The next decade will bring change in the industry that's coinciding with (and no less significant than)
More than a third of financial advisors will retire — leaving a profession in which nearly three out of every four rookies fail to break into the field — with more than two-fifths of the industry's client assets up for grabs upon the older generation's exit,
For wirehouses and regional brokerage firms, which manage a disproportionate share of the industry's assets when compared to their own ranks of advisors, that calculation adds up to a massive threat to their business. In that sense, Financial Planning's annual
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The solution lies in mentorship, succession planning, more diverse recruiting and an overall different approach to entering an
"I am fortunate and am grateful to have found mentors, leaders and colleagues who supported me when I needed it and genuinely cared about me," Nayan Ranchhod, a repeat winner of the Top 40 Brokers Under 40 award with Scottsdale, Arizona-based
"They were willing to tell me what I needed to hear and do, even when I did not want to hear it or do it," Ranchhod said. "Success in this business has a lot to do with the people we surround ourselves around, trusting the process even when you feel like you are making no progress, and remembering why you chose this profession. I cannot speak to why some people make it and others do not; I think each case is unique. I do think that this is a noble and trusted profession for those who have a long-term view on life and want to make a difference in the world."
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By the numbers
The industry will need to recruit, retain and promote advisors like Ranchhod to replace those retiring in the next 10 years. An estimated 109,093 advisors will step down in the next decade — a group that manages 41.5% of the industry's assets and comprises 37.5% of its headcount, according to Cerulli. At least 14% of those advisors are planning to sell their business, while another 26% have picked a successor. A third group of 26% haven't chosen any exit path. Currently, wirehouses and regional brokerages constitute more than 30% of the industry's financial advisor headcount and 50% of its $26.8 trillion in client assets — or $13.4 trillion.
Registered investment advisory firms and independent brokerages
"The difficulty getting new advisors to successfully choose, and remain in, the industry is a nuanced issue," Blake said. "Anecdotally, I believe the wealth management industry lagged competitively for job seekers until recent years by offering limited workplace flexibility and outdated hiring/training processes. Ultimately, rookies need more training and development related to financial planning topics and techniques. Consequently, it is crucial for RIAs and broker-dealers to continue to develop programs and training methods to aid rookies in financial planning and other skills to adequately prepare them as they embark upon a career as an advisor."
Big wealth management firms are beginning to get the message. RBC sends recruiters to college campuses in order to pitch potential interns, while Ameriprise has started specific programs for career changers, setting newer advisors up in "well-established branches" where they'll have more support and covering overhead costs and training expenses, Blake said.
"Many of the largest firms, including Morgan Stanley, Wells Fargo, UBS and Edward Jones, have attempted to modernize their training programs by revamping placement strategies, durations, goals and compensation structures," Blake said. "Ultimately, training programs need to evolve and ensure that rookie development is sustainable over time as they learn and steadily transition into production rather than be pigeonholed into support roles. Firms cannot lose sight of how much rookies hired today and purposefully mentored could mature over the next decade, potentially creating internal succession plans for advisors that have a 10-plus-year retirement timeline."
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Program launches
There are plenty of other examples of large wealth management firms investing in
Wall Street Bound worked with 150 students last year and aims to double that number in 2024, according to Gigs Taylor-Stephenson,
Young people from underserved backgrounds who are trying to get into the field face barriers their peers might not in the form of "the fear of the unknown" from financial firms that are used to working with aspiring advisors who grew up discussing investments at the dinner table and who may have large networks of high net worth family and friends, Taylor-Stephenson said in an interview. Wall Street Bound tries to disrupt those dynamics by working with big-name firms and preparing its primarily Black or Hispanic students with the methods and certifications they'll need in the financial fields.
"We provide not only the technical skills, we provide exposure to industry professionals and we also provide the soft skills," Taylor-Stephenson said.
Wirehouses and regional firms also face tough competition for talent from RIAs, which
The rest of the industry shares the wirehouse and regional firms' dilemma when it comes to helping new advisors come into the field, he says, noting the most
"There's a lot of work to be done in many areas, because it doesn't reflect the population of the country," Rosa said in an interview. "In our industry, there are so many pathways, but they're not necessarily clearly identified, so people don't know what their career path is going to look like in the future."
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How Ameriprise is approaching the issue
The "primary challenge" for incoming advisors to find their base of clients has remained the same "for many decades," even as the technology has shifted to digital from the old-fashioned way of cold-calling family and friends, according to Manish Dave, Ameriprise's
"It's very difficult for advisors who are not part of an infrastructure, a training program, potentially a team environment, to come into our business and be successful," Dave said in an interview. "It starts and ends with the challenge of client acquisition."
In Ranchhod's case, he had been focused in college on "my family's dream for me to go to law school and become a successful attorney" until an advisor at his school recommended that he consider a career in the financial services, he said. After interviews "across the industry and country," he received an offer to work with Ameriprise in Dallas, but the branch manager there suggested he consider a fast-expanding location in Phoenix. Ranchhod followed that advice.
"When I came to Phoenix and met with that branch manager, he said something that changed my life," Ranchhod said. "He said, 'Nayan, in order to truly be successful in this career, you need to have the heart of a socialist and the mind of the capitalist.' I knew then I was in the right place. He explained to me the process and how it would be an uphill battle since I did not have a natural market in Arizona, but said if I committed to learning and excellence, he thought success would not be an 'if,' but rather 'when.'"
Ranchhod credits the location's district manager, Matthew Vickers, for additional support and guidance along the way.
"As a young advisor (21), I was so worried that people would reject me because of my youth," he said. "But one of the greatest lessons he taught me was, people won't care how much you know until they know that you care. He taught me to focus on the relationship, leverage my team and, with time, my planning experience would far exceed my peers."
At the firm level, Ameriprise conducts business planning meetings with nearly all of the firm's 10,300 advisors to assist them in thinking through potential succession relationships and any capital needs for less-tenured teams to buy the books of retiring advisors, Dave noted. Technology-assisted training, licensing and certification programs and identifying leaders and mentors who are "really stakeholders in the success of the new person coming into the business" are key components of the firm's support for younger advisors, he said.
"It starts with making sure that people are starting in the right environment," Dave said. "It's a two-way street, in terms of the person coming into the career has to understand that it's going to be a very demanding, challenging call to be a successful advisor."
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Hopes for taking off in the future
Wirehouses and regional firms have traditionally "been very sales-focused," so connecting with a younger generation of advisors and clients entails adopting newer service models that are "not just focused on AUM" such as a fee for planning services, Rosa said. Aspiring advisors frequently express "a hunger for that ongoing support, that growth, whether it's educational opportunities or mentorship opportunities" or other aspects of the career that "go beyond salary," he said. The prospective advisors themselves can learn a lot through organizations like BLX, the
"There's so much growth there as well, just learning from your peer group, that you shouldn't overlook that," Rosa said. "Even if it's not available at your firm or your broker-dealer, you can still find one, and that will be super helpful as you advance in your career."
The arc of an advisor's career often looks like the flight of a plane, according to Dave. As the industry confronts the shrinking advisor headcounts, the continuing demand for wealth management services and the onslaught of new technology, aspiring planners need "a full cockpit" to get them airborne, he said.
"This topic is a really important one. There are still more and more Americans who need more and more advice," Dave said. "Those firms that get it right across the board in terms of selection, the right environment and then surrounding them with the right tools and capabilities, then we can have more and more of those planes going into ascent and help more people."
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