The cohort of younger men and women seeking advisory jobs in financial services reflects major differences in attitude from that of the previous generation, argues recruiter Bill Willis, founder and CEO of Willis Consulting. That’s causing many potential financial advisors to steer clear of the space.
“Fewer people in their 20s and 30s are risk-takers like their parents were. Advisory has become a harder nut to crack because [client] fees and commissions are so low now,” Willis maintains in an interview with ThinkAdvisor.
“One has to accumulate so much more in the way of assets than the younger generation’s fathers did just to make a living, let alone thrive,” he says.
Willis, with a 25-year background in leadership at Merrill Lynch, Sutro and Prudential Securities, opened his own recruiting firm in 2000. Wirehouse training programs are dwindling because their graduation rates are too low, he says.
But Willis describes several ways to build a career in financial services. One is as an advisor at a bank branch, where plenty of client leads are provided. The role of bank broker may not have been so appealing 20 or 30 years ago, but because of shifting circumstances, it seems to be now.
Here are highlights of our conversation:
THINKADVISOR: Why is there such an active advisor recruiting market at present?
BILL WILLIS: It’s symptomatic of a number of different things: Deals continue to rise at the wirehouses and in the independent space. There are many ways advisors can move right now, and many of them allow them to own their book of business and ultimately monetize it at a much higher level than with a retirement plan at, say, Morgan Stanley or Merrill.
Why doesn’t the younger generation want to become financial advisors like the previous generation did?
It seems as though fewer people in their 20s and 30s are risk-takers, like their parents were.
Part of that comes from the fact that [financial advising] has become a harder nut to crack because fees and commissions are so low now. One has to accumulate so much more in the way of assets than the younger generation’s fathers did in order to just make a living — let alone thrive.
Please elaborate.
Ultimately, you need more assets to survive in the business now because clients pay much lower fees and the [duration of] training programs that typically existed in the space decreases as the length of the service contract ends.
So it’s a runway. It supports people for two or sometimes three years, but that isn’t enough.
Morgan Stanley, for example, has very little training going on. Firms just aren’t doing it; it doesn’t work. The percentage of people graduating is just too low.
Some firms bring in people to be analysts and in sundry junior roles to an advisor; they get them to join a team. But every year there are fewer advisors out there.
What are other firms doing to boost their advisory services?
Wells Fargo and Merrill, to name two, are having successful advisors sit in a bank branch, where they are introduced to clients on a regular basis.
That has become a more successful means to start, and that’s the way Merrill is doing the majority of its training right now, at Bank of America branches. And Wells is doing it that way too.
How else do you characterize the current advisor recruiting picture?
We have more demand for advisors right now, though they’re not minting many new advisors these days — yet all these firms want to grow.
So it’s an unusual combination of events, which is raising the price firms will pay to have someone move over and join them.
It’s a great time to be a financial advisor with a secure book of business.
Are more RIAs seeking your services?
RIAs are a growing space. Private equity has been very interested and is investing heavily in it.
Why are wirehouses having a hard time retaining advisors? Is it related to signing bonuses?
Yes, it’s always been that way. Deals are typically kept at 13 years in length. As they get closer to conclusion, the amount on the note becomes less. So some people leave prematurely.
What about the effort to recruit more women to be advisors?
It’s [continuing], but I don’t think you can push a button and just have it happen.
Some of the senior [women] in management have never even written an [order] ticket. So how can they really be effective without experiencing the most important thing that happens in their firm: when a client talks to an advisor.
What role does technology play?
You have to have a lot more assets to run a successful business. That means you must use high-end technology to make sure you’re taking care of everyone, calling them on a regular basis.
Everyone has always done that, but now you can do it more crisply.
Is technology helping advisors to acquire new clients?
Some of that’s happening through technology and social media. AI may help you sort out the right clients, the right targets.
AI might tell you who paid the most for a house in a particular city in the last five years. So you can develop a mailing list from that and pinpoint a list of people for your campaign.
McKinsey & Co. says that there will be a shortage of 100,000 advisors in the next 10 years. Do your estimates agree?
If nothing changes, that’ll probably be correct. There’s a shortage now — but with better technology and a lot of AI, advisors will have more clients.
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