Practice Management

Average Age of Advisers Ticks Down

But, as the ranks of advisers nearing retirement grows, there is a need for formal succession plans, TD Ameritrade says.

By John Manganaro editors@strategic-i.com | August 09, 2017
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The financial advisory industry is getting younger as more firms hire recent college graduates to fill client-facing and revenue-generating roles, according to TD Ameritrade Institutional’s latest Financial Adviser Insights research report.

According to “People and Pay,” nearly one-third of firms are proactively targeting recent college graduates for revenue-generating roles, and as a result the median age of lead advisers has slipped by three years to 47 since 2015.

There is evidence that these graduates emerge licensed and credentialed, but naturally “they are less productive than experienced investment advisers with an existing client base,” at least during their early years in the firm.

Vanessa Oligino, director of business performance solutions at TD Ameritrade Institutional, suggests the big challenge for firms interested in recruiting a new generation of advisers is to “communicate the benefits they can offer, promote the growth prospects of a financial planning career and structure an organization that can help these new advisers develop and contribute to long-term growth.”

The research shows the median firm expects to have seven full-time-equivalent employees by the end of 2017, up from five just two years ago. And while advisers report the pace of client growth has slipped to 6.4%, “that growth rate is still slightly above average for the nine-year history of the study … The industry overall remains healthy with firms reporting a median of 13% growth in assets and 6.7% revenue growth.”

“As a result of this scarcity, more firms are outsourcing, forming strategic partner relationships and casting a wider net for talent,” TD Ameritrade reports. “Indeed, six out of 10 firms have realized labor savings as a result of some form of outsourcing.”

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