WASHINGTON -- If the graying financial services industry is to replenish the ranks of retiring advisors and brokers, firms and trade groups must take a more active role in promoting the field to millennials and countering the tendency of young people to associate all professions in the sector with the worst excesses of Wall Street.
That reputational hit, combined with the industry's lackluster self-promotion, helps explain why just 22% of advisors practicing today are under the age of 40, according to Mark Tibergien, CEO and managing director of Pershing Advisor Solutions.
"I think we're all waiting for somebody else to do it, to be honest. We are not recruiting on campuses as an industry like the accounting profession is or the legal profession is. We're not doing anything to reverse the perception of our industry in the minds of the market. You know, we're kind of allowing for this idea that financial services is a crooked business, and we're not trying to reverse this trend. In fact, we're doing a lot of infighting among ourselves trying to make a distinction between, 'Well, that's a Wall Street firm, that's a Main Street firm. That's an RIA, that's a broker-dealer,' not recognizing that any time we jump in the puddle, that mud will splash on everybody," Tibergien said in a presentation here at the Financial Services Institute's OneVoice conference.
BALANCE OF POWER
Tibergien offered his thoughts on the next generation of financial services professionals in the context of a broader discussion of the evolving dynamics of the broker-dealer and advisor sectors, one in which he sees advisors gaining the upper hand.
"In my opinion the balance of power has shifted from the broker-dealers to the advisor," Tibergien said. "Their ability to vote with their feet, to negotiate different agreements, to pursue the type of business model they want is clearly in their control, and the rest of us are just trying to respond to these market changes."
But if advisors increasingly are able to call the shots in terms of their business model and the products, services and technologies available to them through their broker-dealer, it remains a vexing question as to how to recruit the next generation of practitioners.
"You have to ask the question why are not young people attracted to this business," Tibergien said.
BOOMER BUSINESS NO LONGER
"This is a career where you profoundly impact the lives of other people, agreed? It's financially rewarding. There's a degree of independence. It's intellectually stimulating," he added. "But for some reason it's not compelling. And in fact, what's happening among most broker-dealers is that you're just training old people."
Save for counseling greater engagement on college campuses and efforts to rehabilitate the reputation of the financial services sector (or at least highlight the disciplinary distinctions therein), Tibergien offered few policy prescriptions. But he warned that the current demographics of the advisor and broker-dealer complex, measured both in who works in the field and whom they serve, are unsustainable.
"What we begin to recognize is that this is a business fundamentally built by and for boomers. The way it sits today is for and by boomers. The boomers are retiring at rapid rates today, and those of you who are still building tanks and bazookas have to be thinking about your business differently, because it isn't a boomer business for long," he said. "It's a Gen X business and a millennial business."
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