Accelerate your success: How talent development can benefit your firm

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See how these advisors use sponsorship to develop talent at their firms—and improve employee engagement and retention.

Key Points

  • Competition for top talent is intense—and it will only get tougher as the strong growth trajectory continues for the Registered Investment Advisor (RIA) industry as well as for independent RIA firms. The new client growth and increased profitability reported in the 2016 RIA Benchmarking Study from Charles Schwab demonstrate the power and appeal of the independent advice model. According to the study, at the median, firms have increased their client base annually by 5.5% over the past five years, with average client size ranging from $930,000 at smaller firms to $3 million at larger firms in 2015.1

Advisors' focus on their clients and their commitment to building ever-stronger businesses make this significant growth possible. As you adjust your talent strategy to keep pace with this growth, you may find it helpful to learn how some advisors are focusing on talent development and sponsorship.

For each unfilled position, the average organization loses roughly $407 per day.2

As your firm has grown, you've seen a significant increase in the number of clients you serve. While that's a good problem to have, it can put a strain on your staff, making it hard to efficiently scale your services and operations to handle the increased demands.

By providing professional development for top performers, you'll be getting the best return on the investment you've already made in recruiting and onboarding your team. And extended vacancies can hurt your bottom line due to lost productivity in the role, as well as in time spent by recruiters and hiring managers.2 Promoting from within may reduce the expenses associated with open positions. Developing the talent you already have on staff could help you build the next generation of leadership and ensure your firm's long-term success.

Sponsorship is a strategic talent development tool

Sponsorship can support the development and retention of top performers. And for junior staff, sponsorship can make a tremendous difference in terms of whether—or how fast—they make it to the senior level of a firm.

To clarify the difference between a mentor and a sponsor: Mentors advise and sponsors act. That is, while a mentor provides career guidance, a sponsor is a senior leader who advocates for stretch opportunities and promotions for high-potential employees. And a protégé is a high-performing employee who adds value to a sponsor and the firm.

A sponsorship relationship is based on trust; sponsors and protégés are accountable to each other. Sponsors expect protégés to bring their "A" game to roles and responsibilities within the firm, as well as to client interactions. In return, protégés can free sponsors to focus on client relationships by offering support in other areas, such as providing technical expertise, sharing insights into particular market segments, or preparing research materials.

Top benefits of sponsorship for your firm:

Sponsorship can offer clear advantages for employees, but it offers important benefits for firms as well. Your firm can use a sponsorship program to:

  1. Improve retention, which could reduce turnover costs: Talent development programs that include sponsorship can help grow and retain current talent, potentially reducing employee turnover and its associated costs.
  2. Attract top talent: By offering your employees a clearly defined career path and support from senior staff through a sponsorship program, you’ll enhance your recruitment strategy and attract attention from top candidates.
  3. Provide support for your senior leaders: Support from protégés—whether it's providing market research, technological expertise, or fresh perspectives—frees up senior leaders to focus their attention on areas of greatest importance.
  4. Strengthen your succession planning strategy: Integrating new hires into client relationships early on could build trust with clients and pay off with a smooth transition when senior leaders retire.
  5. Increase diversity and inclusiveness: While sponsorship can benefit all top performers, it can be especially important for women and diverse populations. By supporting diversity and inclusiveness, you'll be better positioned to meets the needs of your future clients.

Sponsorship in action

Advisory firms are using sponsorship to develop talent at their firms. Take a look at the following case studies.

Over time, a client’s trust in the sponsor is gradually extended to the protégé in a seamless, mutually beneficial process.

Developing next-gen advisors for next-gen clients

Marjorie L. Fox, FJY Financial co-founder and partner, has over 30 years of experience developing and retaining talent. She believes that her firm's clearly defined career path for new hires is critical to its recruitment and retention strategy, as well as an important component of succession planning. Marjorie understands that millennials want to know what’s required at each stage of their career path so that they can track their progress and advance quickly. And spelling out responsibilities and requirements, both within the firm and with regard to client relationships, makes it easier for her firm to evaluate employee performance.

At FJY Financial, sponsors invite protégés to client meetings; protégés begin as note takers and progress to making presentations, developing their relationships with clients along the way. Over time, a client's trust in the sponsor is gradually extended to the protégé in a seamless, mutually beneficial process.

How does Marjorie keep an eye out for top candidates? Her firm has developed an internship program that liaises with universities with CFP® Board–Registered Programs; each year FJY hires "summer associates." In combination, these employee development initiatives are helping to build the next generation of leadership—for the next generation of clients—at her firm.

Men are 46% more likely than women to have a sponsor,3 and Caucasians are 63% more likely than ethnic minorities to have a sponsor.4

Men are 46% more likely than women to have a sponsor,3 and Caucasians are 63% more likely than ethnic minorities to have a sponsor.4

Building the inclusive culture investors want

When Rebecca Pomering, CEO of Moss Adams Wealth Advisors, and other leaders at her firm reviewed their employment development data, it showed that although the firm had equivalent numbers of junior-level men and women with the potential to become partners, the high-potential women tended to leave the firm—but the high-potential men stayed and were promoted. When they dug deeper, they learned that junior men had mentors and sponsors, but junior women only had mentors.

With the benefit of this insight, Rebecca and her leadership team committed themselves to helping correct the gender imbalance in the senior levels of her organization by initiating a sponsorship program. So far, the feedback has been positive from employees—and clients. In fact, some clients have mentioned that the firm’s culture of inclusiveness was a key factor in their decision to choose her firm over others.

In response to the evolving investor landscape—with women, younger people, and ethnically diverse individuals controlling more assets—RIA firms are looking for ways to recruit and develop advisors who reflect the clients they want to serve. An inclusive sponsorship program can help create a strong pipeline of talent for all top performers, including women, younger people, and those with culturally diverse backgrounds.

Increasing employee engagement and retention

Amanda A. Tappen began her career as an equities researcher, but when a sponsor spotted her potential for a client-facing role, he asked her to interview for her current position as a relationship manager at Douglas C. Lane and Associates. Her sponsor invited her to shadow colleagues and attend critical meetings, which made her feel valued and accelerated her learning process. He also encouraged her to earn her CFP® certification, which she says was one of the best decisions she ever made. In this way, the firm demonstrated its commitment to her and allowed her to take on additional responsibility.

Early on, Amanda proved herself to be very valuable to the firm. When a client asked Amanda to help his wife become more involved in the management of their wealth, she met with her at the couple's home and made herself available 24/7. Amanda strengthened the relationship over the next year, which proved critical when the husband died suddenly and his wife turned to Amanda for help and guidance.

As a result of the sponsorship relationship, Amanda gained traction in her career progression, and her firm benefited from her relationship-building expertise.

Amanda's story demonstrates the "sponsor effect": Employees who have sponsors are more satisfied with their rate of advancement and report greater likelihood of staying with their current employer.5

A sponsorship program offers the professional development employees are looking for. In turn, it can build loyalty to the firm and increase employee engagement and retention.

Employees who have sponsors report greater likelihood of staying with their current employer.5

A road map for sponsorship

To capitalize on the power of sponsorship—for yourself and your firm—consider the following tips.

For firms: Take a look at your current employees. Identify the top performers and think about how you can support and develop them. You’ll also want to pinpoint potential sponsors—those who are admired for their leadership skills, have a track record of helping employees succeed, and are outspoken in their support for inclusiveness. Discuss your firm’s views on the value of inclusive leadership and talk about how you plan to address transitioning client demographics. Finally, consider launching an informal sponsorship pilot to test what works for your particular circumstances.

For sponsors: Think about how you can contribute to a culture of sponsorship at your firm. You might begin by raising the issue at a leadership meeting—or by identifying high-potential individuals whom you are willing to support and who can be an extension of your brand as a leader.

For protégés: Think about where you’re headed and identify the people who can help you get there, including mentors who could turn into sponsors. And make sure that you’re prepared to articulate your unique value to them.

Support from a sponsor gives high-performing employees the assistance they need to advance their careers. And sponsorship programs help senior leaders build effective teams that contribute to the success of their firms. It's a win-win.

Four key components of a successful sponsorship program

Sylvia Ann Hewlett, author of Forget a Mentor, Find a Sponsor and a leading expert on talent management, lists four key components of a successful sponsorship program—scalable for firms of any size:6

  • Make sponsorship robust. Companies must take a comprehensive approach to building and leveraging the sponsorship relationship with end-to-end solutions that incorporate senior leader support, enrichment, and education, plus a structured approach to ensure that sponsorship grows as a function of proactive talent management.
  • Lead from the top. Engaging the C-suite is a critical success factor. Visible and active support from a company's most senior leaders—both women and men—often signals the difference between good intent and real outcomes.
  • Pay attention to the pipeline. The seeds of sponsorship can be planted at all levels. In fact, smart companies understand that employees need sponsorship at each career transition point—which can be as early in their career as when they join the company or move from manager to director.
  • Make sponsorship safe. Barriers to sponsorship come in many forms, not the least of which is comfort in seeking advice and counsel from senior leaders. Programs that make it safe and simple for new relationships to form help to bridge a gap.

Sylvia Ann Hewlett, founder and CEO of the Center for Talent Innovation, studies the challenges diverse populations face in the workplace. She notes that sponsorship programs can be beneficial for all populations of high-performing talent and may be particularly relevant for women and minorities.

Want more industry insights, analysis, and research on talent from Schwab Advisor Services? You can now access a wealth of information on talent recruitment and development all in one place. Visit the new RIA Talent Advantage™ Program site to get the tools, resources, and insights you need to enhance your talent strategy—and drive your firm's growth.

RIA Talent Advantage™

Visit the new RIA Talent Advantage™ Program site  to get the tools, resources, and insights you need to enhance your talent strategy—and drive your firm's growth.