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July 21, 2014 at 09:28 AM
In the 1960s, the Beatles questioned what it would be like “when I’m 64.” Well, the surviving Beatles are in their 70s, and most of today’s financial advisors are past the age to “twist and shout!” Various surveys report that the average age of agents and advisors is 55 or more. A critical question for the financial services industry is “who will fill their shoes?”
The next generation of financial professionals
Exacerbating the issue of aging and retiring advisors is that huge numbers of Americans are marching toward retirement. With some 77 million baby boomers (and by the way, the youngest boomers reach 50 this year!), and nearly as many Generation X’ers, there are far too few advisors to provide professional advice to so many who need it.
Then, there are millions of younger Americans, Generation Y or millennials (those born in the early 80s through the early 2000s), who are beginning their careers and starting families. These younger people need advice on 401(k) plans, IRAs and Roth IRAs, and the financial risks that they face. These people need to understand the value of their human capital — the potential to earn income over their working life. They need to be educated and encouraged to convert their human capital into financial capital in the form of savings and investments.
Sadly, many millennials are shunning the equity markets in the aftermath of the Great Recession of 2008-09. They are forfeiting their opportunities for a more secure retirement by over-allocating fixed-income vehicles in lieu of equities. It is not an understatement to say that the future of the financial services industry, as we know it in 2014, depends on reaching these younger Americans, winning their trust, and providing the products and services they need.
While younger Americans (and others) are hooked on their smart phones, iPads, and computers, complex products such as permanent life insurance and annuities generally are not suitable for sales through the internet or via slick marketing videos. The face-to-face meeting between client and advisor will still be necessary to explain complicated products and encourage or discourage their purchase, depending on their individual financial situation.
Today’s customers are inundated with financial information, causing a “paralysis by analysis” resulting in no action at all. Throw in the myriad “financial experts” who characterize permanent insurance and annuities as everything from “financial anathema” to “financial magic” and we understand why the public becomes confused and stymied.
