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By Josh Welsh
There’s a dearth of young advisors in the wealth management industry and there are a few reasons why, according to a panel of advisors who participated in a discussion at the Women in Wealth Management Summit on Tuesday, Dec. 5.
The average age of financial advisors is between 55-65 years, says Jacqueline Tung, vice president of iShares at BlackRock, and the reason younger advisors aren’t getting into the industry is the lack of education and succession planning.
“Some advisors were managing their clients really on their own, and now they're approaching retirement and they're being forced into thinking about succession planning.,” says Vanessa Flockton, senior vice president of advisory services | client relationship manager at Nicola Wealth. “That's not really the spot you want to be in. You want to be thinking about that group and investing in the next generation early. Ultimately, it's the best thing for the individual advisor, but also for their clients.”
The wealth management industry has also been hard to get into, says Tung. “But more and more, I've seen my dealer head offices, whether it's Raymond James, or RBC, they're looking for more younger advisors. They're looking for advisors to partner with some of our largest teams and build multi advisor teams.”
Recruiting young advisors is just one aspect of preparing advisory practices for the great wealth transfer. Another strategy should be getting the younger generations of clients involved too. Flocton says that clients are frequently concerned about several factors around involving their children like how much they should give to them in their wills or whether to even bring up their wealth. Nevertheless, she argues that having those discussions early on can help.
“Then, you can accept that it takes people time to get around the idea,” Flockton says. “Some clients might start with talking about a small portion of giving some assets to kids and letting kids learn by managing these assets. Other clients are willing to open up and talk about everything, but it's really understanding their comfort and talking about money with others. And then once you understand, you can help guide them in terms of how to open the conversation with their kids.
