More than half of the estimated 5.25 million people who left the workforce during the COVID-19 pandemic appear to have retired earlier than they planned to, new research indicates. By the end of August 2021, approximately 3 million people had retired earlier than they had planned. Based on current trends, those numbers are only going to grow. In November, a record 4.5 million workers quit their jobs, many of whom will never work again.
We wrote about the impact of early retirements on the asset management business in our recently published 2021 Talent Trends Research Report. We looked at the importance of succession planning from the workplace exodus now known as the Great Resignation. In fact, our survey of senior asset management leaders found that one in five of them had experienced an unexpected number of accelerated retirements at their firm in 2021. Thirty-eight percent indicated their own succession plans were lacking.
As the New Year begins, asset management is particularly susceptible to a new wave of Baby Boomer retirements. The industry’s strong growth during the decade-long bull market and its handsome compensation has given many Boomers the financial resources to retire on their own terms. Until now, there’s been a lack of motivation for Boomer leaders to retire. The pandemic changed all that. Q1 could be the tipping point.
The Dynamics at Play
Two dynamics are impacting this retirement trend. The first is that many Boomers are reticent to abandon the quality lifestyle they created during the pandemic by working remotely. It raises the question of whether they have the appetite and ambition or edge to lead their businesses with the same intensity. Many have discovered they don’t want to trade the mountains or beach for their downtown office or weekly travel on planes or trains.
The second dynamic at play is that some Boomers are at risk of being phased out simply because they haven’t demonstrated a lean in leadership approach during the pandemic. C Suite and Boards looking at a firm’s talent map for 2022 are focusing on those executives who haven’t innovated or embraced the new realities of remote work, digital outreach and reimagining the client experience. In these situations, firms will accelerate retirements for these executives.
What to Do
So what can be done? How should firms prepare for transition in what could be a tumultuous year?
We recommend the following three initiatives, which many of the winning firms we’ve worked with are currently pursuing:
#1 Proactively meet with all your Boomer-Aged Leaders.
Open a fresh dialogue about their plans for retirement, or alternatively, their appetite for career growth. Age isn’t indicative of energy or passion, so avoid taking a one-size-fits-all approach. Customize the conversation with each of your high-impact leaders to determine how the firm can better support the individual’s desired career trajectory—or, if their retirement plans have accelerated, a smooth exit.
#2 Revise Succession Plans.
Look at your firm’s talent bench with an eye toward high-performing contributors, even those who may require an accelerated development plan. Next Gen skills development has been stalled as firms moved to remote work, a trend noted by 60% of leaders in our 2021 report. Stepping up to ensure that opportunity exists for the future growth and development of your high performers is a critical retention tool in today’s competitive market.
#3 Crystalize Your Firm’s Story: Why is it a destination for top talent?
What has your leadership done to solidify your culture and keep everyone across the organization bought into your mission during this lengthy, remote work environment? Can you illustrate that you have a committed, collegial and purpose-driven culture? In the event you need to go to the market for talent, today, more than ever, you need to have well-articulated and compelling story on why your firm is a great place to build a rewarding career.