How to attract the next ­generation of financial advisers

The profession of financial advice places planning for major life events at the core of its value proposition A frequent subject that a financial adviser will discuss with a business owner is succession to the next generation of leadership. Unfortunately, when it comes to succession planning in many financial practices, the cobbler's children have no shoes. If an advisory firm is going to survive into the future, attracting and retaining the next generation of advisers is a top priority. There are reasons why that could be difficult, though. Here are some statistics on demand and supply for financial advice. Approximately 10,000 Baby Boomers turn 65 each day and are questioning retirement and estate planning, wondering about the impact of taxes, and trying to decipher benefits like Social Security. Younger generations are looking for advice to optimize their savings, decrease debt and understand which investing tools are available to them. Yet, according to a study by Cerulli Associates, the financial industry is not prepared to handle this increased demand. Here are some facts about the financial advice industry that would worry any professional field: - Almost 40% of advisers plan to retire in the next 10 years, right along with their clients. - There are more Certified Financial Planner professionals over the age of 70 than under the age of 30. - Less than 30% of all financial advisors have the CFP certification. The reason for this shortage of qualified talent can be attributed to the financial crisis as well as how the industry has groomed its next generation leadership. Coming out of the financial crisis 10 years ago, the largest employers of financial advisers, the major Wall Street banks, reduced headcount and focused on retaining talent rather than hiring the next generation. With a tarnished reputation and commission business shrinking, it became very difficult to develop that next generation of leaders. There are universal elements to this problem of supply and demand to which our friends in accounting and law may well relate. We are left to ask several questions about how to attract and develop talent: - Why would talented people want to enter the field? It would help to convey a sense of purpose or vocation to someone considering a career in finance. The financial industry carries a poor reputation because it has been disconnected too often from the needs and interests of its customers. By embracing a client-focused vision and business model, a firm would become more attractive to a next generation that wants to help others make confident decisions about their money. - Why are young advisers failing or leaving? Young advisers fail or leave the business because they lack mentorship, training and experience. A change in mindset is required. We need to migrate away from hiring salespeople who can talk finance, to true professionals who know how to properly serve clients in need of advice. The former is transactional, the latter is sustainable. - Are advisers focused on hiring people with a growth mindset? It is tempting to hire a young adviser to help manage relationships that already exist because those clients represent the stability of the firm. An adviser with a growth mindset who relishes achieving their potential is not going to settle for the role of being a steward. Young professionals want to know that the best days are yet to come, and the right people will embrace planning for an abundant future. Advisers' role as leaders is to understand the "best version of themselves" vision to which top people aspire. ----- Dennis Morton is the founder and principle of Morton Brown Family Wealth. He is a Certified Financial Planner and Chartered Financial Consultant designations and holds a life, health, disability insurance license. He served as a captain in the U.S. Army and was awarded the Bronze Star for service in Operation Iraqi Freedom. Published: Thu, Oct 31, 2019