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Building for the Future: Recruiting the Next Generation of Advisors to Help Drive Succession Planning & Growth

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Sponsored by Fidelity Investments

The financial advisory profession is facing a looming talent shortage. According to Cerulli, 71% of the advisor population is over the age of 45, and the average advisor is 51½ years old.[1] As these advisors reach retirement age, some 8,600 are expected to leave the profession every year for the next 13 years, thinning the ranks of advisors at a 2.7 percent annual clip.[2] Unfortunately, for every eight advisors that retire, only three are trained to replace them.[3]

Replenishing the ranks of older advisors with younger advisors is one of the major challenges the industry now faces, and this challenge exists on at least two fronts. The first is the issue of succession planning for established advisory practices in which the principals are at or close to retirement age and looking to pass the torch to the next generation. The other is simply finding and attracting enough viable candidates among Gen Y[4] to fill the expected volume of job openings in the coming years.

In response, many firms are taking steps to think differently, create new strategies and implement programs to boost their recruiting efforts. Unfortunately, in some cases those efforts may be hindered by some existing misconceptions.

Uncovering Common Misconceptions


One commonly held misperception is that there is a widespread lack of interest in the financial advisory profession among Gen Y, but the Fidelity® Recruiting Redefined Study (Fidelity study) revealed that lack of awareness, not interest, is a more relevant factor.[5] Only two in 10 college students and young professionals responding to the Fidelity study were familiar with the financial advisor profession, but  after learning more about it, almost half indicated they would consider it.

The Fidelity study identified a number of false impressions that can exist among Millennials[6]: that you need licenses and certifications to be a qualified candidate, that sales activities are the most important part of the job, and that the profession doesn’t offer the kind of opportunity to help others that is so important to many in this age group.

That last point is an important one for firms looking to tap the Gen Y talent pool. In a 2013 survey of 1,000 college‐educated men and women born since 1980, 84 percent agreed with this statement: “Knowing I am making a difference in the world is more important to me than professional recognition.”[7]

According to the Fidelity study, too few Millennials currently see a financial profession as a pathway to making a difference, largely due to limited awareness of this career among college students.

The Fidelity Recruiting Redefined study identified three steps that firms and others seeking to recruit young talent to the financial advice profession may want to consider taking.

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[1] Cerulli Quantitative Update, Advisor Metrics 2013, Understanding and Addressing a More Sophisticated Population, Cerulli Associates.
[2] Ibid.
[3] Ibid.
[4] Born from 1980 to 1992.
[5] Fidelity® Recruiting Redefined Study, September 2014. References to the “Fidelity study” are statistics from this study unless otherwise indicated.
[6] Born from 1980 to 1992; also known as Gen Y. 
[7] Millennials in the Workplace, Bentley University’s Center for Women & Business, August 5, 2013, http://www.bentley.edu/centers/center‐for‐womenand‐business/millennials‐workplace.
 
For investment professional use only. Not for distribution to the public as sales material in any form.

Fidelity Investments does not provide advice of any kind. The content provided herein is general in nature and is for informational purposes only. This information is not individualized and is not intended to serve as the primary or sole basis for your decisions as there may be other factors you should consider. You should conduct your own analysis, review, and due diligence based on your specific situation. You are responsible for evaluating your own specific needs and making appropriate decisions. The information provided herein is not meant to be exhaustive of all possible options you may consider.

The third-party opinions expressed herein are solely those of the author and in no way represent the advice, opinions, or recommendations of Fidelity Investments or any of its affiliates.

The 2014 Fidelity® Recruiting Redefined study conducted by Fidelity Institutional is based on multiple research methodologies including four in-person focus groups with 44 participants in total and four online quantitative surveys with 600 participants in total. Research participants included hiring decision makers at financial advisory firms, students (college and MBA), young financial professionals, new advisors, college counselors, and career counselors interviewed from April through June of 2014. All the research was “blind”— Fidelity was not identified as the sponsor during any phase. The study was administered by Greenwich Associates, an independent firm not affiliated with Fidelity Investments.

The 2013 Fidelity® Advisor Insights Study, previously named Broker and Advisor Sentiment Index, is the seventh iteration of the study. This was an online, blind survey (Fidelity not identified) fielded during the period of August 8–21, 2013. Participants included 813 advisors from across multiple firm types who work primarily with individual investors and manage a minimum of $10 million in individual or household investable assets. Firm types included a mix of banks, broker-dealers, independent broker-dealers, insurance companies, regional broker-dealers, RIAs, and wirehouses, with findings weighted to reflect industry composition. Bellomy Research, an independent third-party research firm not affiliated with Fidelity Investments, conducted the study.

Third party marks are the property of their respective owners; all other marks are the property of FMR LLC.
Fidelity Institutional Wealth Services provides brokerage products and services and is a division of Fidelity Brokerage Services LLC. National Financial is a division of National Financial Services LLC, through which clearing, custody, and other brokerage services may be provided. Both members NYSE, SIPC. 200 Seaport Boulevard, Boston, MA 02210.

© 2015 FMR LLC. All rights reserved

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