The Department of Labor (DOL) Fiduciary Rule, which went into partial effect June 9, will cost wealth, brokerage and retirement firms an estimated $2.4 billion per year. Its impact on staffing will also be significant, generating additional pressure to attract financial services specialists in an industry where supply is already lagging demand.
In brief, the DOL ruling would automatically elevate all financial professionals who work with retirement plans or provide retirement planning advice to the level of a fiduciary, binding them legally and ethically to act in the best interest of their clients — putting their clients’ interests above their own. The rule could eliminate many commission structures that govern the industry, and completely evolve how institutions offering retirement advice engage with their customers, especially regarding the required access to a quarterly review for each customer.
Under the new regulation, customers with a retirement account of any amount are now entitled to a personal quarterly review. For some investment advisers, who may handle a hundred or so clients at once, the time demands would be impossible to meet. Because of this, many firms are creating or beefing up service centers where they can take care of customers with smaller retirement assets.How the new rule impacts staffing
Rerouting those customers to service centers is significantly driving the demand for client service representatives, often finance degree holders with an interest in the wealth management, brokerage or retirement industries. “What makes it especially challenging is that candidates need to hold the Series 7 license from the Financial Industry Regulatory Authority (FINRA), which is required in order for them to provide financial advice, notes Devin Moretz, Aerotek strategic account executive.
With the dire shortage of licensed candidates, many firms are holding their own training classes. “However, only 65 percent of the people who join this class complete the requirements and pass the test for the Series 7 license,” Moretz explains. “This low conversion rate makes it even more important to max out class sizes, and many firms are competing for the same talent — often times in the same cities.” The issue is further complicated by the fact that is typically takes 16 weeks from when a client services rep is hired until he or she is ready to talk to customers.A streamlined, cost-effective solution
Because of the complex and timely nature of the talent demand for DOL compliance, many firms are increasingly using contract-to-hire solutions. A trusted staffing partner will have access to a wide talent pipeline of candidates with the financial acumen, personality and desire to excel in client relations for financial services, notes Moretz.
In a contract-to-hire arrangement, Aerotek, for instance, will source, screen and formally sponsor candidates for the Series 7, assuming the overhead associated with the licensure process. Only when the candidate has successfully completed the Series 7 requirements does the client company retain the candidate on a permanent basis. Using contract-to-hire talent eliminates the need to pay for workers who don’t complete the course, and also benefits financial firms by offering a fixed hourly rate that can help standardize expenses, reduce attrition and maximize the cost-per-hire.
The most effective recruiting firms, Moretz says, offer broad industry experience and innovative strategies for attracting top talent. Aerotek, which specializes in consultative relationships with clients and candidates, is at the forefront of helping create meaningful solutions to complex business pains like increased federal regulation.
The Fiduciary Rule will be fully implemented January 1, 2018. If you want to learn more about how to prepare, contact Aerotek now.