RIAs Will Need Twice As Many New Staffers to Match Growth, Schwab Says

Growing up is hard.

Wealth management firms brought on two new staff members on average over the past five years but will need four to six more over the next five years to keep up with demand, according Schwab’s latest compensation report. Based on current AUM and revenue trends, the industry as a whole will need to employ more than 70,000 new staff, including both advisors and administrative roles, over the next half-decade. The numbers reflect increasing pressure on advisory firms to bring on new talent, specifically younger advisors, as the battle for new recruits heats up.

“If [firms] can’t meet their hiring needs, they feel that in their productivity,” said Schwab’s managing director of advisor services Lisa Salvi, whose team leads the study. “Their staff will tell them. They feel it in how strained they are.”

Growing Pains

Not surprisingly, compensation is the top driver of employee happiness, more so than everything from equity to vacation to sick days. Total cash comp increased by 23% over the past four years, according to Schwab’s study, but the way it broke down varied depending on the role:

• About 91% of a client service associates’ compensation came from their base salary, compared to about 8% from performance-based pay.
• Meanwhile, only 44% of a managing partner’s pay came from their base salary, while 42% stemmed from owner profit distributions.

As the talent war intensifies, nontraditional benefits like mentorship programs, are also becoming a key strategy. For firms looking to understand what makes their teams tick, simply asking is the first step, Salvi said. One firm actually discovered that their employees cared most about pet insurance. (Hey, vets can get expensive.) Another firm Salvi worked with employs avid horseback riders and gives team members time off to go riding during certain seasons. “You can get really creative,” she said.

Goodbye Notetakers. Another way firms can keep up with demand is by updating their job descriptions. With the advent of AI, particularly notetakers, some tasks will have to be updated to reflect what technology might take over, Salvi said. “Whereas that first junior role might have been a client service associate who would sit in the meeting and take those notes, in most firms that have really adopted [AI] notetakers, that’s not necessary anymore,” she said. “It’s shifting the mix of their responsibilities. It’s not going to look the same as it did even just one year ago.”