(Barron's) - Many registered investment advisors struggle to bring in young blood. This is especially true amid a tight labor market, in which there are nearly two jobs for every unemployed person.
But recruiting young talent—and keeping it—is a business imperative. For one thing, the industry is graying, and older advisors eventually need to pass the baton. The average age for advisors was 57 this year and last, according to the J.D. Power 2022 U.S. Financial Advisor Satisfaction Study. That’s up from 54 in 2020, J.D. Power says.
Advisory firms also want to have workers who look like—and know how to communicate with—next-generation clients.
“More and more wealth will continue to pass through to younger generations,” says Thomas Carroll, president of Homrich Berg in Atlanta. “Being able to have advisors that can relate to the inheritors of wealth is really important,” he says.
Getting this right requires significant investment. Here are five ways firms can attract and retain young blood:
Be aggressive. Prior to the pandemic, firms could advertise junior positions on Indeed, and resumes would flow in, says David Geibel, president of Girard, the wealth management division of Univest Financial. That’s not the case anymore. Instead, the firm relies on its internal recruiter to tap young talent from local firms. “You have to search for what you want,” he says.
Having a strong presence at colleges and universities also helps. About a third of firms in 2021 recruited from the college and university level, according to Lisa Salvi, managing director of advisor services at Charles Schwab .
Homrich Berg, for example, participates in on-campus career fairs and an alumni career tips program at Georgia State University. The firm also spends a day at the university meeting with students, conducting a financial literacy seminar, and offering a resume review.
Summer internship programs are another way some firms draw in young talent. The size and scope of these programs varies. Homrich Berg has six interns participating in its 10-week program this year. Schwab has 16 interns in the eight-week program designed to prepare undergraduates for employment with RIA firms. Mariner Wealth Advisors, meanwhile, has 54 interns for its program, which requires a four-week commitment.
Offer a roadmap. Young candidates are intent on understanding their potential career trajectory, so it’s incumbent upon firms to offer this information. Notably, more than two-thirds of all firms reported offering clearly defined career paths and/or career progression opportunities, according to Schwab’s 2022 Benchmarking Study published on July 21.
Wealth Enhancement Group in Plymouth, Minn., for example, offers three levels of financial advisors. During the interview process, the firm discusses with prospects these different levels and what the candidate needs to do to be successful at each. “Clarity gives confidence,” says Jeff Dekko, the firm’s CEO.
Omar Qureshi, managing partner of Hightower Wealth Advisors in St. Louis, recalls a recent interview in which a candidate in his early 20s asked him what it would take to get his job. The bold question directly led to the creation of a written roadmap, which sets out criteria for growth and advancement within the team. The roadmap has also been shared with other Hightower teams.
Having a transparent compensation structure is also a huge selling point for young job seekers, Qureshi says. “Newer generations want to see things transparently upfront rather than the ‘trust-me-work-hard-and-I’ll-take-care-of-you-later’ approach,” he says.
Show and tell. During the interview process, Mariner Wealth Advisors offers opportunities for candidates to talk to advisors who have grown their careers within the firm. “It’s really important for younger advisors to see themselves at the firm and see the path that they will go down,” says Tony Roberts, the firm’s national managing director of wealth management.
Educational opportunities are also important to young candidates, says Jennifer Geoghegan, chief of staff and strategy at The Colony Group. During interviews, the firm discusses the various options for ongoing learning, including free classes for employees around topics such as wealth management, tax, and business development coaching. “They want to feel that we are investing in their learning and their future,” she says.
Flexibility matters. From a competitor standpoint, Michael Wagner, co-founder and chief operating officer of Omnia Family Wealth in Aventura, Fla., loves when he reads about large banks telling employees they have to be in the office five days. That’s a turnoff to many younger people, especially those coming out of school, who are used to setting their own schedules and like knowing flexibility is an option, he says. “You’ve got to meet people where they are, and not everybody wants to commute five days a week and be in the office,” he says.
The firm allows its staff to work at home two days a week after a roughly three-month probationary period during which they are expected to be in the office full time. Omnia remains flexible at accommodating employees’ needs, he says, offering the example of an employee in his early 30s who recently worked for a few weeks from Spain while he was visiting family.
The Colony Group frequently gets questions from young job prospects about whether they have a remote work policy. The topic was coming up so much that the firm now includes the information in job postings, Geoghegan says. The firm allows employees to work two days remotely, and it also has a summer Friday program, in which employees can work a half-day on seven Fridays from Memorial Day to Labor Day.
Flexibility isn’t only about working at home a few days a week, Wagner says. He offers the example of a candidate in her 20s, who lived in New Jersey and couldn’t move to Florida immediately. The firm hired her anyway, allowing her to work remotely for a few months, and even suggested the local neighborhood to which she eventually relocated.
Focus on retention. It’s not just about hiring young people; it’s about retaining them and giving them the opportunity to move up the ranks. Accordingly, firms need to ensure younger workers continue to see the path forward, says Roberts of Mariner Wealth. This means, for example, offering younger advisors ample opportunities to work directly with clients. If you leave someone behind the scenes for too long, frustration can mount, he says.
Sometimes you have to take chances on young employees when promotion opportunities arise. When the CIO job at Girard opened up, for example, the firm promoted a 30-something, because he had the right tools for the role, and the firm didn’t want to lose him, Geibel says. Although upward mobility may happen at an earlier age for some than it did in the past, “the industry is aging, so what choice do we have?” Geibel says.
When putting younger people into more experienced roles, firms have to be willing to provide ongoing mentoring and coaching opportunities. Younger workers may need guidance, for instance, in navigating interpersonal relationships and human resources-related matters. “I don’t care how smart they are, they don’t have the life experience that comes along with some of these things,” Geibel says.
By Cheryl Winokur Munk
