Tech-savvy millennials are “rewriting the rules of the financial marketplace,” with the banking industry at “the highest risk of disruption by millennials,” Susan Axelrod, executive vice president of Regulatory Operations at the Financial Industry Regulatory Authority, said Tuesday.
Speaking at the Insured Retirement Institute’s government legal and regulatory conference, Axelrod cited the most recent Millennial Disruption Index — a survey of 10,000 millennials — which found that 73% would be more excited about a new offering of financial services from nontraditional financial institutions like Google, Amazon, Apple, PayPal or Square than from their own commercial bank.
The index also found that 71% would rather go to the dentist than listen to what banks are saying, she added.
The industry, she warned, has “work to do in attracting them [millennials] to the financial services industry as employees if we want to avoid the looming succession cliff,” Axelrod said.
The number of financial professionals advising clients in 2014 was around 285,000, down nearly 2% from the year before, she noted.
Since 2008, “the professional headcount has dropped by 39,000 as older financial professionals retire and as too few young people enter the field to replace them — something we are hoping to help address by making it easier for people to enter the industry.”
While FINRA has been zeroing in on preventing senior investor fraud, Axelrod said that there are also “challenges facing the industry on the opposite side of the generational spectrum: Millennials.”
This cohort, she said, makes up “the largest share of the labor market. By 2020, 30% to 40% of baby boomers are expected to retire, leaving millennials to account for 50% of the global workforce.
“By 2025, that will jump to 75% of the workforce. This generation — born between 1982 and 2004 — are no longer the leaders of tomorrow. They are, increasingly, the leaders of today.”
Millennials, said Axelrod, “think and act differently from other generations. Trust me, I know. I have two millennial sons, and I know what it’s like to fight against an iPhone for their attention.”
Axelrod noted that in March, FINRA filed a proposal with the Securities and Exchange Commission to streamline competency exams and facilitate opportunities for professionals seeking to enter or re-enter the securities industry.
“This new approach would give individuals seeking to enter the securities industry the opportunity to demonstrate a fundamental knowledge of regulatory requirements prior to joining a firm, potentially providing firms a larger pool of qualified candidates,” she said.
But attracting millennial talent isn’t the only challenge, she continued, as “millennials in general show very little loyalty to the organizations for which they work,” with a Deloitte study highlighting the extent of the challenge.
“If given the choice, one in four millennials would quit his or her current job to join a new organization or to do something different,” Axelrod said in citing the study.
“By the end of 2020, two of every three respondents hope to have moved on from their current job. Meanwhile, only 16% said they saw themselves remaining with their current employer for the next 10 years.”
Keeping millennials engaged, Axelrod said, is “a serious challenge,” one she deals with in her direct reports, 30% of whom are millennials.
In 2016, FINRA brought in a millennial consultant “to talk to senior staff and help us sift through the myths and misunderstandings about millennials,” Axelrod said. “You’ve heard some of them — lazy, self-absorbed, noncommittal, a generation with unrealistic expectations. The reality is millennials are the most educated generation — 52% of millennials attended college, versus 32% of baby boomers — and they are hungry to do great work and hungry to build meaningful careers.”
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