It’s back to school for advisors

It’s no secret that the wealth management industry faces a head count problem driven by a wave of expected retirements of older advisors, a trend that continues to generate discussions and worries within the industry. One of the key strategies that will help ensure the future of financial planning advice is attracting and retaining talent.

Several firms are putting in place educational programs to help solve the problem. Wealth Enhancement Group, an RIA with $75 billion in assets under management, developed a program, “Wealth Enhancement Group University,” which educates and strengthens the firm’s rising advisor talent by building cohorts of junior advisors to learn and collaborate.

Kris Carroll, co-founder of the program and managing director at Wealth Enhancement Group, who’s also a second-generation advisor, says that while the firm’s advisors will go through courses in the program, it’s ultimately for second-generation advisors who are about to take over a business and serve as a team leader for the first time.

“There’s a big difference in being a team leader and being a financial advisor or a team member,” he says.

The courses are designed to be small study groups of up to 10 advisors, though Carroll says they currently have as many as 32. They’re all built around the soft skills of financial planning and can be taken as often as advisors wish. However, the actual duration of the program is no more than eight to 10 weeks.

The two most popular courses are those that focus on emotional intelligence and practice management, Carroll said. “They’ve just been super popular, and we realized more people need this,” he said. “We’re going to try to really dig in and replicate and redo those two [courses] and try to get them out to more and more people.”

Wealth Enhancement isn’t the only firm that’s focused on attracting advisors through education. Iron Bridge Wealth Counsel, part of Osaic, has built an internal program that allows next-gen advisors to both build their own client base and get the training to develop as paraplanners while they finish their certified financial planner designation.

“The wealth management industry struggles with balancing the need to focus on long-term sustainability by hiring and training good G2 talent with the need to focus on shorter-term profitability. Furthermore, many successful advisors primarily focus on their current clients and not necessarily on their future clients,” Shane Morrow, partner and CEO of Iron Bridge, said in an email.

Crystal McKeon, financial planner and chief compliance officer at TSA Wealth Management, thinks colleges will be able to fill the gap in entry-level positions by offering training for future advisors and planners in college so that they’re more prepared for immediate entry into client-facing positions when they graduate.

“We are currently signed up to attend interview day at a local business school to recruit interns from their Financial Planning Track program,” she said in an email. “I think many will have to get this kind of training to enter the industry.”

Why aren’t advisors and firms making it an immediate priority to recruit? Several advisors say while bringing in younger advisors should be at the top of the list of one’s succession plan, it’s also the ultimate challenge or isn’t really a priority.

“Time is our friend,” said Julie Genjac, vice president and managing director of applied insights at Hartford Funds, who says she recommends to advisors that they have a transition plan in place two years in advance.

“I always say a transfer of trust to a client, it doesn’t happen in one handshake or one conversation, this is a multipronged process,” she said.

Genjac says it might be worthwhile for advisors to consider reaching out to candidates from outside of the industry when they’re recruiting the next generation of advisors.

“We could bring somebody who’s been in a health care profession, or in a nonprofit or in the education sector, that also has all of this really great life experience, that could sit down and have a phenomenal and meaningful human-to-human conversation with our client and prospect. They may not be able to construct a portfolio but that’s OK, because we have somebody else on our team,” she added.

 Carroll noted that having a second-generation advisor also helps the leaders of the firm save time and increase a firm’s value in the long term. “Whether that [next-gen advisor] is the one buying your business or an outside person’s buying your business or you’re selling it to another firm, having that continuity deepens the relationship with clients.”

While some next-gen advisors are looking for firm ownership and a flexible work schedule, Jack Heintzelman, financial advisor at Boston Wealth, a millennial and second-generation advisor, says the key to supporting the talent pool of younger advisors is making sure they feel supported and mentored, and promote the service of clients, rather than just the business development and the sales.

“If you can promote education and growth and ask the right questions, then they’re going to develop faster and build more trust with those clients that you want to introduce them to,” he said.

At the end of the day, as Dinon Hughes, another second-generation financial advisor, points out, the issue revolves around two things: continuing to serve clients and the survival of the business.

“But without proper due diligence into your successor, the business you spent your whole life building can crumble before your eyes,” Hughes said. “Lots of advisors target clients the same age as them. Who serves those clients in retirement when the advisor is also retiring?

“Another major focus is bringing on kids of clients to facilitate the wealth transfer,” he added. “Who is going to serve them? Different life experiences create different mindsets, values, beliefs that match next-gen clients in a way that Gen X or baby boomer advisors may struggle with.”

Related Topics: Next Gen, recruiting