October 1, 2017
- Managing Director, Generation Next, TD Ameritrade Institutional
At TD Ameritrade Institutional, we are thrilled to share that our own “AdvoKate” was recently recognized as one of Wealth Management’s “10 to Watch”—its annual list of 10 individuals poised to make a big difference in the wealth management industry in the year ahead. We agree! And we are excited to see Kate Healy continue her tireless work in support of NextGen talent.
The 2017 FA Insight Study of Advisory Firms: People & Pay, an industry benchmarking report from TD Ameritrade Institutional, recently revealed some news that made me do a little happy dance: Since 2015, the median age of lead advisors has slipped by three years, to 47—a clear sign that the profession is heading in the right direction.
Though there is still a lot of work ahead to keep up this momentum, we deserve to take a minute and relish the fact that our message is getting through, and the dial is finally moving after years of not budging.
What’s behind these numbers?
The financial advisory industry is getting younger, according to the study, as more firms are targeting recent college graduates for revenue-generating roles. Despite the fact that recent grads are often less productive than experienced advisors, many advisor-hopefuls graduate already licensed and credentialed, thanks to the growing number of colleges and universities with exceptional financial planning programs.
These schools are a great resource for future talent. I highly encourage you to contact your local college that offers a financial planning program and form a mutually beneficial relationship, such as mentoring. Program directors work hard to source opportunities for their students. I guarantee your call would be welcomed and appreciated.
Creating opportunities for students at UNT
My friend Dave Ragan agrees. He wears two hats: Vice President of Financial Planning at Grunden Financial Advisory, Inc. and Professor at the University of North Texas (UNT). Dave shared that he recently attended a continuing education workshop and was speaking with local advisors who were not aware that UNT had a financial planning program.
One advisor had an open job posting for an intern. Thanks to this chance connection, Dave shared the opportunity with his class and, basically overnight, a deserving student now has a shot at a great internship. While this is a nice example, let’s not leave these opportunities up to fate. Reach out and make these connections happen!
Dave has even more strategies for getting local planners involved with his students:
He has previously hosted panel discussions where advisors come in and share their experiences. These interactions are about more than scoring internships. Dave’s goal is to expose students to these experts and garner more much-needed interest in the industry. These panels are a great way to raise awareness of the profession.
Another exciting program Dave shared is part of the Capstone Financial Planning class at UNT. Here’s how it works: The class asks local advisors to put them in touch with a real-life family in need of a financial plan. So seniors get to work with an actual client with real, often complex, financial planning issues. Certain sensitive information is redacted and the students sign non-disclosure agreements. And, thanks to a grant UNT was awarded in 2015 from TD Ameritrade Institutional, the client is compensated for opening his/her financial life to the students. A panel of judges, including program faculty and college administrators, selects the best plan. The winning student gets a cash prize.
In fact, Dave is currently working with the organizers of the DFW Financial Planning Association’s annual “Ask a CFP” event. During this day, people can call and ask a CFP financial planning questions. However, not all questions can be answered in five minutes. Dave hopes to receive referrals from this event for people who need a full plan and have his class work on one.
This live case study touches on a lot of different fronts. The competition element raises the excitement level, helps keep the industry front and center in the DFW area, and provides a financial plan to someone who needs it.
I love hearing from Dave and how he blends his two worlds, teacher and planner. I hope these ideas help motivate you to create similar connections in your community.
Recruiting beyond recent grads
As we’ve been predicting, good help may be getting harder to find. Industry research¹ has shown that a wave of baby boomer retirements would likely outpace the arrival of NextGen advisors. The FA Insight Study suggests that this talent gap is now being felt.
Over 2017, the typical firm expects to grow its team from six to seven full-time employees—and add more than just one position if replacement hires are needed. Of those new hires, 40% are targeted as revenue roles: lead advisors, associate advisors and business developers. Yet nearly 70% of firms report increasing difficulty in hiring revenue roles.
As a result of this scarcity, firms are casting a wider net and looking to non-traditional avenues for talent. If you are struggling to find the right hire, keep in mind that, in addition to recent grads, women returning to the workforce and former military personnel can be under-tapped resources. I’ve been part of trying to break down barriers to entry for diverse talent, but as the final step we need you to be open to people who may have taken an untraditional path to your door. Their different perspectives can be a major asset not only to your firm, but as a source for new clients.
Planning is key
Don’t wait to find talent after expansion creates challenges. Long-term organizational planning, the study shows, is what separates the standout firms from the rest. Just 19 % of advisors have a documented plan for the future firm they want to build, and proactively think about hires and positions that can handle that growth before those employees are needed.
Regrettably, one thing that hasn’t changed in two years is an absence of formal succession plans, the need for which becomes more crucial as the number of advisers nearing retirement grows. According to the latest study, only 37% of advisory firms said they have a viable plan. The rest either don’t have a plan, or have plans with serious flaws. Regulators have been considering making business continuity plans a requirement for RIAs. My friend and colleague, Skip Schweiss, touched on this in a recent blog . Follow Skip to keep up with how this unfolds.
The takeaway here is clear: Planning is key to secure your firm for the next generation.
As always, I’d love to hear from you, especially about how you are partnering with local financial planning professors and preparing for the next generation. Follow me on Twitter @KateHealy_TDA.
FA Insight is a product of TD Ameritrade Institutional, division of TD Ameritrade Inc. FA Insight is a trademark owned by TD Ameritrade IP Company, Inc. TD Ameritrade Institutional, division of TD Ameritrade, Inc., FINRA/SIPC.
1Cerulli Associates, Advisor Metrics 2016 TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.