are looking for planners with some experience, and it makes it very, very difficult to fill their vacant positions.”

The consequence is that “many regional employers look for candidates over a long period of time, until the right person comes up, rather than making any investment in training”.

“In turn, this limits the realisation of the potential that these employers see for planning and super planning within their marketplace.”

Salary and incentive levels in the regional areas are similar to the cities, Gowan said, eliminating this as a major reason for the regional shortage.

“We could probably recommend employers up salaries a little bit, but it often doesn’t even get to that point, as there is just not the availability of candidates to consider.”

He said the typical packages on offer by regional banks for experienced planners would be around the $80,000 to $90,000 base plus incentives.

The regional chartered accountancy firms are offering similar packages and are also offering the potential for equity in the business, he said.

Equity deals “certainly are offered by Cairns practices as an inducement for experienced planners, although you still have to attract the right people”, according to Tuck.

“There is also a lot of talk about local practices offering equity as a means of retaining good staff, and not necessarily just for planners either.”

Tuck is also “aware of quite a few local practices looking to merge with other firms in the regions, to try and achieve some economies of scale”.

“This has been growing as a trend over the last few years as practices try to find ways to operate with less financial planners and use their staff more effectively.

She believes mergers will become more frequent in future, considering that a “lot of the current amalgamations centre around succession planning”.

“There aren’t a lot of people coming into the industry that could provide for succession planning, which is a key concern among local practices.

“After all, if you want to build your business, you need to know where it’s going in future, because succession planning is really part of the value of your business.”

Other regional practices are dealing with the “shortage of experienced planners by actively advertising for recruits from metropolitan and also other regional areas”.

“There are some big [cost] risks for practices in doing this if early on the recruited planner does not work out or for any reason and decides to go home.”

Yet another local strategy is to ask any of the business development managers that regularly pass through Cairns if they know of any, but Tuck said, “Unfortunately, they usually tell us the shortage is general”.

Julie Berry spoke with the authority of someone who tried vainly for three years to fill a vacancy for an experienced planner in Port Macquarie, NSW, when she said salaries are not a key factor in overcoming the current regional planner shortage.

In fact, the post had still not been filled when Berry quit her longstanding position as general manager of a local credit union’s wealth management department two months ago to start her own practice.

Currently managing director of Berry Financial Services in Port Macquarie, Berry said it “proved impossible to recruit anyone with good, solid face-to-face planning experience”.

She said the feedback from metropolitan candidates was that it wasn’t the pay, which was on a par with the Hays Banking rates, but rather that there were too many opportunities in the cities.

A related factor is that candidates correctly perceive the opportunities for moving from job to job to be “much less” in regional areas than in metropolitan areas.

“It’s not a good idea to move around too much in a regional area, where your reputation and the client relationships you have built up are critical to your success.”

Another factor is that candidates would have to uproot their family, which is “always a big deal in their thinking, especially the consequences if the job did not work out”.

There are “inevitably a few strategies” that planners in rural towns are using to try to mitigate the shortage of planners, Berry said.

Some of the larger businesses, for example, are currently offering “extremely generous” incentive packages on top of salaries.

Candidates who do accept positions often tend to go to employers that are offering equity, she said, but small firms don’t often have the capacity to give out that level of incentive.

Another strategy by principals with licensees based in the cities is to ask them to help in finding candidates from the cities.

They are asking them to market the fact that career and lifestyle opportunities in the regional areas aren’t any less than in the cities.

Berry, who takes over as deputy chair of the local Financial Planning Association (FPA) chapter in November, said there are also some “industry initiatives in place with some potential to help redress the shortage”.

“The FPA, for example, is now posting employment opportunities on its website, giving regional members an additional means for sourcing candidates, and with a higher ethical level.”

If these strategies are helping to any real extent to alleviate experienced planner shortages in regional Queensland and NSW, they do not appear to be doing so in country Victoria.

Mike Raselli, director of Warnambool-based practice Silvan Ridge Financial Services, essentially puts his faith in headhunting planners from licensees in other regional areas.

Raselli said the practice had recently successfully headhunted two planners with experience after advertising for “months and months” in Melbourne-based media failed to bring results.

“There were 350 other advertisements for city planners on seek.com.au, and then there were all of the other advertising avenues as well.”

He added that the only way the headhunting of the two candidates succeeded was by “offering them equity in the practice from the start”.

“If we didn’t do that I don’t believe we were going to have any success whatsoever.”

Both planners were headhunted from practices where the issue of equity had been shelved for a long time, he added.

“They couldn’t see a clear path to secure any ownership in the practices that they were in.”

A bonus for the practice was that each headhunted planner brought an experienced paraplanner with them to Sylvan.

This brought its staff complement to six planners, 12 back-office staff and a practice manager, alleviating a once pressing shortage, for now at least.

Raselli said the overall experience was to wed Sylvan to the “concept of building succession, if you like, through a process of getting younger advisers in with the offer of equity”.

“We are also in the process of looking at acquiring another practice, which has some of its own planners, who we believe are intent on staying with the firm.”

In Western Australia’s regional areas any thoughts of using local initiatives to overcome the shortage have long since been abandoned in the wake of the resources boom.

It’s a measure of the strength of the boom that WA financial practices are actually abandoning the regional areas for Perth to facilitate massive shortages of planners in the city.

Nick Bruining, principal of Perth practice Nick Bruining & Associates, and also a noted media commentator on the WA financial services sector, said this relocation is coinciding with a growing ‘fly-in-fly-out’ trend by resources firms.

“Most of the people who are earning the big bucks from the resources boom actually fly in [and] fly out to Perth, which in turn is drawing in planners from the regions to the city.”

To illustrate the strength of the relocation, Bruining said he understood that there is only one CFP in the entire northwestern Australia.

He said the major institutions are currently servicing the regional areas by flying city-based planners on round trips to the various regional areas to service clients.

“However, we are witnessing a growing reluctance on the part of the locals to use these planners because there is no longer the permanence of relationships they are accustomed to.”

Shortages of planners in the regional areas is exacerbated by the fact that “anyone who is any good is already in practice for themselves, or beyond what employers are prepared to pay for them”.

Often you will find planners that are now settling in the bush tend to be those that came from there originally, and are actively seeking the bush lifestyle, he said.

The irony, he said, is that the shortages in the bush areas actually offer one of the best professional development stages in the career of a young planner with some or even no experience.

“You will find the regional planners deal with all issues, both precisely because of the shortages and because they traditionally deal with everyone from wealth accumulators to retirees.

“In the city by contrast, planners tend to specialise in particular areas, which for a young planner might actually be a limiting career experience.”