Congratulations, advisors. The years since the financial crisis were a struggle, but you made it work. FA Insight has the numbers to prove it.
FA Insight's fifth annual study found that in a period marked by a global financial meltdown that took out the likes of Lehman Brothers and Bear Stearns, advisory firms managed to maintain practices that withstood the crisis and in 2012, "achieved the highest profitability and greatest level of owner income of any FA Insight study year."
FA Insight addresses the findings its 2013 People and Pay study, which focuses on how human capital helped firms achieve those results, in a series of four in-depth articles, which you'll find on the following pages.
This article addresses the key finding of the 2013 People and Pay study; namely, that a firm's "investment in human capital is a complex but crucial foundation of sustainable growth."
"In years past, even slim growth expectations often lulled firms into lapses in management discipline," according to authors Eliza De Pardo and Dan Inveen. "Five years of FA Insight study data show that firms have not yet forgotten hard lessons learned during the recession. While firms are clearly benefiting from the current recovery in security markets, their financial results suggest that management practices have also improved."
It's a simple case of supply and demand; when the pool of talented workers dries up, hiring the best is expensive. The 2013 People and Pay study found the best firms were maximizing return on their labor forces by considering both financial and nonfinancial motivators.
That doesn't mean bringing in lunch on Fridays or putting a foosball table in the break room, but giving employees something that will ultimately make them better workers.
