A career as an adviser can be equal parts prosperous and fulfilling. Advisers have the ability to make meaningful differences in clients' lives, not just by growing their assets but also by helping them reach their life goals. Advisers solve real-world problems using empathy and creativity. Particularly in the independent channel, advisers have the entrepreneurial opportunities, flexibility and control over who they serve and how they assign literal value to their time and services.
There's also a growing need for financial advice, especially among high-net-worth individuals. The number of wealthy individuals across the U.S. population has expanded significantly in recent years. Spectrem Group counted 9.98 million American millionaires in 2017, an increase of almost 600,000 from 2016's total(1). Then there's the trillions of dollars in the coming wealth transfer: Deloitte's Center for Financial Services expects $24 trillion to be transferred (after taxes) to younger generations over the next 15 years alone(2).
Why, then, is a there a well-documented talent shortage in the industry? With those anticipated wealth transfers and growing wealth among prospective clients, why don't more young people, women and minorities embrace this opportunity-rich career? Why does the popular image of an adviser remain stuck in the stereotype of a 1960s stockbroker--an older white man in a dark suit who alone can solve the mysteries of the stock market?
Hear from your peers about potential reasons for the disconnect:
If the aforementioned quotes help paint the problem of a lack of diversity in the industry, another adviser's words suggest how rethinking an adviser's role could attract a more diverse workforce to the industry:
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“If you enjoy finances and helping people solve problems, but you want to have your own business with flexibility to do what you want to do or the hours you prefer to work, this is a good career.”
White female wirehouse adviser based on the West Coast
These voices are of successful advisers who come from under-represented groups within the adviser industry. Whether the challenges they relayed were institutional or personal and made out of ignorance or hostility, they are a symptom of a broader problem. They also suggest the way toward future success in solving some of the industry's most vexing issues.
They came from participants in a two-fold Fidelity research effort to help define the adviser talent gap and explore the lack of diversity in the industry.
Source: 2018 Fidelity Talent and Diversity Study
One part of that effort brought together 25 advisers across the spectrum of age, gender, race, ethnicity and sexual orientation into small, candid focus groups. The group participants shared stories of how they came into the industry and how they succeeded, often despite the challenges they faced as nontraditional advisers. Their voices helped inform the shape and scope of the research.
The complementary quantitative research, the 2018 Fidelity Talent and Diversity Study, surveyed 464 advisers across all channels, from RIAs to wirehouses. The goal was to document the adviser talent gap and gauge advisers' thoughts about the lack of diversity in the industry. (See "About the Research" at the end of this piece for more details.)
The findings of the overall research, we suggest, could uniquely guide the entire industry in addressing these dual challenges.
The quantitative findings from the 2018 Fidelity Talent and Diversity Study are stark: 68% of the advisers surveyed agreed that the industry is facing a talent shortage; 59% said it's a challenge for their firms to find talent and staff that fits their firms' needs; and only 37% of advisers said their firms do a good job at recruiting and hiring new advisers.
The qualitative focus groups are illuminating. Coming from women or racial and ethnic minorities or career changers, those advisers detailed the challenges they faced—and still face—as they journeyed along their differing career paths.
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On his first day at a wirehouse: /assets/docs src="/wp-content/uploads2018/10/CI1175311016.PNG" “[Another adviser] says to me, 'I understood we hired an African-American, so I wanted to ask you, why are you here? This isn't for your people.' I was like, 'I don't, even understand what that means… what do you mean?' So [he said] 'Well, you know, African-Americans don't exist in this business, and there's not very much wealth for you to go after. Maybe you should focus on the churches, and you could get money that way from your clients.'” African-American male wirehouse adviser based in the Midwest
/assets/docs src="/wp-content/uploads2018/10/CI1175321016.PNG" “I'm in this space in banking [after gaining her second master's degree], and I'm meeting all these young folks, and they're talking about their careers. I just wasn't into financials and folks in business school that were headed to Wall Street. They were always in their own world speaking their own language. When I met some folks, [I would] host parties and they said, 'You know everybody. You're always bringing people together. You really should consider a career in financial services.'” African-American female wirehouse adviser
/assets/docs src="/wp-content/uploads2018/10/CI1175331016.PNG" “Not only are the clients aging but so are the advisers. And because a lot of people haven't entered the business, it's actually become more challenging to someone like me that still has another 20 years or 30 years or whatever to keep working…And for the business model to not be adapting as quickly…it's very restrictive in terms of what we can and can't do.” White female independent broker-dealer/RIA adviser based on the East Coast