Advisory firm recruiting is moving ahead despite the current market environment, according to a survey conducted this month by Northern Trust Asset Management’s FlexShares Exchange Traded Funds. The survey found that 41 percent of financial advisors are making plans to grow their team in the near-term, defined as “during or soon after” this market downturn. Furthermore, over half of these firms (52 percent) anticipated updating their work-from-home policies after health concerns from the coronavirus have dissipated.
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“Firms that prioritize their diversity recruitment are best positioned for growth in the long run, as those firms will provide investors more options to find an advisor with whom they connect.”
As companies refresh their recruiting and retention policies surrounding the pandemic, a late 2019 survey by FlexShares on advisor teams and diversity found that many advisory firms are underprepared to address investor preferences for diverse talent. The survey, which asked 200 investors about their advisor preferences and over 500 advisors about their internal strategic recruiting initiatives, found that while investors express indifference to demographic features, in actuality they choose advisors who look like them.
Investors Look at Advisor Age, Gender and Racial Profile
According to the 2019 diversity survey, 68 percent of investors said they have no preference for race and 76 percent said they have no preference for gender when looking for an advisor. However, these same investors work with advisors of a similar age, gender and racial profile. When it comes to gender similarity, women were found to be four times more likely to work with a female advisor than men are. Investors also search for advisors that match their ethnicity, as 98 percent of white investors from the survey work with white advisors, 75 percent of Asian investors work with Asian advisors, and over half of all non-white investors (63 percent) work with non-white advisors. The same principle applied for age similarity. Investors under 40 prefer advisors in their 30s and 40s, while investors in their 40s and over, tend to prefer advisors in their 40s and 50s.
“As U.S. investors become more diverse, it’s critical for advisory firms to consider investors’ desire to work with advisors like themselves,” said Laura Hanichak Gregg, Director of Practice Management and Advisor Research at FlexShares. “Firms that prioritize their diversity recruitment are best positioned for growth in the long run, as those firms will provide investors more options to find an advisor with whom they connect.”
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