The time is now for young financial advisers

For new advisers trying to gain a foothold in an age-based industry, the struggle is real. But not impossible.

May 29, 2016 @ 6:00 am

By Alessandra Malito

After graduating from college, Eric Roberge worked at two investment banks and then four different advisory firms within five years, unable to find a company where he felt comfortable.

After he decided to start his own firm, he was forced to work as a waiter part-time to make ends meet. He was 33 years old.

Mr. Roberge, now 36, was eventually able to leave his part-time job and works full time at his firm, Beyond Your Hammock. He is a virtual financial adviser with clients around the country.

Not everyone has Mr. Roberge's perseverance. Whether they're at large wirehouses, small registered investment advisory firms or anything in between, many young advisers don't make it over the initial hurdles they encounter upon entering the financial advice field and end up leaving the industry.

“There is a lot of trial and error, and you often face failure right away,” Mr. Roberge said.

Common frustrations include extended time performing menial duties, studying for multiple designations while learning the ropes, and being expected to bring in assets of clients who probably still view them as kids — despite their level of education and hard work.

The statistics on adviser attrition early on in their careers back this up.


Last year, there were about 36,000 new adviser “trainees” (those with less than three years of experience) in the financial advice industry, according to research firm Cerulli Associates. But more than 29,600 advisers who'd entered the field in the previous five years washed out in 2015. Cerulli counts as washouts those who do not succeed in the adviser role and either attempt another position in the field or leave the industry altogether.

“They either drop out or they take a less-high-expectation job in the industry somewhere,” said Caleb Brown, partner at New Planner Recruiting, which matches new advisers with advisory firms.

The low backfill means the number of advisers in the profession keeps falling as more baby-boomer advisers retire each year. The industry saw its fifth consecutive year of decline in 2014, to about 285,000 advisers, from a peak of 325,000 in 2008, according to Cerulli. The research firm estimates there will be a gap of about 10,000 advisers in 2020, in terms of the supply of advisers versus the industry's potential growth.

29,600+Advisers who'd entered the field in the previous five years that washed out in 2015Source: Cerulli Associates

Bryan Hasling, 26, stepped into a financial planning role with JW Harrison Financial Advisors early in his career, and thought he had the job down pat — until a client made it clear to him how finite his life experiences were at such a young age. The client jokingly said that Mr. Hasling couldn't relate to her effort to figure out what to gift her children since he didn't have any.

Mr. Hasling had to admit to this particular client and others who shared her view that, although he knows the technicalities of 529 plans and debt management, for example, he has never yet had to deal with them personally. He knows cash flow, but has never bought a home.

Luke Seiderman, 22, a financial planner at Vista Wealth Management, said his firm teams up junior and senior advisers to work with clients, which eases the concerns older clients have about turning their hard-earned assets over to younger, inexperienced advisers. Mr. Seiderman worked in the industry throughout college and, after graduating, received his certified financial planner designation. But he agreed his biggest issue was comfortably communicating with clients.

“You're not taught that in an academic setting,” he said. “The biggest challenge for me has been the shift from academia to the real world.”

(Related read: Best practices for developing a new adviser at your firm)


Craig Pfeiffer, founder and chairman of Advisors Ahead, a professional development program that matches undergraduate students with wealth management firms, said the industry needs to do a better job of merging academic training and real-life experiences, adding that the hiring process must begin focusing on relationship dynamics.

“The industry collectively and each industry participant has a responsibility to create an onboarding model that attracts quality candidates and positions them for success, and that comes from watching success,” said Mr. Pfeiffer, now president and CEO of the Money Management Institute.

Another issue for next-generation advisers, especially those not entering the field through large-firm training programs, is getting a network in place from which to learn and gain support in the formative, early years.

Lauryn Williams, 32, an Olympic athlete turned financial adviser who recently started her own firm, said she had to get through the awkward first phase of not knowing anyone and build up a network of peers and a mentor.

Lauryn Williams: "It takes a while to get connected with people similar-minded and excited to take on another person to mentor."

“When you are new to the profession, you don't know exactly where to look,” said Ms. Williams, founder of Worth Winning. “Even if you're a go-getter and social and all those wonderful things, it takes a while to get connected with people similar-minded and excited to take on another person to mentor.”

And unfortunately, the next generation — especially the current crop of millennials — is often pegged with negative stereotypes, such as wanting to ensure plenty of vacation days, not being able to sit at a desk to get their work done or seeking to jump into the CEO's chair from Day 1.

“You can't paint them all with a broad brush,” said Kate Healy, managing director of institutional marketing for TD Ameritrade Institutional. “They are just baby boomers 20 years ago, and I think we forget that.”

So how do those who do persevere make it?

Depending on the firm they join, new advisers who survive usually receive sound training and form groups with peers or find mentors. Those who become familiar with the industry and all it has to offer, and who get as involved as possible with clients and coworkers, are more likely to succeed.

For those at big firms, it often depends on the efficacy of the training program and the willingness of the firm to invest in the new hire's potential.


In 2014, Merrill Lynch started a path within its training program called Team Financial Advisor, in which trainees are hired to work in a particular role — like business development or investments — for 31 months before assuming a financial adviser position.

“We believe people should play to their strengths,” Racquel Oden, former head of adviser training and development at Merrill Lynch Wealth Management, said in an email. A spokeswoman for the firm said the retention rate for advisers in the program is about 35% to 40%.

Ms. Oden was recently appointed market executive of Merrill's Fifth Avenue branch in Manhattan.

"We believe people should play to their strengths."-- Racquel Oden, head of adviser training and development at Merrill Lynch Wealth Management.

Some new advisers, particularly those who lack colleagues of their own age, gain camaraderie and strength to persist through the early, tough years by joining support groups, such as the Financial Planning Association's NexGen or the National Association of Personal Financial Advisors' Genesis, which provide tools and a cadre of peers as resources.

“You can't be out on an island and do this all by yourself,” Mr. Brown said. “You have to have people give coaching and accountability.”


Other new advisers pay for outside assistance and support. One of the groups that supply that is XY Planning Network, which offers services such as compliance setup and finding leads for more than 200 fee-only firms of young advisers.

“We realized so many people out there needed that sense of community,” said Alan Moore, co-founder of XY Planning Network and a financial adviser with an eponymous practice.

Those who make it also usually have peers and mentors who are willing to give them the unvarnished truth. Ms. Williams said her mentor told her not to expect to be profitable for five years. This put her compensation model into perspective, and convinced her to set up a monthly retainer for clients as opposed to a commission or fee-only model.

Alan Moore: "We realized so many people out there needed that sense of community."

She recommends her young adviser colleagues really listen to what seasoned professionals say. Ms. Williams advised “being open and not thinking you know it all. People know more than you.”

Being familiar with the industry's top news and its tools, such as the various technology platforms available, helps too, said Barry Mulholland, assistant professor in Texas Tech University's department of personal finance. He said alumni report back to him that in their early years, their main concerns are overcoming insecurity and feeling as though they can provide insight to their firms.

With advanced knowledge, young advisers “feel they are adding value sooner,” said Mr. Mulholland, who in July will be come the new CFP program director at the University of Akron.

“Some of the firms will ask them to get involved with technology because they don't seem afraid of it,” he added.

Texas Tech is working to get students accustomed to what's offered in the industry by partnering with other universities and software providers to create a network with access to numerous software applications.

Ultimately, the only way a new adviser will survive in the industry is by finding a role and firm that are a good fit and growing alongside them, said Anne Marie Ihling, 22, a financial planning associate at Abacus Planning Group.

“I'm not just getting into this to get a job,” she said. “I'm getting into this to have a career and grow myself.”

Mr. Roberge understood that, too. His journey took a little longer than many of his peers would have been willing to stick out, but he knew building the business he always wanted would make all the challenging experiences worth it.

“For any new adviser, there is more than one way to make it work,” he said. “You have the ability to create the type of working environment you want, so if you stay committed to that vision, eventually you're going to get there.”


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