20th March 2023

Executive talent update - Hiring tips for CEOs!

Last year was a great year for executive head-hunters. Following the depth of the pandemic, the market came back incredibly strong. It wasn’t only us who had our best year ever in 2022.

So how is the executive talent outlook 2023 in financial planning and wealth management?

I think it will carry on much the same as 2022.

The pandemic first caused a hiatus in hiring and then caused a near stampede when the whole market tried to hire at once. You can’t have missed it!

A perfect Storm for Head-hunters! 

In many ways we have a perfect storm. Financial Advice firms enjoyed a great pandemic. The fee model which became mainstream 10 years earlier with the introduction of RDR, meant that most Adviser business revenues held up well, even during lockdown, apart from short-term blip when markets initially panicked before recovering. American PE in particular saw this and decided they were piling into the sector to buy up UK financial advice firms.

Many Business owners, tempted with opportunities to sell their shares, saw the chance to “take the money and exit stage left”. Many more are attempting to follow. 

Inevitably this has led to many growing Financial planning and Wealth companies being left without a full complement of Directors. The larger companies, with good succession plans in place were able to replace internally and then hopefully bring in a new employee lower down the pecking order but many were forced to go to market just when they would rather not have.

Hiring top talent without an Executive Search Consultancy could place you at the back of a long queue!

When a market grows rapidly there is always a shortage of talent. We currently have less than 50 large advice firms, but there are nearer to 150 with significant financial backing who are trying to expand through acquisition and probably even more planning to do so in the future. So, inevitably there are a lot of companies chasing a small amount of talent. Inevitably, the few people with experience on the board of large acquisitive advice firms find themselves with an incredible amount of choice if they are ever willing to raise their head above the parapet to check if the grass is greener elsewhere. 

They don’t need to look for jobs, they expect to be Headhunted! 

This brings a whole different set of challenges for a headhunter like us…

Many of the larger advice firms have needed to fill specialist roles for the first time as they grew. We have watched Operations Directors and  Chief Financial Officers are being brought in to replace Office Managers and Financial Controllers as companies sought to improve the board governance as they grew. 

While the CEO is usually the mover and shaker who secured the investment and will lead the company to its next funding round, many need to bring in a Managing Director as their successor to ensure they will be able to escape with their cash next time round.

Of course, these large PE backed firms need to have good corporate governance even though they are run by entrepreneurs. This can be a cultural challenge for many who have been used to running small entrepreneurial firms and suddenly find themselves in a much more structured environment. A lot of our efforts are placed in ensuring our clients can get the balance right when hiring, to ensure the right amount of entrepreneurial flair while ensuring the individual doesn’t get too frustrated by the growth in bureaucracy and governance requirements needed to build start-ups into scale-ups to take businesses to the next stage in the growth.

We often find these individuals will come across from larger companies in the financial services sector. However, the need to understand the advice process shouldn’t be underestimated, when joining the board of an ambitious financial advice company with a significant PE or corporate backer.

All this has made it an exciting time as head-hunters, as we support companies in negotiating packages based more on equity options than the traditional basic salary and bonus, that candidates may be more familiar with. We also have to deal with the inevitable Counter-offer!

What does today’s CEO need to do to grow their business while competition for talent is so high?

It is estimated that the cost of replacing a top executive is 2.5 times salary so that is £400-£500,000 for a typical executive in a mid-sized financial planning business. 

Tips to retain Top Executives

1. Focus on retaining your key staff. Look after them and show them they are valued. If they are important to you, their skills will be in high demand from your competitors. 
2. Lock them in (at least for a period) with equity and Long Term Incentive Plans (LTIPs) so they share in the company’s success.
3. Don’t assume you can successfully counter-offer if a key staff member resigns. Of course you are welcome to try but most employees who have handed in their resignation will view a counter-offer as too little- too late. This will have been anticipated by the head-hunter and will have already have been covered off in the process.  

Tips to replace or hire Top Executives

If you have to hire, use our RAISE process below (others are available)

1. Research your market. Identify around 100 possible candidates.
2. Approach them personally. It’s a competitive market! Stand out from the crowd!
3. Interview robustly.
4. Select based on competence and cultural fit with candidate profiling.
5. Embed effectively with a good onboarding strategy.

If you choose to use an Executive Search firm (Head-hunter) to do it for you

1. Check their track record. Do they have proven expertise in your market at the level you are hiring. Testimonials will help you check.
2. Make sure you use the RAISE process above (or similar)
3. Make sure they offer free replacement guarantees.

Paul Harper

Paul is Managing Director of Paul Harper Executive Search and author of the amazon best selling book “Reinventing the Financial Advice Profession” 

What have we done to raise our game in line with the market?

Well firstly we introduced our Handpicked range of affordable executive search products, designed to help growing companies secure top board level talent without breaking the bank. Then we extended our bespoke Scale-Up service for ambitious companies needing a variety of specialist staff at different levels, and finally we developed a number of services for IFA Business Owners seeking to exit now or in the future.

Of course, all of this was achieved while bringing in additional executive financial services talent into our business through a mix of hiring high profile industry professionals such as John Biggs and Charles Evans plus associates like Neil Baines-Thomas and Ian Hancock and more recently the acquisition of Legal & Wealth Consulting and the formalising of Paul Harper Mergers & Acquisitions with Martyn Laverick as its Divisional Director, an expert in managing the sale of IFA businesses.  

Today, our business is barely recognisable from the business we had only 3 years ago. While we kept all our core staff and core services, we refined everything, and we have added expertise which is second to none. 

What next

As we support our clients to meet their growth aspirations, we will continue to provide additional services for executive search, recruitment, growth & exit consulting. We continue to listen to our clients and help them achieve their aspirations through working collaboratively and executing effectively. 

View all the latest job opportunities from Paul Harper Search here

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