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Top HR Challenges in the Financial Services Industry

Changes are coming to an industry traditionally resistant to change.

T​he financial services industry, which is hardly known for cutting-edge adaptability, was forced to make sweeping changes last year.

HR leaders were challenged by a pandemic that led to remote working on an unprecedented scale and economic fallout that created uncertainty and increased stress for many financial services employees. At the same time, a nationwide reckoning over race relations led companies to focus on employee diversity. Other human capital priorities, such as the need to reskill the workforce and compete for talent, predate the chaotic events of 2020 and are ongoing.

All of that adds up to a full plate for HR professionals in the financial services industry in 2021.

“The role of HR has never been more important,” says Julia Lamm, a New York City-based workforce strategy partner at global accounting and consulting company PricewaterhouseCoopers (PwC). “HR is leading on the return to work. HR is the moral compass [on diversity] of financial services. Companies are really prioritizing ... culture change [and] having empathetic leaders. HR is owning all of that.”

Feeling the Strain

Pandemic stress has been a common challenge for employees in many industries, especially as whole families spend time working and learning in close quarters and uncertain economic conditions leave people feeling anxious. But financial services workers also have been unsettled by volatile markets and a push toward automation within the industry that some employees worry could leave them without jobs.

The current environment is taking a toll. Brad Smith, chief science officer at meQuilibrium, a digital resilience-coaching platform based in Boston, studied the effects of the pandemic on employees in eight industries. Financial services workers reported the second-highest level of job stress and sleep disorders (behind tech industry workers). Employee motivation also dropped 32 percent in financial services, according to Smith’s study of 7,000 of his clients.

At Deloitte Consulting in Atlanta, Joseph Rapanotti, senior manager for workforce transformation, says the pandemic has sped up changes in the financial services workforce that were already coming: working remotely; adopting enhanced technology, such as artificial intelligence; and focusing on matching employees’ skills to jobs.

Lamm expects the industry will experience layoffs because of the shaky economy, low interest rates (which squeeze income in sectors such as insurance) and the switch to automation in some jobs. She says, “It’s a difficult message: ‘We care about you, but some of you are going to lose your jobs.’ ”

Connecting Virtually

Before the coronavirus pandemic began, just 29 percent of financial services companies had at least 60 percent of their employees working from home once a week or more, according to PwC’s Remote Work Survey. The rate of remote work has not only jumped, but the trend is likely to continue: 69 percent of companies expect 60 percent or more of their workers to continue working from home at least once a week after the pandemic subsides.

Executives felt that remote work not only helped employees but also increased productivity, according to the June 2020 survey. And 88 percent of financial services workers identified work-from-home arrangements as the most helpful form of support they received from their employers, according to meQuilibrium.

To track the engagement level of remote employees, Tana Thomson, chief people officer at Vista Capital Partners, a financial planning and investment management company in Portland, Ore., is surveying employees more frequently than before the pandemic. New workers also get an onboarding buddy from among the staff for weekly check-ins.

“People appreciate getting connected,” says Boston-based Paul Lesser, head of talent acquisition, talent development and learning at Fidelity Investments. The company had hired around 8,000 new workers by Thanksgiving 2020, and most of them had never met a fellow employee in person.

Fidelity has kept employees connected to the company and its culture through various online offerings. Employee resource groups provide a chance to connect and share advice for parents, minorities, veterans, LGBTQ employees and women in leadership. A virtual career center offers online coaching. Employees can even help their communities through virtual volunteer work.

Last summer, despite the pandemic, Fidelity hired 1,000 interns and stood up a system to send laptops to every new hire, including all those interns who arrived during a two-week onboarding period. To get it done, HR coordinated with the security and enterprise infrastructure teams. “They turned into a mini-Amazon to get people laptops,” Lesser says.

Some companies had a head start in onboarding employees virtually. Three-fourths of Facet Wealth Inc.’s employees were working remotely before the coronavirus emerged. When the Baltimore-based financial advisory firm more than doubled in size in 2020 to 214 employees, it already had methods in place to facilitate personal connections. The CEO calls all new hires the day before they start, for example, and the HR department onboards groups of 10 to 15 new hires, giving them a cultural overview of the company.

New workers also can join other employees who share common interests, such as exercising or a love of dogs, through outlets such as channels on Slack, the messaging platform. Everyone has access to a series of master classes taught by other employees sharing their passions: One advisor taught pizza making, and another gave tips on maximizing credit card reward points.

“I love seeing what people are interested in outside of work,” says Jen Lackmann, HR manager for Facet Wealth. “Those opportunities to get to know people outside the job have been important for us.”

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Supporting Employees

Smith at meQuilibrium uncovered a strong correlation between how employees were doing mentally and how much support they felt they got from their companies. “In finance, as in many industries, employees are struggling and hurting,” he says. “The value of employer support is powerful.”

As remote work leads to the blurring of the line between work and home life, leaders should encourage workers to take time off. To give stressed workers a break, Fidelity Investments’ Lesser had to outmaneuver his employees. He called a 2 1/2-hour, all-hands meeting with 250 employees to talk about financial results, to be followed by a quiz. But when the meeting opened, “I told them they had the rest of the afternoon off,” Lesser says. It was a beautiful 65-degree day.

The thank-you e-mails that poured in included photos and tales of spending the windfall time napping, going for walks with parents, taking kids to the park and running errands.
Last year, Fidelity added a benefit to help workers pay for therapy, five extra days of “relief” time off, and reimbursement for child care and elder care coordinator services. “We’re trying to do more things for managers to help associates deal with stress,” Lesser says.

Kimberly Reingold, director of external communications for the company, says the new elder care reimbursement benefit was a huge stress reliever for her when her own parents needed help because a caregiver had COVID-19.

‘In finance, as in many industries, employees are struggling and hurting. The value of employer support is powerful.’
Brad Smith

According to Lesser, “people really appreciate that the company has introduced [new benefits] at this time when a lot of [employers] have cut back on things.”

“Everyone is impacted at some level,” says Vista Capital’s Thomson. That includes “a single mom managing online learning or someone living alone or a new hire feeling out there on an island.”

Thomson has been promoting her company’s employee assistance program, along with new benefits such as a free one-hour massage and a day off for self-care. Over a recent eight-week period, every one of the company’s 26 employees got a call from someone on the executive team just checking in to find out how the employees were doing.

Smith says regular communications from company leaders can improve employees’ sense of well-being and morale. “Everyone wants to be thanked for the work they do.”

‘In finance, as in many industries, employees are struggling and hurting. The value of employer support is powerful.’

Promoting Diversity

Employers responding to PwC’s 2020 Health and Well-being Touchstone Survey said the issue of diversity and inclusion has risen on their list of priorities, but attracting and retaining diverse talent is a challenge.

Some financial services companies have been working for years to change the industry’s reputation as a domain for white males. Others started focusing on diversity, equity and inclusion (DE&I) after the public outcry following the 2020 death of George Floyd in police custody.

“We’ve really gone hard on DE&I,” Thomson says. Since 2019, Vista Capital has adopted goals for increasing representation of women and minorities among its workforce and leadership over three years.

“We will all benefit from diversity of thought, gender and race,” she says. “It sparks innovation and better team performance.”

For Lackmann, the issue became more important as Facet Wealth went on a hiring binge in 2020. To bring a more diverse pool of candidates into the industry, the company partnered with the Center for Financial Planning in Washington, D.C., to offer scholarships to Black candidates interested in becoming certified as financial planners.

At Vista Capital, the number of minorities among the company’s 26 employees went from zero to 3 in 2020, and Thomson’s addition to the leadership team doubled the representation of women to 25 percent.

“I talked with a lot of diversity experts and companies who had success with their DE&I initiatives,” Thomson says. In addition, she has partnered with staffing agencies that are focused on expanding candidate pools to include diverse groups of potential hires. But for a company that doesn’t hire often, is in an industry dominated by white males and is located in a city with a low percentage of minorities, achieving its DE&I goals hasn’t been easy.

“We had to go all in to make meaningful progress,” Thomson says. Next, she plans to look at the company’s hiring practices from start to finish to make sure there are no roadblocks for minority applicants. She also plans to hire consultants to train managers on inclusion.

Like Vista Capital, Fidelity is taking action to move the needle on DE&I. It has reviewed its hiring process to eliminate barriers and reached out to groups that can tap into diverse communities. For instance, it advertises job openings with the National Association of Black Accountants. This year’s group of new hires is more diverse than the company’s overall U.S. workforce, according to Reingold. The company also has a new diversity and inclusion senior advisory team, diversity riders on all retained search contracts, and a call for two or more candidates from underrepresented groups in final interviews, along with diverse interviewer panels.

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Upgrading Skills and Talent

As financial markets and technology change rapidly, many finance companies have struggled to keep employees up to speed. These employers need to invest in data visualization and cybersecurity training, Lamm says, as more financial business is conducted digitally. At the same time, HR departments need to create more upward mobility within companies, which reduces recruiting and onboarding costs.

For HR, Lamm notes, upskilling means reducing manual tasks and using technology to automate more processes. “HR needs to upskill itself on digital tools to be able to better serve its customers,” she says. And as the first point of contact for recruits, a tech-savvy HR team presents a better image for the company.

HR also has a role to play in making sure new talent doesn’t get frustrated in the button-down culture of the financial services world. The realization that people can work from anywhere, Deloitte’s Rapanotti says, has led some finance companies in need of technical expertise to swipe talent from Silicon Valley. But he warns that tech workers new to finance won’t stay if they jump from a creative and entrepreneurial atmosphere in tech to an overly hierarchical environment without the chance to work on interesting projects and keep learning.

Banking Evolves With Its Customers

Traditionally, banking has been one of the more conservative sectors in its attitude toward remote work. But that’s changing due to the COVID-19 outbreak. The pandemic is not the only thing that has loosened banking’s resistance to change, however: More customers now want to bank remotely, so banks need to make sure employees have new skills to deal with the changing demands.

“How do bank employees build relationships with customers and maintain relationships using different tools than being able to smile and chat with them when they come into the office?” asks Timothy Reimink, managing director at Crowe LLP, an accounting, consulting and technology company in Grand Rapids, Mich. “Banks need to reskill to operate in this environment.”

One approach has been to develop “universal bankers.” Instead of being trained to work exclusively as a teller or a new-accounts representative, employees are trained for a range of tasks so that when one area of a bank branch is quiet, they can jump in and contribute elsewhere. HR’s role, Reimink says, is to educate workers about a range of products, set expectations with new hires, and screen potential workers for the temperament and skills needed for the job.

With technological advances rapidly changing the industry, firms need people who know how to adapt. “The half-life of skills keeps getting shorter and shorter and shorter,” says Margie Painter, a principal at Deloitte in Atlanta.

“It’s not just about what [employees] crank out,” Rapanotti says. “It’s about how they’re developing their skills.”

The emphasis on increasing skills is also very important to many employees. “Professionals are looking for opportunities that allow them to grow and develop,” Painter explains. “Organizations that don’t recognize that and [don’t] start thinking about how we create this tapestry of jobs that someone is going to experience over the course of their career, they’re going to lose the ability to attract top talent.”

Lesser agrees that employees are thinking more than ever about their careers and the skills they need, and that training is popular. “People are pretty thirsty about it,” he says.
Training and professional development are high priorities for Millennials, and providing such opportunities is an effective way to retain top talent in an industry where people assets are a key differentiator, Thomson says.

“Invest in strategic HR,” she advises. “Place a high value on attracting and retaining top talent. If the employees are well taken care of, the clients are well taken care of.”  

Tamara Lytle is a freelance writer in the Washington, D.C., area.