Panel of experts share strategies advisors can take to recruit both young advisors and clients
There’s a dearth of young advisors in the wealth management industry and there are a few reasons why, according to a panel of advisors who participated in a discussion at the Women in Wealth Management Summit on Tuesday, Dec. 5.
The average age of financial advisors is between 55-65 years, says Jacqueline Tung, vice president of iShares at BlackRock, and the reason younger advisors aren’t getting into the industry is the lack of education and succession planning.
“Some advisors were managing their clients really on their own, and now they're approaching retirement and they're being forced into thinking about succession planning.,” says Vanessa Flockton, senior vice president of advisory services and client relationship manager at Nicola Wealth. “That's not really the spot you want to be in. You want to be thinking about that group and investing in the next generation early. Ultimately, it's the best thing for the individual advisor, but also for their clients.”
Read more: How women can lead in the intergenerational wealth transfer | Wealth Professional
The wealth management industry has also been hard to get into, says Tung. “But more and more, I've seen my dealer head offices, whether it's Raymond James, or RBC, they're looking for more younger advisors. They're looking for advisors to partner with some of our largest teams and build multi advisor teams.”
Recruiting young advisors is just one aspect of preparing advisory practices for the great wealth transfer. Another strategy should be getting the younger generations of clients involved too. Flocton says that clients are frequently concerned about several factors around involving their children like how much they should give to them in their wills or whether to even bring up their wealth. Nevertheless, she argues that having those discussions early on can help.
“Then, you can accept that it takes people time to get around the idea,” Flockton says. “Some clients might start with talking about a small portion of giving some assets to kids and letting kids learn by managing these assets. Other clients are willing to open up and talk about everything, but it's really understanding their comfort and talking about money with others. And then once you understand, you can help guide them in terms of how to open the conversation with their kids.
Read more: How a family office handles intergenerational wealth transfers | Wealth Professional
“I wouldn't say it's a really important conversation to have, because you don't want the kids just getting to the spot of inheritance. And they're suddenly unaware of the entire situation, because that can cause a lot of family strife when it happens.”
The panel agreed that clients often make a mistake thinking they can start a financial plan later in life. But the clients that Flocton has seen, who are the most successful, were interested in their investments in their financial plan earlier in their lives, from mid twenties to early thirties.
“They started just chipping away at it,” she said. “I see them in their forties and they actually get to make those informed decisions at a very young age as to, ‘Do I want to stay in this job? Would I like to work less? Would I like to earn less?’ The biggest message I would just say is starting earlier and don't think you can do it at 50. Because then it's a lot harder to move from there.”
As for a successful succession plan, Soong says advisors should really be adding somebody to help every 10 years into the office, which is what she’s doing with her team. “We have an advisor who's 60, I'm 30,” she says. “I'm looking for somebody in between because there are just certain things that you agree with or can relate to. That makes more sense if you work with somebody who's been in the same position.”
One of the key takeaways going forward is ensuring the up-and-coming generation of advisors, both male and female, are well educated. “Most of our kids come out without any financial knowledge when they come out of high school, and most of them don't even know what an RESP is,” said Andrea Linger, vice-president of practice management at Raymond James. “We're not doing the job of educating our young people on what a great career this could be.”
