Did you know that the average financial advisor in the United States is older than 50 years old? Or that only 5 percent of advisors are younger than 30?
In fact, research group Cerulli Associates has found that the number of financial advisors in the U.S. has fallen every year since 2010. Advising firms have been plagued by a decreasing workforce, which will only get worse, as Cerulli claims that approximately 100,000 more advisors will retire over the next decade.
Corroborating this claim is Richard Stein, a partner at Caldwell Partners, who has calculated that 50% of today’s advisors will retire within the next 15 years.
If not addressed head-on, a talent shortage will have far-reaching consequences. As more advisors retire, there will be fewer people to take over leadership positions which endangers not only their practice but the wellbeing of their clients as well.
Considering that 33% of Millennials prefer to get financial advice from their parents and 23% of them don’t trust anyone at all with their financial matters, recruiting people from this group to become financial advisors will be an uphill battle. That’s why ZoomInfo has put together this article on how to recruit new advisors, retain top talent and groom your successor.
Tips & Best Practices for Recruiting Financial Advisors
Without a doubt, the best places to source new recruits are colleges and universities. Many universities are starting to adopt internship or co-op programs, which give students a break in their studies for up to six months to work full time in jobs that are related to their majors.
These experiential learning initiatives are incredibly popular with both students and businesses. Plus, schools are always looking to partner with more companies to offer their students unique working opportunities.
By partnering with universities, you will be able to take part in their career fairs and on-campus recruiting events, which many companies strongly favor their low cost and high effectiveness ratings. If you don’t have existing ties to universities or professors, consider investing in a contact database to help source new contacts.
Depending on the nature of your relationship with local schools, professors can introduce you to their most promising students. Or, perhaps, offer guest lecturing opportunities to build your company’s reputation as a thought leader.
But just because you have a presence on campus doesn’t mean your college financial recruiting efforts will be successful. You have to implement quality programs that young people will be interested in applying to. Gone are the days of students willing to take unpaid internships in hope of getting their foot in the door.
This has been especially true since the economic crisis, which resulted in many young people losing trust in financial institutions. Instead, offer well-paying jobs that give students meaningful experiences.
Creating apprenticeships or mentorships create a strong bond between your company and young talent. Plus, these types of programs will encourage more young people to seek out your firm after graduation.
How to Retain Financial Advisors
Having a clear career plan is one of the most effective ways to retain employees. Employees are more likely to stay with a company when there is a clear goal and clear support from management.
In fact, a recent study found that 78% of employees would stay with their current employer if they knew their career path. Yet, 51% of employees say they receive “no input” or “input only once in a while” from superiors on their performance.
Proper support from supervisors is also key to retaining top employees. Becoming a mentor to your new hires will allow you to have a greater influence in their professional lives. By building a solid connection, employees will become much more loyal to your company and less likely to quit.
One of the most common reasons for new advisors to leave the profession is the compensation structure. Most new advisors work on commission, which can mean very little income when they’re first starting out. Instead of motivating them to work harder, it ends up dissuading them.
After a few stressful months earning an unsustainable income, they ultimately leave the field. Firms must create a more flexible compensation plan which may include a higher base salary, coupled with intensive training to bring new reps up to speed. With such a limited talent pool, more resources need to be put toward reducing turnover and keeping advisors.
Improving employee benefits is also a good way to retain new talent. According to MetLife, 59% of professionals indicated that benefits were a significant reason to stay with their company. Focus on benefits that offer your employees flexibility and a greater work/life balance.
Succession Planning for Financial Advisors
Consulting firm Moss Adams has calculated that the financial industry could face a shortage of over 200,000 advisors by 2022. State Street Global Advisors has reported that less than one-third of advisors approaching retirement have created a succession plan for their firm. Financial advisors hesitant to put a succession plan together risk the longevity of their practices and endanger the welfare of their clients.
This is where mentoring programs really hold their value. With senior advisors personally guiding younger advisors, younger advisors learn the values, leadership, and management skills required to run their own practice.
You should also make an effort to create stronger ties between the most valuable employees and the practice. You can do this by offering a minority stake in the business. This will ensure that high-performing employees stick around after you step down to take the helm.
Recruit Financial Advisors with ZoomInfo Contact Database
There is a huge shift happening in the finance sector. As more and more advisors retire, the crunch to find new talent will only get worse. The only way to insulate your firm is to implement new recruiting and training programs.
By investing in high-quality fresh grads, you’ll continue offering your clients superior service. You’ll also have the resources you need to plan for transition as older advisors retire.
Start building relationships with local universities to create a recruiting pipeline and gain access to bright and motivated students. To increase the efficacy of your outreach campaigns, use a contact database like ZoomInfo. This will help you find contact information for key contacts at the schools you want to target.