Recruitment: desperate times, desperate measures

As the financial services sector braces for major change flagged by the Federal Government more than a year ago, companies within the industry are becoming increasingly vigilant when it comes to recruiting new financial planners. Milana Pokrajac reports.

Despite recent reports showing increasingly positive job outlooks for financial planners, the industry has taken a cautious approach to recruitment over the past 18 months – and the reasons for this are evident. 

First, the Government’s proposed Future of Financial Advice (FOFA) reforms brought uncertainty to the financial planning sector, as dealer groups and smaller practices alike have yet to determine the exact costs of implementing the changes to their business and remuneration models – which could slow hiring activities for some. 

And second, although the recovery from the global financial crisis (GFC) is well underway, markets are still volatile and investors are nervous, which spells an uncertain outcome for financial services companies in terms of short-term performance and profits.

Experts claim this, too, could lead to more conservative recruitment outlooks. 

On the other hand, data from SEEK found the financial services industry is still among the top 10 highest paid industries in Australia – although this year’s salaries might not exactly surpass planner expectations. 

The demand for highly experienced, quality financial planners remained consistently high. Skills shortages have become more apparent over the last six months and institutions are finding creative ways to fight this by growing and nurturing their own talent.

So, what are the trends for the year ahead and should prospective and existing planners prepare for the job hunting nightmares? 

Stop and start ahead of FOFA

Recruitment experts have all agreed there was less demand for financial planners and paraplanners over the past year, along with other roles within the sector. 2010 has been ‘stop-and-start’ in terms of recruitment, with hiring activity constantly adjusting to the impact of market movements both locally and overseas, according to regional director of Hays Banking Jane McNeill and Profusion director Alison Loader.

Companies have dragged this trend into 2011, albeit with more confidence. 

“We’d be extremely busy and then some of our clients would put recruitment freezes in place, but it looks like a stronger market this year than it was last year,” Loader said. 

However, the heated debate around FOFA could further contribute to lack of confidence in the next couple of months, as the draft legislation release date fast approaches.

Managing director and financial planning recruitment manager at eJobs, Trevor Punnett, observed that retail banks were always advertising, but financial planning firms outside this space have focused on shifting their revenue models and ensuring lower costs through technology and staff efficiencies. 

“They have moved to really protect and consolidate their A and B client business and have not looked to expand their staff until they have a handle on those expenses and efficiencies,” Punnett said. 

This might result in some financial planning firms not feeling confident enough to recruit big numbers until the industry gets full details on the upcoming reforms and a better picture of the costs associated with the changes. 

Punnett did notice some firms felt that costs were under control and that near future, if not now, could be the time to invest in some expansion. Data from eJobs (see figure 1) shows the number of advertised roles in financial planning dropped significantly in December 2010, but there has been an apparent increase throughout 2011, which may point to an increase in confidence.

Win for back-office staff

Certainly the big winners from the regulatory changes about to hit the financial services sector are administration officers and client service officers, along with other back-office staff.

Ever since the Federal Government released the FOFA package, financial planners have claimed some of the proposals, especially the controversial ‘opt-in’ requirement, would cause a massive administrative burden on their businesses. 

Regardless, they still need to ready themselves for additional requirements, reinforcing back-office teams.

EJobs managing director Trevor Punnett also observed that admin staff as well as client service officers were in the highest demand.

The demand for financial planners and experienced paraplanners is expected to rise, but the banking sector is also looking for business development managers and relationship managers, according to the Hays Salary Survey.

Experienced financial planners are always highly sought after, but industry newbies might find it tough to break into the industry – especially with some companies putting periodic recruitment freezes in place, as Alison Loader from Profusion pointed out.

This leads us to one of the hottest topics of the year.

Education versus experience

What matters more when it comes to financial planning: education or experience? Years in the industry, or a university degree? 

Older advisers would definitely argue experience, while the younger kind would go for education. In what seems like an endless debate, recruitment experts claim the answer is simple: both. 

“When seeking a financial planner, clients look at a multitude of skills and abilities – they do not just look at qualifications,” Punnett said.

“So whilst ‘on paper’, an appropriate degree clearly suggests a better qualification than a TAFE diploma (and from this one might deduce a bit more academic ability and perhaps maturity), it might be that the latter has more charisma, presence, initiative, passion, drive, presentation and displays more professionalism,” he added. 

Raw graduates with no financial planning experience find it more difficult to find a job in the industry, said McNeill, adding there is a shortage of candidates who are both qualified and have appropriate experience. Since banks and large instos in general stopped hiring trainee and associate planners during the economic downturn, the shortage of appropriately trained and experienced candidates is now becoming evident, she added. 

Although the industry has raised its expectations of financial planning candidates in response to legislative changes relating to educational compliance, attitude, communication skills and the team fit are equally important, according to Robert Walters’ Sara Harrison. 

However, the shift of focus from experience to education might happen once the entry level bar is formally raised by the Federal Government, as recommended by the Australian Securities and Investments Commission. 

“Having someone ‘up and running’ soonest is generally the objective, which often favours the experienced,” Punnett said. “But with the bar rising all the time on qualifications, these are becoming more important, and those with higher education will be more favoured.”

Instos growing their own talent

‘Skills shortage’ has become a buzzword in financial planning recruitment over the past 12 to 18 months, with the industry talent pool at dangerously low levels.

This means institutions and boutiques would need to find more creative ways to seek out quality financial planners, especially those who are entering the industry.

Profusion’s Alison Loader said larger employers are focusing on growing their own talent, looking to address the issue of skill shortage in that way.

One such institution is AMP Horizons (formed in 2007), which offers a 12-month ‘Professional Year’ featuring 10 weeks’ formal academic training and nine months’ on-the-job experience working as a planner.

The academy had 95 graduates in 2010 – 89 of whom currently work as financial planners at AMP or one of AMP-aligned dealer groups.

Director Tim Steele told Money Management in a recent interview that academy would have 140 new graduates this year, with plans to double this number in the next few years.

Nine months ago, NAB Financial Planning launched an education program aimed at recruiting people looking for a career in financial planning. The program trains new recruits and offers them support to gain their Advanced Diploma of Financial Services (ADFS). Once qualified, the new planners are given coaching within NAB Financial Planning and are then aligned with a senior financial planner as a mentor.

MLC had launched a new program in March, MLC Pathway to Advice Excellence, for those who are seeking to change careers and join the financial planning industry.

It is a four-day course aimed at those working in sectors such as professional or financial services who are gaining their RG146 qualifications.

MLC Advice Education offers RG146 courses, as well as the Diploma in Financial Services and the ADFS. Over the last 12 months 517 individual students have enrolled with MLC Advice Education.

Others are nurturing existing talent by offering professional development programs and education workshops.

Macquarie Private Wealth has rolled out a training program that offers technical and product skills, practice development, required learning and compliance. 

Similarly, Colonial First State (CFS) Institute of Advice offers training for both new and existing advisers, along with a number of specialist programs for those who wish to specialise in areas such as self-managed super funds, aged care and direct shares.

Head of CFS Institute of Advice, John Carnevale, said the planner attrition rate within major institutions is around 22 per cent, with companies facing a major challenge in retaining key talent. 

“This is why we are making sure planners are properly inducted and trained,” Carnevale said, adding providing the necessary support would hopefully keep key talent from leaving.

MLC’s Adviser Scholarship Program also offers its advisers professional development activities, including strategic advice, technical knowledge, ADFS and Certified Financial Planner qualifications and practice management.

Upside of skills shortage

Staff turnover had already increased in 31 per cent of organisations within the financial services sector, and companies are responding with greater focus on employee retention. This means that some financial planners are in for a treat.

Alison Loader said a big part of the planner retention strategy is talking to the staff, understanding what it is that’s actually important to them and delivering against that.

“What you’ll find is that … what’s important to a paraplanner might be completely different to what’s important to a financial planner, which in turn might be completely different to somebody who’s working in technical,” Loader said.

This means that key talent will be in a position of power and will be able to demand better conditions in the workplace.

Bonus payments have also been more lucrative this year, according to Hay’s data.

However, Punnett argued employee retention was high this year, mostly thanks to the legacy left behind the GFC.

“Incumbents have preferred job security to going out to look at other roles. Employers have been doing better at keeping staff with better communication and attention given to staff wellbeing,” Punnett said.

Employers are still demanding highly skilled and qualified candidates who do not require a lot of training and development, but when it comes to interview these professionals, they are moving quickly because they are aware of the shortage of such talent, according to McNeill.

Employers were definitely not hiring out of necessity or urgency, Punnett said.

“They are waiting for the right people to emerge and are taking their time, which could be frustrating for both recruiters and job-seekers alike,” he said.

Associate director for banking and secretarial support, Sara Harrison, said clients would generally become more flexible with some of their requirements as skills shortages further emerges in financial planning, but in niche areas, such as tax, risk or senior positions, clients have been “happy to wait for the right person regardless of timeframe”.

Climbing the ladder

Since companies have taken a cautious approach to recruitment, every advertised position in the financial services sector is well thought out, so job security is high, according to experts.

Robert Walters’ Sara Harrison said organisations across the sector have continued to change, transform and merge, “which always brings about structural change, but this can result in as many positives as negatives”.

“The roles that are coming to market have generally been deeply considered and gone through multiple layers of sign-off, so they are certainly secure,” Harrison said.

In terms of career progression, things are looking up, with most dealer groups big and small using this as a retention strategy.

“Most organisations now have a structured internal process that is followed prior to looking externally in the market,” Harrison said. She added this does not mean they are always successful, but that opportunities for progression, development and further training are becoming much more apparent.

Beware: social media

Networking has always been vital in the financial planning industry, with some people being much further advanced than others when it comes to utilising it as a recruitment tool.

Business networking websites such as LinkedIn are a very useful tool for networking and seeking out new talent, and experts believe this is most definitely a trend for the future.

However, Punnett warned candidates that recruiters in the financial services space, just like in other sectors, also look up their Facebook and Twitter profiles.

“We are certainly using [social media] as a way to check on candidates and it often gives us a reason not to employ,” he said.

Jane McNeill said the rise of the Internet and the increasingly important role technology now plays in the recruitment process does not mean the industry should steer away from the face-to-face process.

“Taking the time to get to know someone is still crucial in identifying the right role for them and picking up the phone or meeting them in person just can’t be substituted,” McNeill said.

Twitter and iPhone/iPad applications have proved themselves to be very efficient in targeting the right audience and seeking out potential employees.

What next?

Although companies have become more vigilant as a result of the GFC and FOFA, hiring intentions are up and skills shortages will force employers to be more flexible in terms of their expectations.

“The general feeling is that of cautious optimism and I think that they will continue to see that, but most people have got plans for growth over the next six to 12 months,” Loader said.

She added there might be strategic times of the year where companies decide not to recruit, but this would not affect adviser recruitment as much as it will affect head office staff.

In terms of recruitment generally, hiring will go up as the market further recovers from the GFC both locally and globally, according to McNeill.

Hays Recruitment found almost half of the surveyed employers in the sector plan to increase salaries, but not beyond planner expectations, which could prove ineffective if they wish to retain staff.