Growing an advisory firm today requires more than just attracting more clients and managing more of their assets. Without a talented second string of junior advisors to take over for departing leaders, a firm’s current clients could find they are suddenly DIY investors, without the education, experience or inclination to take on managing their wealth.
The problem for current firm leaders, who may have started their firms decades ago, is that their second string isn’t game-ready. As consultant Angie Herbers notes in the cover story to this supplement, “Despite the rather massive efforts of custodians, BDs, industry organizations and boomer advisors themselves, the next generation of advisors isn’t learning the business fast enough to fill the looming void.”
The way younger advisors process information is fundamentally different from that of their predecessors, Herbers writes. Dumping more information on them to try to bring them up to speed won’t help; the internet gives them access to an overwhelming amount of data. What they need is help finding the right information.
To that end, Bob Clark, one of our regular columnists in Investment Advisor, has been writing a series of blogs for ThinkAdvisor.com exploring some of the financial services industry’s more confounding issues. One of the most profound distinctions between financial services and other industries is the product, Clark writes. While goods sold by Ford and Apple are clear to the consumer, in financial services the product is the client’s own money: making more of it for the client and protecting it from loss. Young advisors need to understand that distinction in order to serve clients well.
Another strategy that may help young advisors better serve clients is to offer the firm’s own services as a benefit to new hires, according to Caleb Brown. This may be especially useful for firms trying to compete for talented advisors because motivated young advisors expect more than just financial compensation for their work. He outlines ways firms can build competitive benefits packages.