Advice practices looking to M&A for growth has come at the expense of recruitment with the former being more common for building scale.
Vivere Group chief executive Chris Gordon has found a flatline in demand for advice roles which he attributes to more M&A deals taking place to build scaled-up firms.
“There’s a lot of merger and acquisition and I think this seems to be having a knock-on effect for advisers and leadership positions,” Gordon tells Professional Planner.
While a firm may have scaling up as a priority, they are often resorting to mergers to do so, whereas three to five years ago the market was much more active.
“Some firms are looking to continue to grow their adviser numbers, but the demand has not been as active as previous years,” Gordon says.
“We have seen a lot of firms merge with other firms and I think they just need to bed down prior to going through another growth phase.”
However, other roles such as support staff positions have been in demand as businesses try and improve client service and not relying fully on outsourcing.
“We’ve been very active with adviser support type of roles…this includes client service managers, paraplanners and associate advisers.”
However, Gordon says this description of the hiring market does not necessarily apply to the private wealth sector, which has seen a much more active market.
“The private wealth sector has been slightly different. We’ve seen them scaling up quite quickly with advisers, but on the retail advice side, firms are definitely growing but at a much slower rate.”
Gordon says salary rates have remained mostly steady across the board, with a slight difference in support staff roles.
“Support roles have seen a slight increase, and I think that’s due to the demand, but advisers, operations, risk, compliance, those roles, the salaries for those positions have been pretty stable.”
Private wealth again sits apart, as if the adviser has a strong book of clients, they may be able to negotiate for a premium salary.
However, on the operations or support side of the firm, the salaries have remained relatively stable.
Fuse Recruitment national manager for insurance and wealth management Madeleine Martin says she has seen consistent demand to recruit financial planning roles, although this did “soften slightly” in Q4.
“This is likely due to clients being tied up with end-of-financial-year preparations and waiting for new budgets to be approved before moving ahead with additional headcount,” Martin says.
She points to Brisbane as their “standout” market this financial year, showing the strongest growth in planning roles, but candidate availability remains low, making many of these roles difficult to fill.
“We’re seeing time-to-fill increase across the board due to a shortage of qualified applicants,” Martin says.
Demand for diversity
Advice firms are very keen to hire more female advisers to better cater to their client base. Female clients often prefer to be served by a female adviser as they can relate to them better than a male adviser.
“The demand is strong, firms are definitely trying to get more females into their business,” Gordon says.
Three years ago, there was a 10 to 15 per cent salary premium to hire female financial advisers due to demand from female clients, but Gordon says firms are no longer willing to pay that premium.
Martin similarly says the strong demand for women in advice roles hasn’t changed.
“Several of the companies we work with have clear diversity targets and are actively reviewing their benefits to better attract female advisers,” Martin says.
But she notes that outside of higher remuneration packages, women are open to incentives like generous parental leave, flexible working arrangements, and leadership pathways.
Generally speaking, Martin says there has been a “normalisation” of salaries for advisers following the post-Covid wage surge and the so-called “war for talent”.
“Recent market data from Seek shows that overall wage growth across all sectors has been quite modest, even though many financial planning roles are still considered hard-to-fill and remain talent-short,” Martin says.
“While financial planning professionals are still being offered salary increases and more attractive remuneration packages when changing roles, the jumps are no longer as significant as what we saw in 2021 and 2022.”
Hiring from within
Slow demand for advisers in the hiring market may also be a consequence of firms choosing to hire from within and train up support staff.
For example, BFG Financial Group has developed a system where its junior staff can progress to being a financial adviser with the backing of the firm, while high-net-worth giants Koda Capital offer a “pathway to partnership” for their Professional Year candidates.
Koda believes it found a way to create an attractive pathway for its PY advisers and then retain them by offering equity stakes as they progress in the firm.
BFG almost exclusively trains its advisers from within, hiring them initially for support or admin roles.
Gordon says demand for associates has cropped up recently, which would be preferable to firms who have a similar philosophy to BFG.
“We’ve seen that firms look for associates or senior associates with the view to offering them a pathway to complete the professional year, as well as the [view] to move them into an adviser [position],” Gordon says.
“The senior support staff can help with the client support and so that’s freeing the advisers up to focus more on new business as well.”
