In 2015, there’s a commonly shared belief by smart people in the industry that the financial planning profession faces a talent shortage, and that the best firms not only intentionally recruit young talent but supply them with the structure and training that provides them with a real career track. Owner-advisors are not doing this out of the goodness of their hearts: They realize that the future success of their firms—and that of their own exit or succession plans—requires embracing younger people and putting them in positions of increasingly responsibility.
Those younger people, and that structure and training, will also make their firms more valuable and provide continuity for clients. So custodians and broker-dealers and software companies are providing cash and technology to undergraduate and graduate programs, and are sponsoring scholarships and internships and executive leadership programs, all in an effort to reduce that talent shortage.
It wasn’t always that way.
Ten years ago, 25-year-old Angie Herbers raised a ruckus by writing about what was then an under-reported issue. In the February 2005 cover story of Investment Advisor, "The Great Divide," Herbers wrote that there was a “crisis faced by the financial planning profession,” and said that “the gap between successful planners and the next generation is wider than most people realize, and it's growing.”
Herbers didn't stop with writing one article (Disclosure: Herbers has written columns, feature stories and blogs for Investment Advisor and ThinkAdvisor since 2005; view her author page and recent writings on ThinkAdvisor). In her writings and speeches and research since, in her electronic mentoring of many frustrated young advisors—and in her day job at her eponymous company, Angie Herbers Inc.—she has been proposing solutions to bridge that gap, offering tough-love advice for both veteran owner-advisors and younger planners, using the wisdom beyond her years gained from her consulting work and networking to support the different generations and raise the discussion about how the entire profession can and should evolve. She’s still not averse to challenging the shibboleths of the profession, as seen, for example, in her November 2014 cover story for Investment Advisor, "The Rainmaker’s Reign Is Over."
Last year, Herbers merged her firm with Kristen Luke’s Wealth Management Marketing, and in mid-April, the firm was rebranded as Kaleido, which offers a free business assessment tool to advisors—the Kaleido Scope. Kaleido's goal, Herbers said, is to help advisors “look at your business in a different way” to overcome growth hurdles. “What got you here,” she said, “won't necessarily get you to the next level,” since “how you run a $1 million firm is totally different from a $10 million firm.”
The Kaleido Scope is meant to address a basic problem faced by advisors hoping to grow. “They’re good at identifying the problem,” she said, but “bad at coming to a solution.” Owner-advisors faced with the problems of growth tend to “go down the wrong paths” in search of solutions and wind up “getting frustrated—they lose enthusiasm, confidence,” at which point the owner-advisor “is certainly not a leader, which you need to build your business.” What Kaleido hopes to do for its advisor clients is to teach them, and show them, that to grow an advisory firm, you have to follow an entire process, not just start a marketing plan or find a niche or add a piece of technology. “Like grief,” she says, “you have to go through the process.”
Herbers started her consulting firm in 2003, she said in a March interview, with “the knowledge that at some point the industry would run into HR problems, human capital problems, capacity problems.” A serial entrepreneur since childhood, Herbers said that when she got into the business, “you could survive without relying on next-generation people,” but today, “the biggest problem in our industry isn’t finding clients to build the business; the problem is capacity," making the finding and nurturing of next-generation talent even more crucial. She admitted that the industry has taken “enormous strides to develop career tracks and educational programs to attract talent,” but she said the issue now is to “get more people interested in the career.”
In looking at the future, she sees two big developments. One has to do with how advice itself is delivered. “How we have seen financial advice delivered in the past won’t be the same in the future,” she said, and firms that fail to see that “will be left behind in five years.”
Herbers was quick to add that this change isn’t just about robo-advisors: “We have to transform the service model of how we deliver advice, how we package it,” by “using all sorts of tools,” including technology in general, the specific technologies used by robo advisors, but also the tools emanating from the field of psychology.
The “second thing that’s going to happen” will be the demise of the traditional rainmaker in advisory firms, as suggested in that November 2014 article. “The financial advisory profession is still in an evolutionary phase,” she argued, but when “rainmakers go away, you’ll start to see true marketing plans that don’t rely on one person” but rather are planned for and implemented by the entire firm, from customer service people to back-office people to junior advisors and the owner.
Regulation has also been on her mind recently, since it’s “part of the evolutionary process in any industry that can change lives.” So the debate over a fiduciary standard, whether at the SEC or the Department of Labor, “has been going on for a long time” and is “about how advice is delivered.” The advice profession “has to be regulated like how a doctor serves patients.” That’s because “the more you see the power that advisors have” to change clients’ lives “and heal, you have the responsibility to protect the person you’re helping or healing."
Every healing profession has that kind of regulation, she said. She predicted that “there will be regulation requiring a fiduciary standard at some point, if not now,” and that “every big business will have to accommodate” that standard.