The financial adviser industry should focus on programs that bring in new advisers in order to combat the current shrinking, aging talent pool, says the Cerulli Edge Advisor Edition—Recruiting Issue.
As the U.S. adviser force ages and shrinks, fewer young people are choosing the industry. More than half of the adviser population is over 50 years of age, the report says, while only 3% are under the age of 30 (See B/Ds Dealing With Dwindling Numbers of Advisers).
Advisers are entering the field older than in the past. In the 1980s, more than 62% of advisers were under age 30 when they entered the industry, while so far this decade only 53% of new advisers have been under age 30 when they started in the field, the data show.
Recent graduates are more attracted to the technical aspects of planning as opposed to the sales aspect, the report says. Many prefer the route of less traditional, sales-based channels of advising.
In the 1960s, 75% of advisers entering the field went to national, full-service firms. So far in the 2000s, that percentage is only 45%. There is a notable growth in other channels, such as registered investment adviser (RIA) firms and banks.
Recruiting Young Talent
Cerulli estimates there are fewer than 100 undergraduate financial adviser programs. Although they operate at capacity, students are not flocking to the major. Many students choose it later in their academic career after pursuing other avenues, the report says.
The lack of interest could be because of the “bad rap’ of the industry as being focused on cold calling, the report suggests. While financial planning is gradually becoming more holistic and team-based, this message has not fully reached the younger generation.
Many firms choose to transition recent graduates into team practices or associate advising positions. The team-based approach is more attractive to recent graduates than the build-your-own-book approach, the report says.
Cerulli suggests more firms should develop the infrastructure to train young talent and assimilate them into established teams. It is also a good idea to establish connections with undergraduate programs in place to absorb new talent. (A list of CFP-registered programs is located here.)