The financial services industry is undergoing a seismic demographic shift accelerated by the pandemic. An industry filled with aging Baby Boomer leaders and financial advisors is now experiencing a wave of retirements and culture-induced departures to other firms. As noted in a recent Wall Street Journal article, there’s a national trend of workers leaving their jobs for various reasons including better opportunities and a better work-life balance.
We’ve seen three recurring trends impacting turnover in the financial services industry:
#1 The desire for a better work culture and hybrid work arrangement.
Getting executives and their teams back to the offices is essential, but there is also a desire by many to continue working remotely in some capacity. Not all companies are on board with this. For example, Morgan Stanley’s CEO, James Gorman, recently said, “If you can go to a restaurant in New York City, you can come into the office, and we want you in the office…if you want to get paid New York rates, you work in New York,” he noted. He went on to say, “None of this, ‘I’m in Colorado, and getting paid like I’m sitting in New York City.’ Sorry, that doesn’t work.”
A CEO with this attitude may soon find his colleagues heading to companies who are embracing hybrid or remote work environments. For many, working for a company whose leadership listens to their employees, especially with regard to culture and remote flexibility, has become a driver of career satisfaction. Today, in the absence of a flexible corporate policy, companies might as well open their exit doors and prepare for departures.
#2 The retirement of Boomers.
At the start of the pandemic, many Boomers put their retirement on hold. Now that the crisis is waning, people are fast-forwarding their previously planned exit strategies. A few notable retirements include Kathleen Murphy of Fidelity Investments and Barbara Novick of Blackrock, two top-level industry leaders.
The pandemic has allowed many executives to work from their second homes at the Cape, on the beach, or in the mountains. Some were reminded that life is short and expedited their retirement over health concerns. Others are prioritizing time spent with their families, hobbies, or volunteerism. The idea of going back to the full-time daily grind in the office has become unappealing for many.
Meanwhile, succession planning across the industry is in full swing. The silver lining in these retirements is that many roles are now opening up for next generation leaders. This generational shift will certainly be bringing fresh ideas and new thinking to a mature industry.
#3 The re-prioritization of staffing expenses.
Many companies are re-prioritizing their staffing expenses, which is a unique byproduct of the pandemic. Many companies have been proactively reducing headcount at senior levels to reduce payroll liability while simultaneously adding jobs at entry, junior, and mid-career levels. TIAA and Fidelity Investments are two major asset management companies that have offered early, and well-paying, retirement packages to many senior staff. Charles Schwab has also been in the headlines for reducing their headcount after acquiring TD Ameritrade yet aggressively hiring for their retail investor business.
For those who took a generous early retirement package and are looking for their next gig, there should be ample opportunities to get realigned with another company given today’s markets.
The most noteworthy takeaway coming out of the pandemic is for companies to lead with empathy. Companies who do so will stem the tide of turnover and provide an attractive landing spot to people who are disenfranchised with their current company’s culture or work environment.