How Recruitment Technology Drives Human Connection

The Data Possible Podcast

Episode 2: How Recruitment Technology Drives Human Connection

Guest: Ryan Shanks, Co-Founder, FA Match

Summary: In this episode of The Data Possible Podcast, Ryan Shanks, co-founder of FA Match, discusses recruitment technology and gives us insight into the landscape of recruiting. What is it? Who’s looking for talent? What kind of talent is out there? You will learn:

  • How today’s recruiting landscape is different
  • How FA Match is using automation to get the right people talking
  • How data helps keep people honest
  • And more!

Resources: FA Match | Discovery Data

The Data Possible Podcast is produced by our partner, Advisorpedia.

Podcast Transcript:

Doug: Hello and welcome to The Data Possible Podcast presented by Discovery Data. The Data Possible Podcast examines how data fuels your sales, marketing, and recruiting teams to achieve success. Our goal is to provide you with tools, techniques, and best practices to help you close more deals, find new opportunities, and recruit better people and partners. This is your host, Doug Heikkinen. And with me today is Ryan Shanks. Hey Ryan.

Ryan: Hey, Doug. How are you doing?

Doug: I’m good. What you can’t see in this podcast is that Ryan is in the middle of Yellowstone. He’s outside of his very cool Airstream. He’s got his logo on the Airstream, so how’s everything going for you out there?

Ryan: It’s going really well. That is my vision board. That is an Airstream that I hope to acquire at some point in time and I hate to let you down.

Doug: You fooled me.

Ryan: Yeah.

Doug: Well, we’re here to talk about recruiting. So, you know, me being not well versed on recruiting, can you set the whole recruiting landscape up for us? What is it? Who’s looking? Who’s out there trying to land talent and we’ll go from there.

Ryan: Oh, absolutely. Yeah. And so thank you for having me. The recruiting landscape is hyper competitive, and I think if you were to go back 10 years, the independent side of the wealth management business, they were somewhat active, but not as aggressive. And frankly not as competitive. Technology has allowed for that to all sort of flatten the market. So you could actually be on the independent side of the wealth management business and be just as competitive, oftentimes more so. Leveraging that technology by your take home, being a lot more of the revenue that you generated. When you think about the landscape it’s multifaceted. So you’ve got banks, you’ve got wirehouses, Morgan Stanley’s, you’ve got independent broker-dealers. You’ve got affiliates of those independent broker-dealers that are often called OSJ’s or supergroups, you’ve got RIAs, and you’ve got custody platforms, the custody assets for RIAs. Advisors are being inundated. They’re getting calls on the regular from folks from all different walks of this industry, trying to insert enough value in that discussion to win some trust for that conversation to last a little longer. And so what I’m seeing is tremendous amount of activity. Advisors are exploring a change across the entirety of the ecosystem. Advisors inside of our RIAs are wanting to break out and find a better RIA to align with. Advisors are wanting to leave the wirehouses to potentially build their own business. They’re leaving to plug into someone’s existing business, so super, super active, which I think is great. It’s obviously great for the business that I’m in and I think it’s great for the business Discovery Data’s in, so it’s all about good data.

Doug: So the advisor has all the power here.

Ryan: In my opinion, the advisor has always had all the power. The advisor that has integrity, that has strong client relationships, and has always focused on adding value to those client relationships is the most important of the entire equation.

Doug: I was amazed when looking at this year’s statistics of how many people have moved already, even in this environment. Is this a typical year or are we seeing something new?

Ryan: Well, so what you don’t see in that data, is how long the courtship took place prior to the decision for the move to happen. On average, an advisor that starts down that due diligence path to the point when they make a move, it’s close to six months. They’re not having a conversation today with the firm and leaving tomorrow to go to that firm, it takes a tremendous amount of planning. And for the advisors that want to be thoughtful, they want to slow down that process to make sure they’re talking and looking at the right firms. To reach those conclusions. So I think what you’re seeing with a lot of what’s hitting in 2020 was a tremendous amount of 2019 work. And so I think what will be really telling is to see what COVID, the impact is going to be of the pipeline development work in 2020, and what we see actually be effective change in 2021 for those transitions.

Doug: Besides an advisor leaving a wirehouse and going independent. What’s at the top of the list of what attracts an advisor to move?

Ryan: Gosh, you know what? I wish there were a silver bullet. I wish there were one thing. It differs from each advisor. Often times it’s simple economics, I’m making 42 cents on the dollar here. I can make 90 cents on the dollar there. Sometimes it’s cultural, right? We’ve got a research survey that we did, and we tried to identify some of those elements and some of what came out of that were,  advisors affiliated with RIAs were really looking for more leadership. So that’s kind of driving that, there’s a conflict in how the business is being run. And they’re sort of more close to that operator.  Folks that are affiliated with independent broker-dealers. It’s the economics, right? It’s the comp structure that’s there. So it depends on where you are and iIt depends on risk that you’re comfortable taking to kind of go and look for wherever that might be for you to go to.

Doug: So what drew you into recruiting? Why are you doing this?

Ryan: I think half crazy. I think the other half just intrigued.

Doug: What’s the crazy part?

Ryan: Well, I think the crazy part is that I believe in the fundamental of aligning with, what would normally be sort of the smaller of the equation and representing them to get a fair shake. Meaning the advisor, it’s then going out and looking at all these large institutional type companies and really representing the small voice and trying to elevate that. That’s very challenging for me and I, somewhat tongue and cheek, but I love the work that I do. I think what got me into it was accidental. I was recruiting in technology and when 9/11 happened, technology recruiting ceased to exist. So I started looking around and seeing, well, what other industry could I entertain recruiting in? And whenever I stumbled across this one, I realized that there are firms that are hiring financial advisors all day, every day, right? Technology companies were hiring one head of sales. And when they fill that position, there may not be other hires that you could get with that end client. So when I discovered that, I thought, wait a minute. The firms are looking for portability in client assets, they’re looking for revenue above a certain threshold. They’re obviously looking for integrity from the advisor’s character, clean compliance background, but if you check all those boxes, they’re really looking to hire that same type with those qualifications all day, every day. And I thought, gosh, you could get in there and become like a market maker, help represent that advisor to evaluate the entirety of the landscape. So that’s what I’ve fallen in love with and, and being in this business and now I’ve been doing it for 20 years.

Doug: And that, when did you start your own company in there?

Ryan: So I started Consulting business in 2006, where my business model was solely to be the sports agent to the advisor. Again, I wanted to represent them in the equation because I felt they were the most important. And frankly, when those client relationships they have leverage, all the firms want to win their trust and want to win their business. I was that catalyst that stood in between to qualify the firm and allow admittance when they checked all the boxes, we needed them to check. And so I did that business from 2006 up until I sunset that business in June of this year. And I’ve now shifted all of my attention to the online platform and the new business model we’re operating with FA Match.

Doug: Yes. And I was negligent. And not saying that you were the owner of FA Match, so I apologize. And I love your tagline, recruitment technology, driving human connection. We all know that tech is driving connection more than ever these days. What is the recruitment? What is recruitment technology and how has it changed in the process in your space?

Ryan: So, recruitment technology from where I sit is really where can it be inserted where people are oftentimes, kind of dictating their value acting as though they’re necessary at that piece of the cycle. And so where we’re really focused is driving automation on the front end, driving automation around the advisor’s business type, the firm’s business type, and driving that compatibility through technology. So that the right people are talking all the time versus, well, I talked to five of the wrong people to get to the sixth conversation, which was fantastic. And I think with the self-dealing that goes on in recruiting, where a lot of recruiters are sending advisors to the same firms that are, frankly, compensating them more. There’s a conflict in my opinion about that, and very, very seldom do you see the underline value stack that’s tied to the fit, it’s most often dominated by the fee. So we felt that we wanted to, I wanted to do my part in the industry to be able to standardize that workflow and that process create some automation and create a set expectation for the users that for all of them it’ll be identical. So that’s where we’re focused on. And that’s where I think technology can add some real value and lift to the recruiting business.

Doug: So are there new things being in this industry for 20 years? Are there new trends you’re seeing going on right now in the industry?

Ryan: There are. I think some of what I’m seeing, I mean, obviously we’ve seen the sort of the flattening, the race to zero from a custody perspective, everybody kind of stepping in and saying, well, gosh, we’re going to compete. We’re going to provide the same. So creates a little less distinction and how to determine the differences in the nuances of those different businesses. I think a lot of what we’re seeing is sort of this evolution of advisors who are, I don’t want to say late to the game, but maybe just more delayed in their processing of going independent. We’ve certainly seen a huge increase in advisors that are going independent, right? So they’re coming from some captive firm. Independence means really two different scenarios. One, they’re building their own company. One, they’re joining another company that’s providing an infrastructure of support, call it technology, compliance, operations, people ops, but they maintain ownership of that client base. So they’re essentially building their own asset class. I think that’s something that’s really phenomenal is advisors are recognizing that those client relationships are significant. I think the other thing that we’re seeing is the acquisition race in our business is, I think, it’s just beginning. I mean, almost every firm kind of raises their hand and says I’m a buyer. And so there’s a lot of confusion there, but I see a tremendous amount of sort of businesses changing hands over the next five to ten years. And I also think that succession planning has been really a big popular topic for the last ten years. Advisors continue to get older each year. I think that is something that’s really top of mind for lots of firms, for a number of reasons, one, it’s retention, right? If you were looking to retire and sell your business and you sold it to someone with a different affiliation, I lose my margin off of your business. So I want to be able to try to put a plan in place to secure that. So the independent landscape with technology is at an even pace. Matter of fact, I think it is more advantageous. I think the technology is better than the wirehouses and that used to not be the case. So again, that’s been fascinating to think about how many business owners we’re creating in this industry. If we can kind of give them the right guidance and the right track to do so.

Doug: We saw a huge RIA get gobbled up by a Canadian company, just this week. Is the independent solo or small advisory firm going to be extinct soon?

Ryan: No, I don’t think so. I think what’s happened with, let’s talk about COVID. Let’s talk about the reaction that everyone has had to it. What it’s done is it’s forced everyone to go into training camp. Those who were reluctant to utilize video, to interact with folks. Advisors with clients have now been forced for that to be the medium, for them to be able to connect and provide that guidance and advice. And in doing so, it’s shown that those advisors that were sort of in a very local market can now actually communicate. And if they’re really good social media, et cetera, I mean, I could be sitting in Massachusetts where I’m at and I could potentially engage with a prospect in California and I could win that business. Whereas prior to this, there was a little bit more of the brick and mortar. I don’t know if we’ll get completely back to that, but I don’t think that it’s going to go away. No, because I think so long as there’s always different personalities, different opinions on how to provide guidance and advice to the end client, that is not going to all be commoditized into one singular offering. So now I think that we’re going to continue to see folks going out and building their own. And then I think what ends up happening is they get overwhelmed with the operations and the compliance burdens. That’s typically when you see them raising their hands saying maybe I sell, or maybe I merge into something bigger because I just can’t really handle all of these responsibilities. And I think that frankly goes back to some flaws and recruiting in the industry where those folks are being encouraged to build where they should be encouraged to join.

Doug: Yeah. From what you just said, it’s going to allow the investor to test out more advisors due to technology and see who they connect with, more than ever before.

Ryan: That’s right. And your niche can become very broad, right? So my niche could be with business owners, it can be with physicians. and maybe where I’m at now, I’ve been going out and going to hospital and I’m getting my meetings and I’m doing my rounds with my clients and prospects. Well, now I could potentially work with physicians all over the country because everyone has become accustomed to, this is the way we communicate and interface.

Doug: How important is data for you in what you do?

Ryan: It is very important. So our process, when we’re bringing advisors and firms into the FA Match ecosystem, that data drives validation. It drives the history of where that advisor’s been regulatory, it brings in all of that history and they can’t really sugarcoat it. So the quality of that is really important. So there is fixed data that’s tied in the industry that we’re really focused on bringing in upon that registration process, if in the other data it’s variable, right. An advisor is inputting and sharing that. And then we’re interacting with our users to confirm that you indicated you have $350 million, is that really accurate? And maybe they only had $50. And so data is really important. I mean, again, we’re all about transparency. It’s about professionals being honest, being somewhat vulnerable. That I’m not happy where I’m at. And then letting firms who have value to add connect with those advisors, where again, that data with what we’re built with our algorithm, that data drives the levels of compatibility between our users. So it’s incredibly important to the way we function.

Doug: I have two final things before we get you out of here. Any advice for financial advisors looking to change jobs right now?

Ryan: My advice would be, think about the client base that you have. Think about what level of portability you believe you have with those client relationships. I like to tell advisors, put them in three tiers, green, yellow, and red, in terms of the likelihood that they’ll follow them and be really honest with themselves about it and think about what they’re missing now and what they wished that they could be doing for their clients. And don’t give too much weight to the firms that you see, maybe always in the media. I like to call that the shiny object. Focus more about what’s necessary for you. What’s important for you. And be really, really diligent in that process. You don’t want to make the move now and make the move again in five years because you weren’t thoughtful about how you might evolve as an advisor. You want to think that through.

Doug: And any advice for companies looking to recruit advisors right now with such a competitive landscape?

Ryan: My advice to companies is ensure that you have a very thoughtful process in place. You have been thoughtful about your pricing structure in terms of what you bring to the table for an advisor. And is it fair? Is that exchange fair? What they receive from you and support and service and what they’re giving you in margin from the revenue that they generate from their clients and make sure that you’re being very additive in that, in that process. The other thing is, get smart. Understand what the rest of the marketplace is doing that you’re competing with, because you may think that you’ve got just the greatest offering in the world. And when you go out and put it out on the field, you find out that your batting average is zero. Well, find out how some of the other folks are hitting so well. What are they doing? Are you missing the mark on comp, are you missing the mark on your expense ratio is just too high, too many restrictions, et cetera? So again, I think it’s both sides. It’s about vulnerability. It’s about owning your weaknesses, elevating your strengths, and then trying to make those weaknesses go away over time.

Doug: Wow, Ryan, we really appreciated you joining us today. Thank you.