Practice Management

Industry aims to ‘change the narrative’ in bid for NextGen advisers

A group of executives and officials representing nearly a dozen firms in the industry gathered in the InvestmentNews office in Chicago July 26 specifically to discuss their collective needs — and plans — to develop the next generation of financial advisers.

NextGen: It’s the advisory industry issue that is on everyone’s top 10 list, but it just seems to keep falling down to number 11.
Except for these firms.
A group of executives and officials representing nearly a dozen firms in the industry gathered in the InvestmentNews office in Chicago July 26 specifically to discuss their collective needs — and plans — to develop the next generation of financial advisers.
InvestmentNews, in partnership with Advisors Ahead, hosted representatives from Cambridge Investment Research, Envestnet, Fidelity Investments, H.D. Vest Financial Services, Merrill Lynch Global Wealth Management, Pershing Advisor Solutions, RBC Wealth Management, Robert W. Baird, TD Ameritrade Institutional, UBS Wealth Management and Wells Fargo Advisors, in a NextGen leadership round table discussion to share ideas and experiences.
All were in agreement that the industry is watching the adviser population shrink and gray — at a time that the need for financial advice is expected to boom. Yet despite the opportunities that are expected to develop over the next decade, dozens of challenges were cited in connecting with the NextGen. Namely:

• Making younger individuals aware of the range of career paths in the advice business.
• Explaining the industry, the terminology and the different types of business models.
• Consistently identifying the candidates who will make the best advisers.
• Assigning an immediate return on investment to recruiting and developing new entrants, when it could take years for the investment to pay off (if it pays off).

Compounding these challenges are several imminent and long-range issues: In the near-term, custodians, broker-dealers and advisers are confronted with succession-planning needs for existing advisers and practices. Longer-term, the intergenerational transfer of wealth from baby boomers to their Gen X and Gen Y children makes the need for younger advisers more pressing, as well.
“We have to form the relationship now,” said Kate Healy, managing director of marketing at TD Ameritrade Institutional. “If you are not engaging them as potential or future clients, then you are way behind.”
While the payoff could be years away, proactively developing a generation of younger advisers now was viewed by many in attendance at the round table as a strategic decision to shape the competitive landscape of the industry a decade from now. “There is no report that suggests in 2020, if we do not bring on and develop a new generation of advisers, the industry will fall off of a cliff,” said Abhijoy Gandhi, senior vice president of strategy and metrics at Wells Fargo Advisors.
To position their firms, advisers and clients for the future, participants in the round table noted that their recruiting and development of new talent have evolved in recent years. Some firms, notably Merrill Lynch, have expanded their training and are putting new recruits through more-extensive programs. Merrill has a rigorous 43-month Practice Management Development Program that aims to attract 2,500 new individuals this year, according to Dwight Mathis, the head of business development and new-adviser strategy at Merrill Lynch. (Watch INTV sit-down with Mr. Mathis and discuss its NextGen strategy.)
The Merrill program now has a strong emphasis on developing business and management skills, along with enhanced financial planning, consultative and investment services. Participants are also mentored extensively by existing Merrill advisers during the program to provide them with exposure, support and enhanced professional development. “Mentoring is not just talk,” Mr. Mathis said. “What we have in place is a formal, institutional approach to developing educated and well-rounded new advisers.”
Cambridge Investment Research has introduced a internship program this summer that has 15 college students operating in a range of home office roles. This, according the Jeff Vivacqua, first vice president of business strategy, has allowed the students to get direct exposure to the business itself and gain a broader understanding of the financial advice industry.
“We have had some of our interns say that they have learned more in 10 weeks than they have during several years at college,” Mr. Vivacqua said.
For firms, understanding the next generation’s traits, preferences and behavior — and broadly portraying the career path of a financial adviser as more attractive — will be a key to successfully attracting new talent.
“We may need a new tag line for the industry when communicating with Gen Y,” said Waldemar Kohl, vice president of practice management at Fidelity. “The message might be more on target if we talk about what you can do as an adviser and how you can influence the lives of your clients.”
Many agreed that the industry needs to “change the narrative” around the story of a career as a financial adviser, as Shane Raymond, vice president and director of business and professional development at RBC US Wealth Management noted. “We need to shift the perception that this is a career focused exclusively on generating the best rate of return,” Mr. Raymond said. “It’s really about letting your clients sleep at night.”
“To connect with NextGen,” he added, “we need to move from a market-based story to a client-based one.”

For more-recent NextGen content and to learn about InvestmentNews’ upcoming Virtual Career Fair, please visit the new section of our site devoted to NextGen.