For months, large financial services companies have been laying off people by the hundreds — but it is a different story for smaller advisory firms that must say goodbye to employees who have become like family members.
For months, large financial services companies have been laying off people by the hundreds — but it is a different story for smaller advisory firms that must say goodbye to employees who have become like family members.
For some advisers in these small firms, even the mere thought is painful.
"It'd be terrible," said Marjorie Fox, an adviser and partner with Fox Joss & Yankee LLC, a Reston, Va., firm that manages more than $200 million in assets and employs a staff of five.
"The three of us partners will cut our salaries before we let anyone go. We have such a terrific team," Ms. Fox said.
"We'd do just about anything not to let it happen," she said. "Our culture's extremely important; we are like an extended family."
But Bedda D'Angelo, president of Fiduciary Solutions Inc., a Durham, N.C., firm that manages about $24 million, felt she had no choice but to lay off her assistant.
Her firm's performance was mediocre at best, but even so, it was a difficult decision.
"I'd never have done anything if the money were rolling in," Ms. D'Angelo said. "But it was clear at the end of 2008 that I needed to do cost cutting."
Since then, Ms. D'Angelo has outsourced tasks formerly performed by the assistant.
For instance, she has contracted with an online provider to send out marketing materials and has set up bookkeeping through a third-party provider.
She isn't alone. An InvestmentNews survey of 584 advisers — 75% of whom employed between just one and five workers — showed that 15% of had laid off workers in the previous six months.
Additionally, the survey, which was sent out by e-mail April 2, showed that 13.3% of respondents said that they would consider layoffs if the economy worsened in the next six months.
When layoffs occur in small offices, it inevitably means more work for the remaining employees, said Ron Fiske, executive vice president of product development and management at Boston-based Fidelity Institutional Wealth Services.
"For some, it means the remaining people have to work harder and stay longer," he said.
"That means everyone has to pick up the slack. You're left with the sense of loss, and it's a notion of trying to get more out of your existing staff," Mr. Fiske said.
In this unfortunate scenario, Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network in Wal-tham, Mass., suggests that advisers ask employees how they think that the added workload should be divided up.
"I'd say to the staff, 'We need to do five people's jobs with four people — how should we do it?' They'll always know far more than the adviser, who hasn't been doing $10-an-hour work," Ms. Youngwirth said.
"I would rely heavily on the team," she said.
But even during this tough economy, one firm's loss can be another's gain.
J. Michael Martin, principal and founder of Financial Advantage Inc. in Columbia Md., said that he is in the enviable position of being able to hire an employee at his firm, which manages about $250 million in assets. He is considering someone who was recently laid off at another small advisory firm.
"I just got the most glowing recommendation letter from the adviser, saying he had to lay her off, and he never thought he'd be losing people like this," Mr. Martin said.
He said he can't imagine laying off any of his eight employees.
"It's very personal. You know the environment you're letting them go into is hostile," Mr. Martin said.
"It's different if they've been a disappointment or if there's plenty of jobs in the economy," he said. "This would be really hard."
E-mail Lisa Shidler at lshidler@investmentnews.com.
