It is often noted that the average age of advisors in the US is rising, and yet there is - so everyone says - a big inter-generational wealth transfer in play. What should and could firms do to improve recruitment and keep abreast of demographic and cultural changes?
More than 111,500 wealth advisors will leave the industry in the next decade, equivalent to a third of the total headcount, raising the need for the sector to hire from more diverse backgrounds than the traditional white, male-dominated base.
With the average age of advisors creeping up into the 50s and the sector bracing for a $30 trillion intergenerational asset transfer, there is a need to ensure that the sector keeps pace with its people.
“In order to broaden their addressable market for new advisors and mitigate succession concerns, firms will need to revamp recruiting and training programs and intentionally prioritize retention—removing barriers that disproportionately affect diverse candidates,” Marina Shtyrkov, research analyst at Cerulli Associates, said in a new report by her firm.
The report, The Cerulli Edge - US Advisor Edition, 1Q 2020 Issue, said that among the advisors retiring in the next decade, 22 per cent are not sure about their succession plan.
For years, wealth managers have wrestled with how to find new advisors, either by developing in-house talent or recruiting from banks, asset managers and other institutions. There is even a theme of former military personnel, to given an example, forging careers as wealth managers.
Some firms are trying to expand recruitment beyond traditional areas. RBC Wealth Management-US, for example, is telling stories by video of how it is widening the range of people who join the industry, following its move last year to expand its net in the war for talent. RBC has revamped its Associate Financial Advisor training program to allow more “diverse” candidates – from inside and outside the financial services industry – to join the firm and follow a career in the sector. A person who may have had a career in a sector entirely unconnected to financial services can enrol. UBS, Merrill Lynch and Abbot Downing, to give other examples, have told this news service how they are widening the talent pool.
At stake is not just keeping up with demographic shifts, but ensuring that there is sufficient diversity of opinions and approaches, as well as diversity in terms of race and gender, for example. Arguably one of the greatest dangers – as perhaps proven by the 2008 financial crash – is what can happen when a form of “groupthink” takes hold in banking and finance. This can happen if wealth managers have similar educational backgrounds, life experiences and viewpoints.