Written By: Ginny Hudgens | The Strategic Implementer
In an era of economic uncertainty and market volatility, many financial advisors may feel hesitant to expand their teams and hire new staff. However, it's essential to recognize that long-term success in this industry requires a strategic approach to growth, even during challenging times.
That’s why this article will delve into the current tight hiring market, discuss key statistics that defy inflation and downturns, and highlight why financial advisors should continue to work on growing their businesses even in a down market.
The Problem: Advisors Think in Terms of Market Cycles
You’ve heard of the feast and famine cycle in marketing, and it goes something like this. You work on building your business and growing when times are good. You know the value of re-investing in your business to see a future return. Then the market turns south, resulting in a lower AUM. You reduce marketing activity in order to alleviate pressure on your cash flow, but now you have no way of keeping your pipeline full.
The same happens with hiring. You are more than willing to grow your team when times are good but put business growth on the backburner when the tide goes out. Feast or famine, though, is incredibly stressful—not just on you, but on your business’s ability to grow.
You see, the problem is that advisors tend to think in market cycles. But just because the market is down doesn’t mean all spending—especially when it comes to support staff—should come to a halt. Here’s why.
The Tight Hiring Market: Defying Inflation and Market Downturns
It's no secret that we're experiencing a tight hiring market, with employers struggling to find skilled candidates in various industries. But the reality is that the demand for financial advisory employees in all roles remains robust.
According to the Bureau of Labor Statistics, employment of financial advisors is projected to grow 4% from 2019 to 2029, faster than the average for all occupations. This demand is driven by an aging population that requires financial planning and investment advice.
Plus, the unemployment rate in the financial services sector has remained consistently low, even during economic downturns. This reflects the sector's resilience and the ongoing need for financial advisory services.
So, while the market is down and inflation is high, the hiring market remains unphased. The demand for advisors is still high and growing.
Why Financial Advisors Should Continue to Grow Their Business in a Down Market
Now, I am not suggesting that hiring expenses exist in a bubble. We know that inflation and market success will undoubtedly have an impact on your business spending; but I am suggesting when it comes to cash flow that hiring is not where you make cuts.
1. You still need to adapt to changing client needs. Market volatility can lead to increased client anxiety and a greater demand for financial guidance. By having a larger team of skilled advisors, your firm can better address clients' needs and maintain trust during challenging times.
2. Diversification creates stability. Hiring professionals with varied skill sets and expertise can help your firm diversify its services and adapt to market changes more effectively. This diversification can lead to increased revenue streams and greater stability in the face of market fluctuations.
3. Gain a competitive edge. By continuing to grow your team and invest in your business, you demonstrate your commitment to success and showcase your firm's stability. This can attract new clients and help you stand out from competitors who may be hesitant to expand during uncertain times.
4. Hiring helps prepare for future growth. Market downturns are cyclical, and economic recovery is inevitable. By continuing to hire and expand during a down market, you position your business for success when the market rebounds. This proactive approach can lead to long-term growth and a stronger business foundation.
You Can’t Predict the Future
Like you tell your clients all the time, you can’t predict the future. What if we enter a recession? Will you put a halt on hiring and jeopardize the trajectory of your growth for five to ten years?
No one can predict how long a downturn will last, so it’s best to position long-term growth over short-term cash flow needs. Investing in your team and your business during a down market can contribute to long-term success and stability, positioning your firm for a brighter future.
Related: Banks’ Demand for Emergency Loans Could Signal More Rate Hikes