Recently there have been articles in the mainstream press as well as in trade publications about the aging of the salesforces within the financial services industry. Indeed, at regional firms, as well as the wirehouses, there is concern, if not outright alarm, that many if not most of their top producers are 50 years old or more.
The dynamics that created this are twofold. First, it's no secret that the workforce in this country is aging. Baby boomers, those born between 1946 and 1964, are now beginning to retire. The baby boom was followed by the “baby bust.” I won't bore everyone with detailing the disputes of when the baby boom ends and when the baby bust begins. What's important to recognize is that from 1964 to about 1980 there were far fewer babies born in the United States than the previous 18 years. In today's terms, there are many more adults between the ages of 46 and 65 than there are between the ages of 31 and 45.
Let's make the assumption that those between the ages of 31 and 45 are the prime candidates to begin a career as a Financial Adviser. The best candidates to go into a training program have had success doing something else and old enough to engender trust from potential clients. The reduced pool of candidates in this age group for ALL careers, not just in financial services, is a demographic fact.
The second factor that caused the shortage of rookies is unique to this industry. Historically, the new Advisers coming into the industry are the trainees hired by the wirehouses. And the wirehouses virtually stopped training two separate times since 2000. The first began with the tech crash of 2000, and then was lengthened by the post 9/11 recession. The second time was after the recent Great Recession/Financial crisis. These big firms are again aggressively looking to hire trainees. But they had stopped two separate times as a matter of survival and are fishing in a pool, demographically speaking, which has never been smaller.
Bottom line: Because of demographics, and the two “survive at all costs” crises that the industry has gone through, there is a shortage of younger Advisers.
To the firms who are both trying to grow or just stay even as your salesforce ages: You must be able to differentiate your company from your peers in order to attract rookies and experienced Advisers. In the absence of differentiation, the default is price (i.e. the recruiting deal).
Ms. or Mr. Advisor, ages 46+: If you had a client who owned a successful, profitable business, who was beginning to think about retirement, or who was actually approaching the traditional retirement age, my guess is you would be discussing with them how they might get equity out of their business. Whether you are with a wirehouse, regional firm, on your own as a RIA or affiliated with an IBD, if you have not thought about the endgame for your business, then you are not maximizing value for your shareholders, who you go home to every single day.
Conclusion: Reduced supply and increased demand makes your practice more valuable than ever before. How will realize that value? What's your exit strategy?
