Catherine WIlliams

Advice practices are losing tranches of clients when their advisers switch firms according to US-based investment manager Dimensional Fund Advisors, with the fallout forcing those businesses to increasingly prioritise talent retention.

Historically, the number one reason advice businesses lose clients is death, but over the last few years Dimensional research shows the trend for advisers to take their books from former firms has become just as prevalent.

In Australia, non-solicitation agreements mean advisers who leave a company can be restrained for a period of time from approaching their former clients, but this can potentially lead to messy legal battles depending on the validity of the contract.

Dimensional head of practice management Catherine Williams tells Professional Planner the departure of an adviser can be compounded by the further loss of clientele. For advice businesses, this is a risk worth steering clear of.

“That is a double-whammy you want to avoid,” she says. “The key to that is advisers need to see themselves long-term in the business.”

The global survey included 800 participants from North America, UK, Europe and the Asia Pacific including Australia.

Retaining talent

Competitive salaries are a major factor to employee retention, but non-monetary benefits including working flexibility have become a higher priority.

“You’re likely competing against businesses outside of this industry,” Williams says. “It’s one thing to be thinking about the competing firm down the street, but also consider the larger landscape and industries that have pivoted quite nicely in this area.”

Williams says the days of being exclusively in the office five days a week are likely gone.

“That said, there’s still a lot of unknowns here. Employees demonstrated to firm leaders over the last few years they can absolutely do their job remotely there’s no question about that.”

Companies face a balancing act by offering flexibility while continuing to provide the same company culture.

“Has that been at the sacrifice of the culture of the company and the client experience? That’s up for discussion,” she says. “The ones that have high employee satisfaction and are able to retain talent are as transparent and communicative as possible.”

Company culture doesn’t need to be done “at the water cooler in the office”, she says. It’s up to companies to find alternative solutions.