It’s no secret the investment industry has a choppy record in attracting young financial talent.
But with 100,000 brokers retiring in the next ten years, and half the industry talent age 55 or higher, according to a report from Cerulli Associates, some industry titans have had enough, and are actively recruiting much younger advisors. Exhibit A is Merrill Lynch.
Early this year, Merrill’s brokerage division launched a new initiative to both land and train younger advisors – a move that’s been a long time coming for an industry showing signs of growing long in the tooth.
“Make no mistake, when we look out over the next 10 years, the thundering herd will be growing,” said Andy Sieg, head of Merrill Lynch Wealth Management, speaking last month at the Securities Industry and Financial Markets Association’s Private Client Conference in Arizona.
While Merrill hires upwards of 3,500 new brokerage trainees annually, the company isn’t putting any hard numbers on its new “youth movement” recruiting process. But the fact that company decision makers are openly talking about the need to attract younger talent emphasizes Wall Street’s need for newer, fresher blood.
Unfortunately, that may be an uphill climb, experts say.
“Young people don’t want to work in financial services because advisors’ websites mostly feature older white men – they see it as boring,” said David Edwards, president of Heron Wealth, a registered investment advisory firm based in New York City. “Or, they’ve seen ‘Wolf of Wall Street’ and think that financial advising is just ‘pumping and dumping.’”
‘Grow With Your Clients’
Edwards points to companies like Oxygen Financial and his own firm as rare examples of investment companies that “get it” when it comes to landing younger advisors.
“While our bread-and-butter clients today are boomers and our oldest advisor is 55, much of our marketing is directed to GenXers or even millennials,” he explained. “Our two youngest advisors are in their 30s. We give them mentoring and support, but we get them in front of clients right away. Right now, our training process is built around ‘grow with your clients.’”
On the younger advisor side, a big part of the problem is that once talented 20- or 30-somethings see the payment model for brokers and RIAs, they invariably take a pass.
“A key reason why so many financial advisors struggle to hire students and recent graduates is that the financial advisors prefer not to acknowledge that the financial realities that most of these candidates face,” said Steven Rothberg, president and founder of College Recruiter, a career and employment company geared toward new college graduates.
“Quite simply, their massive student loans are not well aligned to the 100 percent commission-based compensation plans favored by so many of these companies,” he added. “Few of these mostly young adults have ever held a professional sales position, yet they’re being asked by people with decades of experience to work for weeks and perhaps months with little to no income.”
Many students and recent graduates see Wall Street closely tied to the 2008-09 Great Recession, which devastated the financial security of the entire generation, Rothberg noted.
“The entire industry has a serious brand problem that cannot be overcome by fancy career websites, new employment-related videos, or advertising jobs in more and more places,” he said. “These generations are very sophisticated when it comes to sniffing out false brands. These organizations will need to change their cultures so they’re truly in the business of helping society rather than actually in the business of generating commissions.”
Industry veterans also say Washington D.C. politicos have to share much of the blame for turning off not just younger advisors, but investment professionals of all ages. The culprit: harsh regulations, they say.
“Our industry has become so over regulated that it is just no fun anymore. You spend more time doing cover-your-(butt) stuff than you do actually helping people,” said Phillip R. Reames, founder of Reames Financial in Kalamazoo, Mich.
Similar to Medical Profession
A highly-credentialed financial planner who started his Wall Street career in 1989, Reames said he came to hate what he was doing.
“I think young people who are considering finance as a career are hearing this story from many of us older professionals and are taking heed,” he said. “I flat out tell any young person who is thinking of getting into the securities industry to stay away. It’s really similar to the medical profession in that way.”
Clearly, the investment industry has some heavy lifting to do to court young financial talent as its core financial management professionals reach, and pass, middle age. The downbeat news going in is that millennials, and the Generation Z demographic graduating college right now, view Wall Street as old news, and a bevy of evil capitalists, at worst.
Those aren’t exactly the key ingredients a company like Merrill Lynch would use in a recruiting pitch – and that’s why investment firms have to tear up the old script. In its place could be one that shows Wall Street is both lucrative and rewarding from a career point of view.
That’s all for a generation that isn’t really interested, even though good, professional jobs are hard to come by these days.
Brian O’Connell is a former Wall Street bond trader, and author of the best-selling books, The 401k Millionaire and CNBC’s Guide to Creating Wealth. He’s a regular contributor to major media business platforms, including CBS News, The Street.com, and Bloomberg. Brian may be contacted at email@example.com.
© Entire contents copyright 2017 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.