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Next Gen Investors

Preparing for Next-Gen Advisors and Investors: A New Approach to Talent for Reaching Next-Gen Investors

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Sponsored by Fidelity Investments

An independent broker-dealer nurtures Next-Gen advisors to support Next-Gen investors[1]. This is a case study on how Securities America has taken steps in their business to support their next-gen advisors to meet the needs of next-gen investors.

Many advisory firms tend to focus on an older and wealthier segment of the market. According to the Fidelity 2014 Executive Forum Poll,[2] seven in 10 participating firms said that investors 49 years of age or older, or those with $1 million or more in investable assets, dominate their current client acquisition strategy. A large number of these baby boomer[3] clients, however, are moving from an asset accumulation to an asset distribution stage of their life, which is raising questions about how to replenish this business with Gen X/Y investors.

To help firms explore what these marketplace changes may mean for their businesses, Fidelity spoke to advisors who are taking steps to appeal to this younger audience. This includes initiatives to attract and train younger advisors with similar profiles and preferences who may have an opportunity to establish long-lasting relationships with this segment.

Securities America, Inc. (SAI), is an example of a firm that has launched a program to train and mentor advisors under 40 years of age to specifically serve younger clients. This next-gen group currently represents about 20% of the firm’s 2,000+ advisor population. Fidelity interviewed Kirk Hulett,[4] Executive Vice President of Strategy and Practice Management for SAI, to learn more about the program. Hulett leads a team of business coach consultants who work with SAI’s advisors on all aspects of owning and running a business—from planning to marketing to human resources issues.

We discovered that there are four main components to the firm’s next-gen strategy:

  1. Respond to the needs of Next -Gen advisors [5]
  2. Provide appropriate training
  3. Coach and mentor
  4. Offer tools to be relevant for next-gen investors
     

1. Respond to the Needs of Next-Gen Advisors


“When thinking about the next-gen investor, we believe there are some stereotypes that, generally, are just not true,” says Hulett. “For example, some say these individuals don’t have investable assets, aren’t willing to pay for advice, and only want to work with a digital advisor. In reality, there is a lot of business opportunity here, and advisors need to engage this group, especially the children of current clients. In our opinion, one of the best ways to do this is to have people working in a practice who look like these investors.”

SAI knew it wanted to nurture younger advisors, and in 2014 formed a next-gen advisory council to gather intelligence on how best to serve this segment—what development programs, marketing programs, and technology to provide. The council is currently made up of eight under-40 advisors who meet via conference call every quarter.

The council suggested that SAI create a special next-gen workshop designed to address issues of interest to younger advisors. Held at the firm’s national conference, the workshop included presentations by a number of senior advisors. Topics ranged from how to create a fee-based service model to how these senior advisors describe the value they offer relative to the price they charge. Topics also covered succession planning, providing insights on how younger advisors can prepare to take over a practice when an older advisor retires.

“The workshop was so well received, we are now rolling out online forums accessible from our intranet,” notes Hulett. “People will be able to post questions and get responses from other next-gen advisors, and upload documents, pictures, and examples— all in a searchable archive. We will also use what has been posted as a form of market research to help us identify areas where we might want to develop additional tools or educational materials.”

2. Provide Appropriate Training


SAI created an Associate Advisor Training Program specifically aimed at next-gen advisors. Hulett’s team mapped out the critical competencies they felt were needed for success, and then designed a curriculum to address each of these skill sets.

“The information is delivered through 22 video training modules, with a moderator explaining the concepts,” explains Hulett. “They also contain a coach’s corner, where one of our senior team members provides a play-by-play review of what was discussed. Each video has homework to reinforce the lessons. For example, under personal productivity, next-gen advisors try to better manage their time and block off hours for high-priority activities, such as prospecting and education. Under client advice and delivery, they craft and present their value proposition, and make a list of useful information to gather when they meet with clients.

“In the end, we want these younger advisors to be purposeful about how they create and run their businesses,” says Hulett. “They need a plan for where they want to be longer term, the type of client to focus on, and the services to provide. We also emphasize the importance of continually showing their value in very tangible ways, as that’s crucial to maintaining client relationships and getting referrals.”

3. Coach and Mentor


SAI believes that one way for an associate advisor to move to the top-tier is by shadowing an experienced advisor. So they pair a junior advisor with a senior advisor in a mentoring relationship that complements the training and provides opportunities for wisdom transfer. Every other week for a 12-week period, the senior and junior advisor have a phone call with one of the firm’s coaches. The coach’s role is to guide the discussion and keep it focused on the core competencies junior advisors need to learn, asking questions and facilitating impromptu role plays along the way.

“We started this approach with four coach-mentor relationships to test things out, and things have gone well,” says Hulett. “Two of the four junior participants have already taken the initiative to go and visit the senior advisor—although in-person meetings were never anticipated. One of the visits was to see how the senior advisor conducted client seminars for prospecting and education, and the person came back with a number of ideas to incorporate into his practice. We are now expanding this program and taking it to a broader group.”

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[1] Born between 1965 and 1992; also referred to as Gen X/Y.
[2] The Fidelity 2014 Executive Forum Poll was conducted from May 4 to 7, 2014. Ninety-two registered investment advisor (RIA) and correspondent broker-dealer Fidelity clients attending Executive Forum completed questionnaires at the event. The results of this poll may not be representative of all financial advisors meeting the same criteria as those surveyed at the Fidelity 2014 Executive Forum.
[3] Born between 1946 and 1964.
[4] May 8, 2015.
[5] Advisors under 40 years of age, as defined by the independent broker-dealer.

For investment professional use only. Not for distribution to the public as sales material in any form.

The comments provided herein are by a client of Fidelity Investments. Its business needs and experiences may not reflect the experience of other Fidelity Investments’ clients or all broker-dealers.

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. Fidelity does not provide advice of any kind.

Third-party marks are the property of their respective owners; all other marks are the property of FMR LLC.

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