Money managers and pension funds seeking to fill investment management vacancies with millennials are finding it takes more than just posting a help-wanted sign, sources said.
"It's definitely something we're talking about on a regular basis: How do you stay competitive for talent," said Renee Neri, partner and head of the asset management sector for the Americas at Heidrick & Struggles International Inc., New York.
But finding talent has changed, sources said. A new, tech-savvy generation seeking more purpose-driven jobs with flexibility in where and how they work has forced employers in the institutional investment industry to create an environment attractive to them — while also trying not to alienate Generation X and remaining baby-boomer managers and employees who have made careers at their firms.
"There are headwinds in the industry in general, and how (managers and pension funds) compete for assets, how they compete for clients, how they compete for talent, that's all intertwined," Ms. Neri said. "The conversations we're having with our clients are, where do you see top talent willing to go, and what are those firms that are getting top talent doing differently?"
Who's doing the hiring
"Baby boomers are retiring, Gen Xers are moving into managerial roles and they're the ones hiring millennials," said Keith Robinson, Barrington, Ill.-based managing partner at Focus Consulting Group LLC, a consultant to money management firms. "When it comes to leadership development and mentoring, the Gen Xers in managerial roles need to be trained. Millennials want more development and mentoring, to continually sharpen the saw. Of the three generational groups, millennials are the best educated. They want to continually grow and learn."
Millennials — those born from 1981 to 1997 — total about 83 million people, Mr. Robinson said, compared with 80 million baby boomers and 38 million Gen Xers.
Mr. Robinson said there's a vast difference in how Gen Xers and millennials think. Millennials, he said, are "a generation of instantaneousness. Why are we as an industry surprised by this? As children, millennials all received participation trophies, scheduled play dates. ... Everything was structured. That's why they want the same things in their careers. Gen Xers were latchkey kids. ... They came home from school to an empty house. They're problem-solvers. For Gen Xers, it's 'show me a picture and I'll figure it out.' For millennials, it's 'show me a picture and give me instructions on how to make it.'"
Employers need to understand that millennials generally want some semblance of structure in their work but also a combination of workplace flexibility and collaboration, as well as a sense of mission, that their work matters, Mr. Robinson said.
Sources said the mission of investment management is being overshadowed by the industry's reputation. "I think the financial services industry, and money management in particular, has a PR problem," said Margo L. Cook, president, Nuveen Advisory Services, Chicago. "Most young people we're looking at acquired their views of the financial services industry from their parents. They lived through the financial crisis, and they experienced the same stress or failures their parents did. We, as an industry, have some work to do to enhance the good that we do, what social assistance we do, and remove the memory of what they and their parents had to deal with 10 years ago."
Heidrick & Struggles' Ms. Neri said most investment management firms "are still in the diagnostic phase" in terms of what changes to make to attract millennials. "They know the world is changing around them, but it's more a matter now of seeing what 'best in class' looks like. There's much exploring and assessing going on."
At Nuveen, Ms. Cook said, millennial hiring is seen as part of the firm's overall push to improve its workforce diversity "from a gender and ethnicity standpoint. We're setting a goal of being as good or better (than the industry) in attaining diversity, and that's diversity across the organization, including bringing on more young people."
Pension funds have an additional problem in attracting millennial workers, Ms. Neri said. "The consideration is, can they stay sustainable?" she said. "They're facing similar pressures as managers, but more from different vantage points. Everyone's trying to right-size their structures ... U.S. public plans and some smaller Canadian plans are looking more at total rewards, the concept of why are you an attractive workplace and what can you do to enhance that."
Mr. Robinson said some employers he's advised on the issue have altered their office culture and performance expectations to attract millennials. Those include Polen Capital Management LLC, Boca Raton, Fla., a $20 billion equity manager that has adopted a results-only work environment as a guideline for its management structure, and the $151.4 billion Teacher Retirement System of Texas, Austin, which Mr. Robinson said "has a great culture" that encourages millennial hiring in its internal investment management team.
At Polen, Brian Goldberg, chief compliance officer, said the results-only program that was started in 2016 "looks at managing work rather than managing people. Millennials want to know what's expected in clear terms and want to achieve at the highest level without any heavy-handed monitoring of attendance or face time. We create measurable results from team workers without asking if they were leaving work early or late. It's more about how they help our clients."
Mr. Goldberg said the program also is appreciated by managers and longer-term employees. "They, too, have responsibilities out of the office and appreciate that this opens doors for them to maybe see their children's high school play or Little League games."
Polen also gives examples to its employees of how what they do matters to people, said Graham Ward, director of finance. In one example, firefighters who are participants in the $125 million Miramar (Fla.) Firefighters' Pension Fund came to Polen's offices and met with investment personnel and other staff members to explain the impact the money manager's work has on their lives. Polen managed $21 million in U.S. large-cap equity for the pension fund as of Sept. 30, according to a report by Dahab Associates Inc., the plan's investment consultant.
At the end of 2017, 37% of Polen's 56 employees were millennials. This year, of the 20 new employees who will start in mid- to late summer, 15 are millennials, Mr. Ward said.
Another successful strategy
Mr. Robinson said another successful strategy for attracting millennials into investment management is having entry-level analysts make investment decisions similar to those of portfolio managers. At Capital Group Cos., Los Angeles, finding millennials to fill analyst vacancies "hasn't been an issue for us," said Brad Vogt, Washington-based equity portfolio manager. What's attractive to them, he said, is Capital Group's analysts are "a combination of analyst and a lead investor in their industry of expertise." Analysts actively manage some of the holdings in the funds to which they're assigned and they work collaboratively with portfolio managers, he said.
"The analysts directly manage about 20% of the assets of most of our funds," Mr. Vogt said. "Analysts actually do portfolio management … Analysts can eventually become the next portfolio managers or they can remain as career analysts."
At Texas Teachers, Janet Bray, chief organizational excellence officer, said the pension fund's "open culture, commitment to a strong mission, and our willingness to invest in providing professional development and career opportunities correlates to the employer value proposition that most millennials are seeking post-graduation." In its investment management division, 50% of employees are millennials, Ms. Bray said.n