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The financial advice world has undergone significant change in recent years, not least in how it charges for its services, moving away from the commission driven sales to a fee based services approach. Within my industry, recruitment, it’s still by and large a commission driven charging structure.
Rightly so there has been increasing feeling of resentment in the market place for being charged a percentage of salary to have a position filled. Largely because firms don’t feel as though they’re being charged fairly for the service. I agree as I feel it’s perceived to be a form of ‘commission’ rather than an actual service related fee.
Over recent years, we have offered our services based on either a percentage of salary or a fixed fee amount and have found the fixed fee option has become increasingly more popular. It’s been interesting watching the adviser community go through the debate and consideration of a fee only model. Now we’ve switched to fee only where we offer our clients a range of fixed fee options, dependent on the type of position and how our clients would prefer to engage with us.
I’m sure I’ll look back on this and wonder why we didn’t make a stronger move on this sooner, but at this moment, I’ll admit, doing something different is a little scary. When the standard is that most are charging on a contingency based commission structure, will the market place choose what’s designed to be a fairer charging structure for all?
I’ve spoken about how I believe the recruitment industry is broken and what changes need to made to improve it, and it feels right to be able to deliver on just that.
So how does this all look?
The Engagement arrangement is best suited to using a recruiter you trust to act as an extension of your business, who will champion your company & employer brand, who take the time to fully understand your business, your culture & values and present the best people to help you achieve your company goals and assist in the growth of your business, a much more efficient & better controlled interview/hiring process all underpinned by the fact your initial investment ensures much more buy-in from the recruiter to fill your position.
Retained:
Very similar in style to the engagement arrangement, this arrangement is probably best suited to Senior Appointments; where more head-hunting maybe required, a greater need for discretion and commitment by both parties in terms of loyalty and end goal.
Exclusive Contingency:
This arrangement is better suited to when you want to engage and build a more long-standing relationship with a recruiter as your business grows; who you have time to spend with to enable them to fully understand your business, your culture & values. In return, as the recruiter will not be in a ‘CV race’, you’ll benefit from a more dedicated service, tighter & better controlled interview/hiring process, better qualified candidates & commitment to fill your role.
Contingency:
This arrangement is probably more suited to lower-level or higher volume recruitment. You may believe the benefit is that you potentially have access to a wider talent-pool by using multiple recruiters; however, if the role is an important position to fill and you don’t have the time/resource to spend fully briefing all the recruiters you engage it may result it duplicate CVs, not so well matched candidates, a more protracted interview/hiring process (based on hiring manager/candidate availability and parties involved) potentially resulting in loss of candidates along the process and more costly overall in terms of management time.
I love the fact that the Adviser Lounge is known for its active community and interesting comments on posts.
Knowing many of you as advisers have repeatedly adjusted your charging model I’d really welcome your feedback, thoughts and insights. Do you feel as though your business has settled on the right model now, how much adjustment did it take, are fees something that require constant review? Did you get much resistance from your clients and prospects when you made your first change to fee only?