The coming financial advisor shortage is well known to our industry. Cerulli says that over the next decade, at least 100,000 advisors will retire, representing over 37% of industry headcount and more than 41% of total assets.
Firms are scrambling for solutions, including identifying, training and supporting Next Gen advisor talent. Unfortunately, bringing new people into the profession is fraught with challenges, with the failure rate around 72% for beginning advisors, according to Cerulli.
For a perspective on how to attract Next Gen advisors and set them up for success, we spoke with a C-suite executive and a Next Gen advisor at hybrid RIA Trilogy Financial: Jason Inglis is the firm’s Chief Development Officer, and Gunner Oury is a Next Gen Wealth Advisor.
WSR: It seems like we’ve been talking forever about the need to attract younger people to the industry. What do firms need to do to move the needle and help lower the average age of advisors?
Inglis: In the past, the wirehouses offered excellent training programs for new advisors, as well as the time and resources to build a book the right way. Today, new advisors are handed a compliance manual instead of advisory training and mentorship. They are typically limited to relationships in excess of $250,000, so they better catch on with a big team if they want to survive. While that may be a slight exaggeration, it’s not too far off.
Fortunately, this cultural change has left it to the independents to educate the future leaders of our industry. At our firm, we have a formal program to train early career advisors, get them credentialed and embed them within a team structure with mentorship from seasoned advisors. We’ve seen success, and I think other firms should follow suit for the sake of the industry.
WSR: What do firms need to do to attract younger advisors like yourself, and how can they help them build a long-term career?
Oury: I’ve come across some firms that dump a bunch of leads on new advisors, then stand back and see if they sink or swim. While having access to qualified prospects is important, mentorship and career development programs are much more critical than quick client acquisition. Being part of a team where you can learn from experienced advisors – and make the occasional mistake – is a great way to build a lasting foundation in this business. The firm you join must not only allow mentorship but have a culture that encourages it.
WSR: What do you say to firms and solo practitioners who believe that the expense of bringing on a young advisor is not worth the hassle and expense?
Inglis: I’d say they are very short-sighted. Yes, there is an initial cost to bringing in a Next Gen advisor, but if they are supported and given the right tools, the investment will benefit the firm over time. Younger professionals can relieve pressure from established advisors by handling smaller clients, allowing senior advisors to focus more on their top relationships. New talent can add energy to a practice, attract younger clients and ultimately provide a clear succession path when the lead advisor eventually decides to exit the business. So, yes, it’s worth the expense.
“New talent can add energy to a practice, attract younger clients and ultimately provide a clear succession path.” – Jason Inglis
WSR: Do you feel pressure to build a book of business quickly? How do you define career success?
Oury: This is a competitive business, but building a sustainable group of clients can’t be the primary focus when just starting out. That adds to the high failure rates among recruits to the business. New advisors should work with a mentor who understands what they’re going through in the first years. Valued mentors can teach you the hard skills of investment products, compliance policy and technology use. But they can also guide you in developing the softer skills of client service, understanding client care and relationship building.
“Having a mentor who has experienced the lean years of being a rookie advisor can help you focus on the long-term rewards.” – Gunner Oury
A mentor can also help you set expectations. I think some new advisors view this as a corporate finance job, where you make a set amount of money right away, and it will only get better from there. But it takes more elbow grease than that. Having a mentor who has experienced the lean years of being a rookie advisor can help you focus on the long-term rewards that will come if you dedicate yourself to the ongoing care of your clients.
Janeesa Hollingshead, Contributing Editor at Wealth Solutions Report, can be reached at editor@wealthsolutionsreport.com.
