Why Financial Service Firms Are Losing Talent

The FinServ sector in the US is facing a steadily growing talent crisis. With firms struggling to attract and retain key talent, several factors are driving emerging and existing talent from traditional finance roles. Rising competition from other industries, an aging workforce and shifting employee expectations are forcing financial service firms to rethink strategy to remain competitive in an increasingly fragmented job market.

Why are financial service firms struggling to retain talent?

Competition from Big Tech: Traditional FinServ companies are losing talent to the technology sector, where culture, working environments and compensation are often seen as a more attractive proposition. But why?

• Larger technology companies are offering higher salaries, more flexible working arrangements and better perks/benefits.

• Tech companies are offering a cutting-edge work environment that bridges the gap between hybrid and remote working models, appealing to a younger generation of professionals.

• The appeal of working on exciting and innovative fintech, AI or blockchain projects is pulling finance professionals into the tech space.

Aging workforce & retirement gaps: The FinServ industry is seeing a sharp demographic shift threatening the future of workforce stability. But why?

• Just over half (55%) of the current workforce is aged 31-50, with roughly 260,000 highly skilled employees expected to retire or leave the industry by 2035.

• The sector has long struggled to attract younger talent, creating not just a skills gap, but a skills chasm.

• Without a proactive approach to workforce planning/development, firms risk losing long standing industry knowledge, know-how and leadership.

Digital skills shortage: With the FinServ industry often being seen as old-fashioned and behind the times, it struggles with a skills shortage as service providers seek to become more digital. But why?

• The industry is seeing a growing demand for professionals with digital skills and experience in AI, data analytics and cybersecurity.

• Many employees within the sector lack access to structured training programs to gain necessary digital skills, forcing them to look elsewhere for career growth opportunities.

High turnover & job hopping trends: At 18.6%, the financial services sector has one of the highest turnover rates in the US workforce. But why?

• The industry’s high turnover far outpaces many other industries, further exacerbating training and recruitment costs in an attempt to mitigate attrition. 

• As little as 10% of millennials in FinServ actively plan to stay in their roles long-term.

• Both younger and older employees are leaving the industry for careers that offer greater mobility, flexibility and innovation.

Poor work/life balance & burnout: Roles within the financial sector are known for high pressure, stress and demanding workloads; which can often lead to severe burnout in employees. But why?

• 9 in 10 accountants report experiencing burnout at some point in their careers and reporting excessive workloads and unrealistic expectations as reasons for their state of emotional, physical, and mental exhaustion.

• Long hours, constant deadlines and mismanagement are creating a culture of increased stress and burnout, forcing employees to consider careers in less demanding industries.

How can financial services firms retain top talent?

In an attempt to combat these challenges, many financial services firms are taking proactive steps to attract and retain a skilled workforce by:

Strengthening employer brand - Employers would do well to position themselves as a modern, dynamic and forward thinking company, rather than a traditional, rigid one. Offering competitive salaries, flexible working conditions and a strong benefits package will allow businesses to stand out from the competition.

Investing in workforce upselling - Providing digital skills training in areas like data analytics, blockchain and AI can help to keep employees relevant in a rapidly evolving industry. Offering mentorship programs can also be a great way to support young professionals in developing their careers within the industry. 

Improving worklife balance/reducing burnout - Companies that implement realistic workload expectations are the ones that stand to reduce and prevent employee burnout. Offering remote or hybrid working options, access to mental health resources and flexible scheduling can support employee wellbeing, while employee engagement initiatives safeguard the soul and culture of your company.

Providing clear career growth plans - It;s important for employees to feel like they are able to progress within a company. Establishing clear roadmaps for career development and progression, with defined milestones and opportunities can show employees that they have a future within the organization. Internal mobility can encourage career longevity and allows employees to explore different roles and leadership positions within the company, while cross functional projects create opportunities to engage employees in business transformation and innovation.

Modernizing workplace culture - Companies able to adapt to new working trends like remote work, employee driven decision making and diversity initiatives will position themselves well against competitors dialling back on modernity over traditionalism in the workplace. Promoting a collaborative leadership style over outdated hierarchical structures and encouraging a culture of continuous improvement and development creates a space where employees feel empowered and supported to grow.

The financial services industry must continue evolving in order to meet modern workforce expectations or risk losing out to competitors in tech or other industries. Investments in career growth and continuous development, workplace culture and flexible work arrangements will allow firms to position themselves as the more attractive employer to potential applicants. FinServ firms that act now will be well placed to attract, retain and develop next gen financial professionals. 

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