The future of the financial advisory industry rests with today’s millennials who will be both advisors and clients.
“Millennials are what’s next,” according to a new report from Hartford Funds. “Advisory firms that hope to thrive and grow in the decades to come will need to take measures to make their practice more engaging for this next generation.”
With that in mind, Hartford Funds, which regularly surveys advisors, convened a roundtable of young advisors, most in their early to mid-30s, to discuss what advisory firms need to do now to attract more young advisors. That discussion is the basis of the firm’s latest report.
“The average age of advisors now is 58 or 59,” says Bill McManus, director of strategic markets at Hartford Funds and author of the new report. “When you couple that with the transfer of wealth that you’re going to see over the next 30 years of some $30 trillion that creates a vacuum for the next generation of advisors.”
Here are the report’s major recommendations, which advisory firms may want to keep in mind when recruiting younger advisors:
1. Millennials Don’t Like to Be Called Millennials
Although they have displaced boomers as the single largest demographic cohort in the U.S., millennials are not monolithic, and those in their early to mid-30s don’t necessarily want to be lumped in with 20-somethings who are more likely to still live at home with their parents and have little work experience.
“When asked what comes to mind when they hear the term ‘millennial,’ roundtable participants agreed that they did not think of themselves as members of that generation,” according to the Hartford report.
Given that sentiment, the study says “it is essential that financial advisory firms take deliberate measures to identify top-tier millennial talent and treat them as such, as opposed to viewing them as part of a group that is often stigmatized in the workplace, news media and beyond.”
2. When Recruiting, Stress the Mission of the Firm and Industry
“It’s important to go beyond the numbers side of financial advice,” according to the report. “Stress the mission, vision and purpose behind the firm, demonstrating that you’re dedicated to clients and are prepared to counsel them in times of crisis, in times of fortune and at all times in between.”
McManus explains further: “The challenge to recruiting is the perception that the industry is old, stuffy and male,” says McManus. “Firms to need to change that perception …. and explain what it is that a financial advisor does.”
Moreover, “firms should focus on planning,” said McManus. “Be concerned not just about money but lifestyle planning, retirement planning and helping to navigate longevity.”
3. Create Mentorship Programs