Let’s face the facts. The wealth management industry is aging out, and there is no real solution in place. Most financial advisors in the industry are 55 years old, and – to be honest – their clients like it that way. Making it as a young financial advisor is hard. With over 90% of financial advisors failing their first three years in business and retiring advisors selling their clients to 40-year-olds, the odds are ever against young advisors.
To put it plainly, financial advisors on their way out would rather sell their books than train new advisors, mainly because of the statistic mentioned above. However, it causes a compound problem in the industry because the only advisors who can afford said books are older and have already established a name for themselves. Seemingly every ten years or so, the industry experiences this problem.
Ageism in the Wealth Management Industry
In nearly any other industry, employers look for new young talent with fresh ideas. They try to weed out the aging employees and replace them with youngsters — a classic case of ageism.
However, in the wealth management industry, you see a complete 180. One could even go as far as calling it reverse-ageism.
There is one – and only one – exception; legacies. Children of successful financial advisors have a much higher success rate than those jumping in the water without a genetic life raft. Parents are far more inclined to not only train and mentor their children but to hand over their book of clients when the retiring day comes knocking.
Why do they have a higher success rate?
For starters, they don’t have to worry about gaining clients’ trust as much because their parents already did that. They definitely don’t get a free pass, by any means, but it is definitely more common to see young financial advisors that grew up with parents in the industry.
Training in the Wealth Management Is Non-Existent
In an industry where cold calling is only good for thickening skin and preparing one for constant failure, How can we expect to see real change without a solid training or mentorship program in place?
From the perspective of a 50 to a 55-year-old financial advisor:
He’s already built his clientele over several decades. He’s worked hard his entire career to get where he’s at. Now, his business basically works on auto-pilot. He takes his clients out on golf outings and lunches and enjoys his one or two-million-dollar salary.
In the same sense, he sees young people try and fail at the business left and right. Financial advising takes a specific type of personality. So, maybe, if he notices young talent with the right mentality and the grit to move past failure and disappointment, he might be willing to give the newbie a few pointers.
Rarely, though, do you see a retiring financial advisor give away clients to a newbie. Almost never.
So how does the industry fix this problem? What needs to change to get the retiring advisors to train or mentor young advisors? Is there anything young advisors should be doing differently?
Clearly, something has to change. Let’s chat in the comments. We want to hear your insight on the matter!