practice management | PLANADVISER March/April 2015

Seeking Out New Talent

Recruiting Millennial grads is a practice management priority

By John Manganaro | March/April 2015
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Art by Shout

According to Fidelity Investments, only two out of 10 college students and young professionals surveyed for its 2014 “Recruiting Redefined” study said they were familiar with the adviser profession, and more than six in 10 could not name a single firm that employs advisers.

After learning some basic facts about the industry, however, nearly half of the young people surveyed said they would consider a career as a financial adviser. This is good news for advisory firms, considering that more than four in 10 advisers are either at or approaching retirement age, according to research from Cerulli Associates. In “Advisor Metrics: Understanding and Addressing a More Sophisticated Population,” the Boston-based research firm finds the average age of financial advisers is just under 51 years. The report says 43% are over the age of 55, with nearly one-third falling into the 55 to 64 range.

The increasing average age of advisers is affecting each advisory channel differently, the report shows. Broker/dealers (B/Ds) especially are struggling to recruit new, young advisers to offset those leaving for retirement, but independent advisory firms are having a difficult time, too, Cerulli says.

One of the few solutions to the age problem is to ramp up recruiting efforts among Millennials, Fidelity finds. But how do advisers successfully enlist recent college graduates to join their practices? And how do they train and equip them for success? Fidelity says its study identifies key steps for firms to take to attract and retain Millennials in the retirement plan advisory profession.

The first is to focus efforts on wider resource pools. Researchers found potential talent may be working or studying in adjacent fields beyond just finance—many of the skills necessary to become an adviser are exercised in other professions. Candidates who already have a certification may be perceived as more desirable, Fidelity says, but the data suggest young professionals in related jobs—such as insurance and commercial banking, for example—may be qualified if advisory firms provide them with a pathway to success.

Fidelity finds 91% of young professionals surveyed say they would consider taking a new job in the short term if it seemed like a good opportunity, whether in or out of financial services. This figure held across banking, insurance, technology and scientific services. Advice professionals recruited from these fields appear to thrive with proper training and support, Fidelity says.

Perhaps most important, the research finds that a key recruiting tactic is to tone down the sales aspect of the job: Among the top reasons candidates surveyed said they would not consider becoming an adviser were “too much pressure to sell” and “working on commission.”

“The truth is that the looming talent shortage in the advice industry is no longer looming—it’s here, and the typical approach to recruiting is no longer effective,” says Jylanne Dunne, senior vice president of practice management, Fidelity Institutional Wealth Services, in Boston. “It’s time that we redefine our recruiting efforts so we can begin to make real progress that could benefit the profession in the long run.”