Page 39 - Investment Advisor July/August 2022

THE FAST TRACK

By Angie Herbers

Explosion of Firm Models Poses a Human

Capital Challenge

This means there are more dimensions than ever in the hiring process, and

a need to match a candidate’s goals to your firm’s type.

he success of financial advice The software serves as the backbone of
firms hinges on their ability the client service experience.
Tto attract and retain advisors. We already are seeing market leaders
One way organizations can accom- emerge in the fintech financial planning
plish this is by providing career lexicon. The vast majority of indepen-
paths — clear sequences of steps by dent advisory firms that are starting
which employees may advance toward from scratch today are fintech firms, and
their professional goals. I believe that we will see such firms con-
But here’s the tricky thing: As the tinue to enter the marketplace at a rapid
industry evolves, firm models are pro- pace over the next five years.
liferating. And that adds another dimen- Investment management firms:
sion to the hiring process — namely, Two decades ago, the conventional
making sure that your firm’s model wisdom in the independent advisory
matches the candidate’s career goals. If firm world was that pure investment
your firm type and the candidate’s goals management models were not feasible.
As the industry are not aligned, you’re more likely to Without financial planning, firms could
evolves, firm models eventually lose the advisor and hire and not adequately retain clients. For this
train a replacement, which is expensive.
reason, investment-centric businesses
are proliferating. Not long ago, advisory firm models adopted financial planning services as
And that adds were limited to investment-only firms, a loss leader. They would offer free
wealth management firms and finan-
planning to manage the clients’ assets
another dimension cial planning firms. That has expanded for a fee.
But the belief that investment
to the hiring process to include fintech financial planning accounts can’t be retained without
firms and financial therapy firms. Each
— namely, making type of firm has a different service financial planning is fading. It turns
sure that your firm’s model, different target markets, differ- out that a significant subset of con-
sumers understand that financial plan-
ent pricing structures and many other
model matches points of differentiation. Let’s look at ning is important, but view investment
the candidate’s the different firm types: management as their immediate con-
Fintech financial planning firms:
cern. I’ve seen ample evidence that pure
career goals. I believe that this model is poised to investment management firms can be
proliferate strongly. Fintech firms are successful and quite profitable if they
independent RIAs built around propri- tap into the right client base.
etary financial planning software. These Wealth management firms: Wealth
fintechs are not to be confused with management firms provide investment
robo-advisors or the fintech tools that management and financial planning,
are sold to advisors. They are businesses and they are generally known for com-
that developed their own comprehen- plex client experiences. Over the past
sive financial planning software before two decades, wealth management firms
hiring advisors and accepting clients. have expanded their service models to

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