8 ways to open more paths into wealth management

8 ways to invest in next-gen advisors — and your firm's future

May 17, 2024 11:36 AM

One of the industry's largest and fastest-growing aggregators of registered investment advisory firms has created a "university" to train its next generation of financial advisors.

Wealth Enhancement Group University focuses on small groups of eight to 10 early-career planners, helping them hone "soft skills" such as emotional intelligence and relationship management that often get neglected with the traditional emphasis on technical training, according to Kris Carroll, managing director of the Plymouth, Minnesota-based firm's Carolinas region.

Professional development has emerged as a business imperative, as Wealth Enhancement Group's training efforts demonstrate. The slideshow below offers more than a half dozen other solutions to solve the industry's succession dilemma.

Wealth Enhancement Group has topped $82 billion in client assets through years of accelerating acquisitions. At 16 M&A deals announced spanning $11.5 billion in incoming assets, it was the most active acquirer in the industry last year, according to investment bank and consulting firm Echelon Partners. Wealth Enhancement CEO Jeff Dekko tapped Carroll, a second-generation advisor who's an adjunct financial planning professor at Winthrop University, to lead the firm's training program after acquiring Carroll's advisory practice in 2022.

"You've got to have lots of different prongs, lots of different ways to attack this issue, because it's not going away," Carroll said in an interview. He noted the many recent studies on the number of advisors expected to retire in the next decade and the steep failure rate among rookie planners.

"We've got a lot of senior advisors who are going to retire," he added. "You need to invest in it. You need to take it seriously, and you need to have multiple approaches."

In an effort to identify solutions to the ongoing succession challenge facing the advisor profession and the wealth management industry, Financial Planning spoke with Carroll as well as the following planners and other experts:

Nate Lenz, CEO of Tampa, Florida-based Concurrent
Dominique "Dom" Henderson, founder of Dallas-based DJH Capital Management and Jumpstart Coaching Lab
Luis Rosa, co-founder of the BLX Internship Program and founder of Las Vegas-based Build a Better Financial Future
Hannah Moore, founder of advisor training firm Amplified Planning and Richardson, Texas-based Guiding Wealth
Dinon Hughes, financial consultant working toward becoming a certified financial planner with Portsmouth, New Hampshire-based Nvest Financial
Julie Genjac, vice president of applied insights for Hartford Funds, where she coaches financial advisor teams in practice management

For firms like Wealth Enhancement, managing the talent pipeline amid an advisor shortage looms as a key strategic issue, Carroll said. In that environment, some firms may be "trying to throw equity" stakes at early-career professionals without ensuring they're the right successor to the retiring advisor or that there is infrastructure in place for easy continuity of the firm, he noted.
For eight ways firms can proactively address the problems of finding new advisors, supporting them and smoothly incorporating them into succession plans, scroll down the slideshow.

To see a larger discussion of the reasons behind the low degree of success for aspiring advisors, click here. For a look at why mentorship is so important for women in financial careers, follow this link. And visit this page to nominate yourself or another planning professional for Financial Planning's 2024 Rising Star Award.

The hard work is done

The BLX Internship ensures that any firm aiming "to be intentional about hiring diverse candidates" can do so without large outlays of time or other resources, Rosa said in an interview.

"We already do all the hard work for you," he said. "You don't have to look for this pipeline. … We source them, we interview them, we coach them if they need to be coached, then we also provide resources for the firms."

Accessible program

Amplified Planning's two-month Externship program gives any student access to a rigorous introduction to the planning profession on a 100% virtual and asynchronous basis for only $350.

"All of the barriers that are here for people who are coming into financial planning — we just want to take down those barriers," Moore said in an interview. "We really want to make sure that those nontraditional students can get a taste for what this field is."

Embrace career changers

The industry should seek out people from other fields who "have years of experience in a different realm that I think can be useful for this realm," Henderson said.

"How beneficial would it be to take a software engineer who's just tired of that for whatever reason or somebody in the tech field who understands that and have them come into a financial services business, an advisory practice and revamp the technology?" he said in an interview.

Career changers from the nonprofit, education and health care fields often bring relevant experience from their prior gigs, and they can train to develop the more technical skills and certifications over time, according to Genjac.

"What so many teams are doing is they're looking outside of our industry," she said in an interview, noting these prospective employees' mindset. "'I would really love to step into something different. I have these skill sets. I have the life-seasoning. I can step into the team and bring a unique perspective.'"

Mentors are good luck

In a "stroke of luck," Hughes is from the same area where his Bentley University planning professor, George Raftopoulos, and Raftopoulos' wife and the CEO of Nvest, Nichole Raftopoulos, have their firm, he noted in an interview.

"The biggest benefit to me was having those mentors," Hughes said. "Having a mentor like that, having someone that you can talk to about this is just a huge benefit, because without it you may not know what's what when you're going into the industry."

Ensure successors gain credibility with clients

One "often-overlooked" aspect of a transition within the same firm to a younger advisor from a retiring one revolves around giving clients a "one- to two-year glidepath" in which the outgoing planner often gives the floor in meetings to the successor to discuss key topics like updates to a clients' financial plan, Genjac said. Many successors run into problems when they realize clients are "only going to see me as this notetaker in the corner" of their meetings or customers get "29 days of notice" when they've been seeing the same advisor for decades, she said.

"We've gotten much more diversity in who clients are hearing from on the team as opposed to just one person," Genjac said. "You can introduce your successor from a place of credibility. … It's amazing how powerful that is."

Pressure-free experience

Lenz's firm gives novice aspiring advisors the chance to work in many specialized areas, such as operations, investments or planning, he said in an email.

"This creates an opportunity to gain client-facing experience quickly without the pressure of new client acquisition," Lenz said. "Pairing this with formal mentorship opportunities, regular performance feedback, alignment through incentive compensation and equity ownership and dedicated discussions around career path and internal mobility drives our ability to attract and retain talent."

Be optimistic about the future

The thousands of planning students who have gone through the Externship make Moore energized about the future of the profession, Moore said.

"They are hungry, they are excited and they have so much value to add to our profession. They also want training, they also want support," she said. "The future is very bright for financial planning."