It’s widely known that there is a talent shortage in wealth management, particularly among women and people of color. It’s also been a structural issue as well; according to a recent survey by Pershing, 41% of RIA firm executives say that hiring and developing talent is their biggest challenge.

Because financial advice has historically been associated with “sales,” that has made many new graduates leery of pursuing a career in wealth management, and this perception is limiting the number of new entrants, forcing RIAs to have to recruit from each other. In fact, the No. 1source of new employees for RIA firms come from other RIA firms, according to a recent study by Schwab. Poaching is not a recipe for overall industry growth.

Therefore, the challenge we face in the independent RIA industry is to find ways to better articulate, communicate and educate potential candidates about the many benefits and opportunities for joining an independent firm and building a long-term successful, rewarding career, both personally and professionally.

Having spent the majority of my career in RIA firms, one key learning to attract the best and the brightest may seem simple on the surface, yet it is profound: that is to define and implement a career path in your advisory firm.

Here at Mercer Advisors, we have developed and defined 12 wealth management job levels that span from entry level to executive roles. When candidates join us, there is a defined career path with progressive areas of responsibility. For example, we have several levels of a client specialist position, ranging from coordinator to lead. From there, they can be promoted to a financial planner (associate to senior) progressing to a broader role of a wealth advisor, which also has multiple levels. Further, there is opportunity to take on management roles as a wealth advisor (director to managing director).

We have learned that it is important to have multiple levels within a job band, so team members can continue to progress in their careers, even if they don’t aspire to a leadership role, in order to retain them as valuable contributors to clients and the firm.

Ultimately, our employees have the opportunity to progress to management and executive levels, with growth goals and corresponding financial rewards by successfully moving up. The majority of our senior and executive positions have all been filled from within, which creates a strong, aspirational culture. By having a visible, defined career path, your most promising future leaders will be motivated to stay and grow with your firm; otherwise they will have many opportunities to join other RIA firms if you don’t.

Defining the career path, however, is just the first step in talent management. Successful career development also needs to include support for continued education, such as tuition reimbursement for professional certifications, as well as undergraduate and advanced degrees. Additionally, providing mentorship opportunities through a formal mentor program also is critical to encourage promising team members to stay the course, garner the critical skills and experience needed, while motivating them for long-term success.

As an example, this career path and talent management support structure has been critical to our inorganic growth strategy, as we have successfully integrated 44 RIA firm acquisitions since 2016. In fact, some of our most recent managing directors have come from the ranks of acquired firms and for many of our new selling partners, the ability for their staff to have a broader career path than what they could provide was a key motivator in merging into Mercer Advisors.

Other considerations important to encourage a diverse workforce, is to initiate formal programs that are targeted at supporting the unique needs of various demographics. For example, through InvestHERs, our women’s initiative, Mercer Advisors has increased the number of female executives, doubled the number of women on the senior leadership team and increased the diversity of our board. Women now hold over 50% of client-facing roles at the firm, significantly higher than the industry average.

Ultimately, in order to continue the growth and vibrancy of the RIA industry, we believe that firms need to invest in talent management initiatives to provide well-defined career paths with corresponding HR support. This will help attract more graduates to the profession. By doing so, this will ensure that more clients benefit from fiduciary advice.