9 Keys to Successfully Attract and Retain Next-Generation Leaders

In building a sustainable wealth management firm, the need to attract and retain next-generation future leaders becomes more crucial with each passing year. As firm founders and owners begin considering their legacy, it’s critical to start planning for who will carry the torch forward. In fact, building a detailed continuity and succession plan isn’t just a best practice…it’s your fiduciary duty – to ensure a continuity of care for your clients. By adhering to and implementing the following nine essential keys, you can make important strides toward enhancing your firm’s ability to attract and retain next-generation leaders.

Nearly half (42%) of all advisors are age 55 or older, and a staggering 38% of current advisors plan to retire within the next 10 years.¹

1. Acknowledge the importance of succession planning

Your ability to monetize the full value of your business is going to hinge on the firm’s sustainability after you exit. More importantly, your clients depend on the stability and longevity of your firm to manage their wealth. Without a robust continuity plan, the future of both your firm and your client’s financial well-being is at risk. A clear and actionable succession plan demonstrates your commitment not only to sustainable business growth but to the long-term interests of your clients.

2. Recruit for tomorrow as much as for today

Identifying and nurturing future leaders begins with recruitment—looking for individuals who not only possess the technical skills required but also align with your firm’s values and culture. If you wait until your existing team is at full capacity, it’s too late. Hire in advance of need and with future growth in mind. Some of the best candidates may lack a specific skill set (which can be developed) but possess broader abilities that set them apart.

3. Invest in developing your future leaders

I often hear advisors bemoan the fact that they didn’t get into this business to manage people. But I remind them of the famous Jack Welch quote, which states, “Before you are a leader, success is all about growing yourself. Once you become a leader, success is all about growing others.” Having professional development plans in place and empowering future leaders to continuously improve (through continuous education and mentorship) matters.

4. Offer a clear pathway to partnership

The next generation of leaders often seeks more than just a job; they want a stake in the business. Offering pathways to partnership can be a significant motivator. Consider implementing a tiered partnership program akin to those in law firms, where there are both income partners and equity partners. This provides a clear progression path and rewards commitment and performance.

5. Communicate effectively and consistently

Even with the best systems in place, effective communication is crucial. Regularly discuss career paths, expectations, and opportunities with your employees. Weekly check-ins and one-on-one meetings are essential for building deeper relationships and understanding what your team members need. Consistent and clear communication helps manage expectations and keeps everyone aligned with the firm’s goals. Click here to view our recent blog on Mid-Year Team Reviews.

6. Always Be Recruiting

The best time to look for talent is before you need it. Continuous recruiting ensures that you are always aware of and attuned to the current talent landscape and ready to seize opportunities whenever they arise. Even if there are no immediate hiring needs, building relationships with potential candidates can pay tremendous dividends down the road. Consider omnichannel recruiting, which involves leveraging multiple channels—such as social media, job boards, company websites, employee referrals, and direct outreach—to create a seamless and cohesive candidate experience. This approach is crucial as it broadens the talent pool, enhances employer branding, and ensures consistent engagement with potential candidates across various touchpoints, ultimately leading to more effective and efficient hiring processes.

7. Create comprehensive career plans

Every professional needs a career plan. Develop individualized career plans for your employees that outline their path within the firm, including the skills they need to develop and the milestones they need to achieve. This provides clarity and direction, helping employees see a future with your firm. Click here to review our recent blog on Career Pathing and Incentives.

8. Regularly check-in on employee sentiment

Understanding how your employees feel about their work and the workplace is vital. Weekly pulse checks can provide insights into their satisfaction and engagement levels. And addressing concerns promptly goes a long way towards preventing minor issues from escalating into major problems – in turn reducing turnover and fostering a more positive work environment.

9. Develop (and communicate) a more robust compensation philosophy

Compensation is a vital factor in attracting and retaining talent – but it’s not all about the money. Create a rewards statement that details base salary, bonus plans, non-monetary benefits, and long-term incentive plans. Communicate this philosophy more than once a year to ensure that employees understand and appreciate the full value of their total compensation package. Click here to review our recent blog on Designing Compensation Structures.

The cost of losing talent

Studies indicate that the cost of replacing an employee (i.e., recruitment, training, and lost productivity) can range from 50% to a staggering 200% of their annual salary. For wealth advisory firms, this cost can be even higher due to the critical nature of client relationships and the expertise required.

And the associated costs of turnover aren’t solely limited to the financial. Existing client relationships are your firm’s lifeblood. To mitigate this risk, it’s critical for multiple team members to build relationships with each client. You should also seek out legal counsel and guidance on incorporating specific payment provisions in employee agreements regarding client relationships that departing employees might solicit (e.g., a multiple of trailing 12-month revenue) to help protect the business, considering that non-solicits and non-competes have become much less enforceable in recent years.

The ‘Great Wealth Transfer’

Looking ahead, the greatest wealth transfer in history is expected to occur between now and 2045. This presents a tremendous opportunity to engage your next-generation leaders in developing strategies to capitalize on this transfer to generate continued growth. Invite next-generation leaders to have a greater role in framing the future; ensuring that the firm evolves in a way that aligns with their vision. This collaborative approach can serve to energize their drive and commitment, increase their investment in the firm’s success, and help you build an organization where they see a long-term future.

Attracting and retaining next-generation leaders requires a multifaceted approach encompassing recruitment, development, communication, and strategic planning. By focusing on these nine keys, you can build a strong pipeline of future leaders, ensure the longevity of your firm, and continue to provide exceptional service to your clients. After all, the future of the business ultimately depends on the quality of the leaders you are cultivating today.

Coaching Questions from this Article:

1. Think about your firm’s current passage to partnership for your next-generation professionals. What steps could you take to make your firm’s career paths more clearly defined and engaging?
2. Based on industry benchmarking surveys, how does your total compensation package stack up against your peers for recruitment and retention purposes?
3. What steps will you commit to taking in order to attract and cultivate NextGen advisors to become future leaders of your business?
4. Think about your hiring plan for the future. How can you approach it more proactively with an eye on creating a durable and sustainable business?

¹ Cerulli Associates, “U.S. Advisor Metrics 2023,” January 2024