Illustration: Jing Jing Tsong/©

We hear a lot these days about “disrupters” in the advisory world. While it’s true that the independent advisory business is changing, there’s nothing “new” about dramatic changes in our industry.

Baby boomer advisors — the folks who own the largest independent firms today and who are on the brink of retirement — were the original disrupters. Along with the Vietnam War, the baby boomers experienced a massive stock market crash in 1968 and the near collapse of the U.S. economy in the 1970s, which included double-digit inflation rates and widespread gasoline shortages.

To help their peers deal with these challenges, some boomers created a new “client-centered” profession (financial planning) and a new anti-Wall Street business model (independent advisory firms). They focused on recommending inflation-beating tangible assets (gold, energy and real estate), and reducing clients’ taxes through sheltered investments — and they forever changed the advisory business.

Given this context, it’s ironic that baby boomer advisors, along with Gen Xers, are having such a hard time accepting the fact that with the coming of age of the millennial generation, the financial advisory business is once again changing dramatically. If these more senior professionals want to prosper in the future, they are going to have to change with it.

What follows are our suggestions for what today’s older generation owners need to do to give their businesses a good chance of surviving — and prospering — in the all too near future.

1. Hire millennial advisors.

Futurist Alvin Toffler (author of best-selling book “Future Shock,” published in 1970), said that “everybody lives in the past because we’re aware of very little that’s happening right now.” To get closer to the present, he suggested that we interact as much as we can with younger people.

When working with millennial advisors, there are some things to keep in mind. For instance, there are Certified Financial Planner (or CFP) registered programs all over the country that are shaping this talent. Also, those completing these programs know their talent is in high demand.

Most advisory firms today were designed to meet the needs of baby boomer and/or Gen X clients. While the Gen Xers are hitting their peak earning/accumulating years, most baby boomers are hitting their retirement/depletion phase.

To replace those clients — and their revenues — firms are going to have to attract millennials. That could be a problem. Why?

Millennials are as different from boomers and Gen Xers as boomers were from their grandparents and parents, who lived through the Great Depression. This means that most older advisors today are about as likely to understand millennial investors as their grandparents understood Led Zeppelin.

Unless your business plan involves closing the doors when your Gen X clients reach retirement age, you’re going to have to bring in some folks who understand millennial clients, which means hiring millennial advisors.

No big deal, right? You’ve been hiring young advisors for decades, and you’ll just hire some more.

But here’s something to consider: For years, existing advisory firms have been the “employers of choice.” Yes, a few younger advisors started their own businesses, but the majority wanted to go to work for established firms like yours.

Though that’s still true of some millennial advisors, these professionals also know that their skills are much sought after. This adds an interesting dynamic to an already limited talent pool.

But millennials are very different from baby boomers and even from Gen Xers. Most millennials got their financial education from the mortgage meltdown of 2007-2009. They are wary of Wall Street, know that real estate values can disappear overnight and don’t believe the government always will look out for them and fully protect their interests.

Consequently, like baby boomers back in the day, what they really want is sound financial advice from someone they trust. And they want something else, too; being the children of technology, they require that their advisor relationships be as user friendly as possible.

Of course, many millennial advisors know all this. Plus, they know that you don’t truly know it — meaning they also know that you (owners of existing advisory firms) have little or no chance of attracting and keeping millennial clients without them.

They also know that a growing number of millennial advisors already have launched their own low-maintenance, low-overhead advisory firms for millennial clients with great success. As a result, in their minds — and probably in reality — you need them a lot more than they need you.

Thus, traditional advisory firms have their work cut out for them if they want to attract millennial advisors to help them bring in millennial clients.

The good news is that like every generation, not all millennials are 100% entrepreneurial. They would prefer to work for someone else rather than launch their own business.

2. Lose the fiction that millennial clients don’t value financial advice.

The truth is that millennials value financial advice more than other generations — so much so that they actually are willing to pay for advice.

Today in fact, hundreds of millennial advisors are attracting thousands of millennial clients. If you don’t figure out how to compete with them, your business is going to have a big problem in the near future.

3. Understand and embrace the new advisory model.

If you think you’re going to attract millennial clients with your baby boom/Gen X business model, you’re making a big mistake.

The younger generation now wants different financial services, and it wants them delivered in innovative ways.

Today, thanks to technology and online platforms, asset management quickly is becoming a commodity, with pricing levels most traditional advisory firms can’t match. Tech-savvy millennials are way ahead on building advice-based technology, connecting their millennial equals with technology they have built to serve their generation.

They also realize that they need financial advice to sort out the online platforms, to manage their portfolio allocations and to make all the other financial decisions in their lives. And they are willing to pay for this advice.

The bad news, at least for older advisors who don’t want to change, is that millennial clients want to — and are — paying for their advice in a different way than prior generations. Today’s millennial advisors are charging their clients a monthly fee that often has nothing to do with how much money they have under management (think consulting model).

The good news is that in return they want far less labor-intensive services than their older counterparts. What today’s young clients want is to be able to get financial advice over an app or the phone (as with concierge medical care) when they feel they need it.

What they don’t want is to go to their advisor’s office, wait and then sit through a lengthy agenda that was created for them. They simply want to go online, schedule a phone call or do live chat.

This translates into a very low-overhead, high-volume business for their advisors. In fact, many millennial advisors are comfortably serving upwards of 150 clients on average. (Compared to the traditional 80 or so clients that max out most older advisors.) This translates into around $300,000 a year in revenue — with very little overhead.

This is a good business model, and millennial advisors know it. Thus, to attract them to your firm, you are going to have to let them do business and service their clients their way.

If you don’t, they’ll just leave you and go run their own firms. You’ll be stuck with no millennial clients or their successors thanks to your petrified firm structure.

4. Start the mental transition from asset management to delivering advice.

This means you must prioritize the value of your advice and also take input from those younger than you. You don’t have to do this today or even tomorrow, but eventually you will.

The sooner you start preparing for this transition, the better. And to make ends meet, you’ll need to find a way to adequately charge for financial advice.

Yes, some firms have made a transition to “flat fees” in recent years. As far as we can tell, though, most of them base their fees on what they would have made from assets under management. With AUM fees falling, it’s hard to see those flat fees holding firm in a down market.

The high-volume, low-overhead millennial advisory model, however, offers a more viable solution. By eliminating asset-management services altogether, these advisors can increase both the number of clients they can work with and their profit margins.

5. Create a new division.

We’ve concluded that the millennial advisory business model is so different from the current model in most firms that the two are essentially incompatible.

Yes, we know, you and your firm are different. Even so, do yourself and any millennial advisors you hire a favor. Let them set up their own division of your firm (like an old broker-dealer model under an independent pricing structure).

Furthermore, and this is key, let them run it their way and earn what they earn — no exceptions. We know this won’t be easy, but if you do it right, it will save your firm’s future.

6. Recognize that millennials learn differently and faster.

Whether you are adding a millennial advisory firm or just hiring a millennial advisor, the success of your relationship will largely depend on your understanding of how to train millennials. This is a function of two factors: great education at the CFP schools and the tech savviness of this generation.

Millennials are compulsive researchers. When you introduce them to a new subject today, they will come in tomorrow with more information than you can imagine. It’s not that they don’t respect you, your knowledge and experience. It’s just what they do.

Don’t be threatened by this. Instead, embrace it and use it to your advantage or theirs. They will come up with things you didn’t know. That could be a good thing, so use it to make everyone in your firm smarter.

However, they also may need help understanding and organizing all the information they’ve collected. That’s where you and your experience come in. If you do this, your relationship will be much happier and productive.

What we’re talking about here is a major disruption of the independent advisory industry. Today’s firm owners have the choice of ignoring it and having it disrupt their businesses in major ways or capitalizing on this industry shift by being aware of it, accepting it and taking advantage of it.

The new generation is really different, as are today’s compensation plans, the advisory business overall and the broader world in which advisors and clients operate. Some older firms have been and will continue to be unsuccessful at adapting to this new reality.

But the rise of millennial advisory businesses has shown us what advisory firms in the future will look like: They will separate advice from asset management and value advice on its own.

That advice likely will operate under a new entity with a new structure, lead by a new generation. The reality is the industry is breaking up. There will be asset management firms and then there will be advisory firms.