Get younger or go home.
Thats the crux of the recruiting dilemma facing the financial advisory business, according to a new Pershing study.
Financial services firms have to start recruiting the half-million college students who may be interested in becoming advisors, or risk having demand for financial advice outstrip supply within 10 years, according to the study,ReGENeration: How Gen Y Could Revitalize the Industry and Bring New Life to Your Firm.
The industry is constantly re-recruiting the same pool of aging advisors and ignoring millennials, Pershing director Kim Dellarocca said at a roundtable discussion of the study in New York City. At the same time its going to need 237,000 new advisors to cover those who will retire within a decade, and right now only 5% of advisors are younger than 30. Employers clearly need to think about recruiting differently.
While few college graduates are actually becoming financial advisors, the good news is that the profession potentially is extremely attractive to millennials age 18 to 24, according to a Pershing survey of 500 undergraduates conducted in May by Harris Interactive.
POTENTIAL APPEAL
For example, nearly 90% of students surveyed said they wanted to work in a career in a growing field where a job cannot be outsourced. Over 80% of the students said it was important or very important to choose a career that has a positive impact on other peoples lives.
Nonetheless, while almost all of the students surveyed said they have heard of financial advisors, only one quarter was familiar or very familiar with the profession. Even worse, just 7% said they are actually interested in pursuing it as a career.
Advisors should appeal to the philanthropic tendencies of millennials, or Generation Y, defined as those born after 1980, according to Cathy Benko, vice chairman and managing principal of Deloitte.
This is a generation that wants to help people, said Benk, who spoke at the roundtable and is the author of The Corporate Lattice and other books on the changing workplace. They share cultural values, and its very important for them to have the approval of their peers.
BROADENING THE POOL
To broaden the pool of recruits, the study recommends, financial advisors need new engagement strategies, such as regular attendance at career fairs; offering internships after freshman and sophomore years and reaching out to professors and career counselors by offering networking opportunities and informational resources.
Advisors should also cultivate deeper involvement with the children of clients and various centers of influence such as attorneys and accountants by extending social invitations to the whole family and encouraging discussions about potential careers.
The industry also needs a different onboarding model, said Craig Pfeiffer, chief executive officer at Advisors Ahead, a New York-based firm specializing in professional development for advisors.
Noting models used in medicine, law and education, Pfeiffer said at the roundtable that financial advisory firms need both internship and resident programs for graduates to serve as a bridge between school and becoming a full-fledged professional.
Gen Y has the traits the profession needs now, Pfeiffer said. They are collaborative, like to work in teams, are technologically adept and value connectivity and social relationships. The industry just needs to embrace a new model to attract them.
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