Employers are facing a challenge today in onboarding and retaining workers who have the skills to replace the generation of Baby Boomers that is approaching retirement. That means firms will have to ramp up their learning and development efforts in a meaningful way.
A new Pershing study, “Inaugural Study of Advisory Success: Defining Success Today and Planning for the Future,” on investment advisors shows that the career motivators that Gen X and Millennial advisors have don’t necessarily match the ones of their Baby Boomer predecessors. For investment advisors this is particularly challenging. After all, much of the high net worth client base will be made up of individuals of the Baby Boomer generation. In order to serve them appropriately, younger investment advisors will have to learn some of those Baby Boomer skills and attributes.
And that’s the key challenge identified by a new study by Pershing. Baby Boomers are finding it difficult to connect with their successors in order to train them to take on the business in the coming years. That also makes it difficult for investment firms to retain high performers who become discouraged.
According to Pershing, 12,000 to 16,000 advisors will retire in the next ten years. The industry will have to add 237,000 new financial advisors to replace them and meet growing demand for their services.
“It is evident that the financial advice industry will face a talent shortage in the coming years,” said Kim Dellarocca, director of segment marketing and practice management at Pershing. “Each day, the industry sees young advisors exit the industry and never return. Firms need to think about how to recruit and retain younger advisors by understanding their key drivers and motivators – and convey to them that being an advisor is a rewarding and fulfilling career.”
Pershing’s study can provide some insight into those generational motivation differences, advising employers on how they can better attract, retain, and develop young advisors.
One surprising result revealed by the study was that older advisors are less team oriented than younger ones. Almost two thirds (60 percent) of Baby Boomer advisors said they would rather work on their own and a third (33 percent) said they don’t need the right team to be successful. On the other hand, younger advisors were much more collaborative.
“In contrast to the prevailing wisdom of ‘independent’ younger people, we find that advisors aged 25 – 39 are much more likely to select “team-oriented” as a phrase to describe themselves. This implies the appeal of fostering teamed approaches within firms’ advisory models.”
The study also showed that younger advisors want to feel they are making a difference while making money. Almost three quarters (73 percent) of younger advisors (aged 25-39), for example, said “having clients who appreciate the value they provide” is one of the top three most rewarding experiences of being an advisor. Only 57 percent of advisors in the 40-49 age group and 50-59 age group said the same, and only 56 percent of the 60+ age group agreed.
Finally, the study showed that younger advisors were the most tech-savvy group. While this may come as no surprise, companies should take this into account when considering that the average consumer is becoming more tech savvy as well. According to the report, 73 percent of high net worth investors do research on LinkedIn for financial decisions. “Thus, agility with technology pays dividends to a firm that goes beyond attracting younger investors.”
The study shows that employers will have to get comfortable with younger generations’ work styles and motivators. Similarly, they will have to find ways to convey to younger advisors the customer service skills and technical know-how of Baby Boomer advisors. Doing so will require generations throughout the workplace to meet in the middle when it comes to learning and development.
One method highlighted by Pershing is having a strong mentoring program or culture within the firm. The report says that 98 percent of Gen Y employees believe “working with strong coaches and mentors is an important part of development.” Equipping younger and older employees with the skills to coach and be coached could be the key factor in attracting, retaining, and developing the advisors of tomorrow.