Attracting next-generation talent

Demand for qualified young advisers outstrips supply right now, requiring thoughtful recruiting

Jul 13, 2014 @ 12:01 am

By Liz Skinner

+ Zoom
(Getty Images)

Thousands of baby boomers are retiring each day and some are looking at their adviser — who is most likely at least 50 years old — and realizing he or she may not have enough working years left to see them through retirement.

Where youth has traditionally been a detriment for advisers due to clients' preference for the experience of older planners, some aging clients now fear having to replace that seasoned professional during their own crucial retirement years. They are looking for a younger adviser or a team that includes one.

(More coverage: How to attract — and develop — NextGen talent)

“Lots of clients like that we're going to be around for the next 20 years,” said Jeremy Kisner, president of SureVest Wealth Management, which has four advisers ages 35 to 47. “I've met with prospective clients who say their adviser is in his 60s and they want a back-up plan.”

In addition to offering clients the security of continuity, young financial advisers often can better attract next-generation clients and may form tighter bonds with clients' children, the ultimate beneficiaries of their parents' wealth.

Unfortunately, recruiting next-generation advisers isn't as easy as posting a job opening or even hiring a professional headhunter. A national shortage of young advisers is evident — only about 5% of advisers are under 30, according to Cetera Financial Group.

“The market is really tight for firms to find and hire young advisers who would be able to make an immediate impact,” said Kim Dellarocca, managing director at Pershing.

As a result of the short supply, firms need to rethink recruiting when it comes to young advisers and take “a longer-time view,” she said.

With the opportunity to pluck a young adviser from a competitor unlikely, many firms are pursuing a different approach: developing their own youth movement.

Practically speaking, that may mean hiring a young graduate directly from a financial planning program to be a paraplanner or to fill an operations role, and then molding them into the adviser the firm needs and clients want, Ms. Dellarocca said.

It could also mean looking for young professionals seeking to switch careers, she said. Specifically, someone in real estate or pharmaceutical sales may be a great choice because they are likely to have significant experience working with and serving clients.

Charles Schwab & Co. Inc. has created an internship program that's found success recruiting young professionals, said Bernie Clark, head of Schwab Advisor Services.

During its summer program, 20-somethings rotate through every part of Schwab's business, including time spent on site with a registered investment adviser. About 20 young professionals take part in the program every year, and some interns have landed full-time positions as a result, he said.

The program helps expose the young advisers to the culture of firms so the chances of a good fit between employee and employer improves, Mr. Clark said.

“It's critically important the right hires get made,” he said.

After advisory firms have hired young professionals, having a formal introduction process can better the chances of retaining and shaping a successful young adviser.


The new-hire program should detail what the adviser will be doing for the first 100 days or so and include making him or her more comfortable, such as scheduling lunches during the first week with other employees, Ms. Dellarocca said.

“Firms may also pair the young professional with a "buddy' to help answer questions,” she said.

The age gap between younger and older advisers at a firm can present its own problems that are best addressed proactively. For example, new advisers are often of similar age to senior advisers' own children, said Nalika Nanayakkara, a principal of Ernst & Young. Advisers should be reminded that they are expected to treat these younger professionals with the same respect they show older colleagues, even if there are multiple generations between the two, she said.

And if an older adviser is expected to mentor a young recruit but doesn't know the most effective way, teach them, she said.

“Coaching the experienced advisers on how to build a team can help,” Ms. Nanayakkara said.

Although in the old days, advisers who were just starting out did everything for themselves, including bringing new clients onboard and keeping track of meeting notes, a younger adviser who joins a team today should be given some level of front- and back-office support from pooled associates, Ms. Nanayakkara said. That will improve the chances the young professional succeeds.

Finally, making sure the right tools and technology are available is especially important to Millennials, and can help ensure they are content and remain with the company.

A May 2014 survey of advisers by Ernst & Young found that 72% of baby boomer advisers were satisfied with the tools available to them, compared to only 46% of younger advisers.

The report concluded with a practical reason for putting in the effort to bring on the next generation of financial advisers, train them and give them the tools they need — their ability to attract next-gen clients “will keep risk-of-flight assets in check.”


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