Doesn’t it seem like a high stakes game of poker going into 2016? Right off the bat, we get hit with a market decline that just keeps on going. And last year, didn’t we feel pretty good overall about the markets up until December? Then, the Dow ended down 2.2% and the S&P 500 fell 0.7% for the year. Suddenly, it turned out to be the worst year for these two indexes since markets collapsed in 2008.
So what does this mean for firms planning for growth and expansion in 2016? Certainly, revenue has dropped at most firms in the investment industry, so the question facing C-Suite executives is whether to double down on their growth plans, hold the line, or fold their planned hiring initiatives altogether.
In our national work to attract executive talent to the industry, it’s been clear that in just the first few weeks of this rocky year, firms are sticking to their previously established growth/talent strategies. There have not been any holds placed on searches, and no one has yet to fold their new requisitions and play “wait-and-see.”
Three major themes seem to be tipping the scales toward a commitment to growth. First, talent remains in short supply. The longer you wait to hire, the worst the crisis will get. Second, there is an appetite for disruptive thinkers, not just performers. This is one of the lasting lessons we learned from 2008. Third, firms are still committed to adding top performance, regardless of market conditions: quality over quantity.
Talent Is In Short Supply
Since McKinsey authored the study in 1997, “The War For Talent,” the topic of talent strategy has taken on enhanced importance in the C-Suite. Today, there is a heightened awareness about the critical shortage of executive talent given there are so many aging boomers who are in leadership and ownership positions within the investment industry. With a solid one-third of advisors today over the age of 55, succession planning is essential within the wealth management segment. The makeup of leadership in asset management isn’t drastically different. In other words, whether the market is down a little or a lot, bringing in future leadership for succession isn’t an option that can be delayed.
Lessons Learned from 2008
Declining markets dictate the need for confident and creative leadership. Firms learned the hard way during the financial crisis that when faced with drastically under-performing strategies or channels that weren’t buying what they were selling, supplementing their firm’s leadership with fresh thinking was critical. This year, executives aren’t defaulting to panic at a declining market, but instead are thoughtfully determining where they need to incorporate disruptive thinkers – whether in their investment staff or on their client-facing leadership teams.
Quality Over Quantity
Sustainable, successful firms all rely on great talent. In 2016, in light of the market’s rocky start, the same holds true. CEOs can’t bail on their growth strategies while keeping in that more isn’t better; better is better. When the best leaders encounter a difficult market, they prioritize to make sure they have the very best thinkers, investors, and performers on board.
So, in the high-stakes game being currently played amid market turmoil, the good news is that leaders have learned from the last dismal market cycle that they shouldn’t forego attracting and retaining the best and brightest executive talent.