The most successful independent financial advisory firms pay their employees more, and not just in cash.
According to a to study published on February 1 by Charles Schwab. The other good news behind the spending: Companies that offer performance-based incentives to key employees have better long-term results, Schwab said in its 2021 RIA compensation report.
The report, an addition to Schwab’s Comparative study RIA 2021 last December, revealed that nearly eight in 10 companies said they planned to hire last year, the second straight year of the COVID-19 pandemic. With labor markets still tight at the start of 2022, jobs jumping, Americans leaving the workforce in a ‘big quit’, and talent still RIA’s biggest expense, hiring is likely to continue – as well as introducing new complexities. RIAs are the fastest growing segment of the US wealth management industry, according to McKinsey.
Last year, recruiting personnel rose to second place in the strategic priorities of independent firms. “We’ve never seen this in 15 years,” said Lisa Salvi, managing director of business consulting and education at Schwab Advisor Services. The compensation report surveyed 1,036 consulting firms. Schwab’s RIA benchmarking study is the industry’s leading analysis.
Main findings of the report: