The statistics paint a pretty bleak picture. The average financial advisor today is age 51, with nearly half (43%) over the age of 55 and therefore inside of a decade from retirement age. Conversely, the number of new junior advisors entering the workforce isn’t even close to keeping pace with the number of senior advisors exiting. According to Ernst & Young’s recently released The Next Generation of Financial Advisors report, each year there are two financial advisors qualifying for Social Security benefits for every new advisor entering the market.
Advisory firms have become incredibly top-heavy organizations. According to Michael Kitces, three out of every four U.S. practices currently have more lead advisors and partners than support and service advisors to work with them.
Exactly what does this mean for the long-term sustainability of your enterprise? Without a talented team of young advisors to eventually take over the reins, not only are you risking your firm’s future, you’re seriously jeopardizing your ability to monetize your life’s work. More importantly, you’re neglecting your fiduciary duty to your current clients.
With each client you’ve onboarded, you promised them (either explicitly or implicitly) that you’ll be there through all of their life’s transitions – helping to put their kids through college, preparing them for retirement and dealing with crises like illnesses or the death of a spouse/parent whenever they arise. However, if you don’t have a plan to ensure continuity of client care beyond your working life, that promise is rather meaningless.
Are you really willing to simply walk away and abandon your clients to fend for themselves when you retire? If not, then the imperative to recruit, hire and retain young advisors should be at the very top of your priorities list!
Attracting and retaining NextGen advisors
How do you find and attract young advisors just starting their careers? The following are just a few ideas to help you get the ball rolling and focus you on the task at hand:
- Become more organizationally engaged with your community and charities. Millennials tend to be very socially conscious and charitably inclined. Many are drawn to the profession because it offers an opportunity to make a direct difference and improve people’s lives. Demonstrating that your firm values are driven as much by a desire to give back as by profit can go a long way towards attracting and retaining young advisors.
- Ramp up your social media game. If you want to communicate to millennials, then you better become adept at promoting your vision, your value proposition, your firm’s personality and your social conscience across a host of social media platforms including Facebook, Twitter, LinkedIn and even YouTube.
- Clearly define roles and responsibilities and a path to partnership. Want to attract the best and brightest? Show them that your firm isn’t just a training ground to build their skills before moving elsewhere or starting their own practice. Let them see that there’s a clear path to future partnership that’s achievable.
- Hire for future rather than present needs. As a business owner, the thought of carrying excess capacity may be a tough pill to swallow. Typically, you would wait until present staff is at full capacity before bringing a new advisor onboard. But with young advisors, there’s a strong case to be made for hiring, acclimating and training them before they’re needed rather than simply throwing them into the fire.
From sourcing and onboarding, to training and integrating next generation advisors into your firm’s corporate culture, you need a well thought out and carefully crafted program. It begins with shifting your focus – from the present to your future company, and the many different roles in a growing firm you’re going to need talent to fill.
Coaching Questions from this article:
- What steps will you commit to take in order to attract and cultivate NextGen advisors to become future leaders of your business?
- Think about your hiring plan for the future. Are you approaching it proactively with an eye on creating a durable and sustainable practice?
- What actions and activities will you pursue to better connect and communicate with NextGen advisors earlier and more effectively?
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