For many years, those concerned about the future of the financial services industry have asked where the young advisors will come from.
And the search for answers gets ever more urgent as multiple factors converge to prompt advisors to either retire or sell. Those who make their living consolidating advisory practices welcome the trend – with one noting in conversation during our annual Distributors’ Summit that “a tremendous number of books will be coming up for sale in the next 10 years.”
A lot of advisors who built practices while in their 20s and 30s are starting to feel the strain of burnout, as well as health problems that crop up when people reach their 50s and 60s. That’s starting to pinch, as are ramped-up compliance requirements, which many find frustrating. Faced with a choice between selling out and spending significant sums to add staff and technology to meet regulatory requirements, many will choose the former. It’s a hard pill to swallow for people who 20 and 30 years ago were declaring how much they loved this business and routinely said they’d never quit.
And some never will, which is why product distributors must get busy and figure out how to accommodate those who will stay in the business past age 65. Such older sages with something to teach will play prominently in the industry’s future by serving as mentors for those coming up in the business.
Creating mentors is crucial, because the very factors driving some advisors out of the industry – burnout, regulation, and consolidation – may in the end be the source of its salvation.
The reason? Job-related stress isn’t confined to the advisory world, and people in other professions, such as medicine, social work and communications, increasingly suffer from their own forms of burnout. Strains from mid-career stagnation have many looking for alternative paths.
Those already working in people professions have skill sets that make them ideal candidates to become advisors. They know how to listen, get to the bottom of problems, and prescribe solutions. People leaving communications careers are very good at reporting back to clients to determine if discussed objectives were clearly articulated. Those transitioning from medicine bring with them an ability to diagnose and an ability to deal with regulation and compliance.
And people burned out by the demands of social work want opportunities that take advantage of their predisposition to help others. It won’t take too many experiences of protecting families from risk and helping them grow wealth before they’ll buy into the advantages of the planning profession.
In other words, instead of wondering where the young advisors will come from, the industry needs to think in terms of where the next advisors will come from. They won’t always be fresh-faced college grads. Some will be a bit greyer, but they’ll be wiser and likely to have already bought into professional standards from their prior careers. On the downside, because of their ages, firms will be recruiting their successors a bit sooner than they might like. But if the advice profession is going to live on, it needs to be open to the next generation, regardless of age.