Recently I’ve been studying what many are calling a financial advisor retirement crisis. Financial pundits far and wide have been discussing the ramifications of the bubble of baby boomer brokers that are staring retirement in the face. What will happen when the lion’s share of financial advisors head for Florida?
Chances are, if you’re reading this you’re no further than an eight iron away from retirement yourself. So what happens to all your clients when you decide to hit the 19th hole? Who takes over managing their ongoing fees?
Much like the demise of Social Security, the demise of financial advisors will be caused by us damn baby boomers. We don’t mean it. It’s just a numbers game. As the years pass and the water hazard of financial advisors dries up, someone or something is going to have to replace them.
One major strategy of the past decade has simply been to buy advisors away from other firms. As a recruiter, I have had many advisors open a conversation with me by saying, “OK, let’s just cut to the chase. How much can you give me?” Thanks to these types of calls, I learned how to make a static noise with my mouth and say, “Hey, I might lose you, I’m going into a bad cell area… click.”
That strategy appears to have run its course. Now, many firms are looking at ramping up their training programs and growing their own advisors from within. Will this strategy succeed in providing enough new advisors to carry the bag for the next 18 holes?
If firms are counting on a new generation of financial advisors coming out of our colleges today, I’d be worried. You see, I have a son in college right now and from what I can tell, he and his friends aren’t going to be much help.
Personally, I think there is a far bigger threat to our industry than the financial advisor retirement crisis. As I write this, I guarantee you that somewhere, in a cubicle or garage, there is a team of geeks working on an iPad app that will revolutionize the industry and make all financial advisors obsolete. It will be sold on iTunes, and cost less than the ticket charge on a no load mutual fund trade. Ouch.