Earlier this week Pershing announced the results of a new study into the financial advisory workforce. The results revealed that while younger generations really desire coaching and mentorship, and older generations want to provide that, there may be a bit of a communication barrier.
But, according to Pershing, it’s critical for financial advisory companies to work out this challenge. After all, in the next decade, 12,000 to 16,000 advisors will retire. Considering the rate of retirement and an anticipated increase in demand, the industry will have to add up to 237,000 people in the coming ten years.
Kim Dellarocca, director and global head of segment marketing and practice management at Pershing, explained, “Each day, the industry sees young advisors exit the industry and never return. Firms need to think about how to recruit and retain younger advisors by understanding their drivers and motivations – and convey to them that being an advisor is a rewarding and fulfilling career.”
Companies have to make sure that financial professionals who are retiring are able to convey all of the institutional knowledge and client servicing know-how to the next generation of advisors. This challenge is not unique to the financial advisory industry – as we are all aware, the difficulties in maintaining a productive relationship between different generations run throughout the ages.
Pershing’s report “The Inaugural Study of Advisory Success” provides some advice on how people approaching retirement can best communicate with their younger employees, so that they feel they are leaving their legacy in good hands.
1. Focus on Success
By maintaining and communicating an attitude that coaching is a pathway to mutual success, mentors can better engage mentees. At a study release event earlier this week, Dellarocca explained that while everyone has a different definition of success, the report showed a consensus around a desire to be supported. “We surveyed almost 400 advisors and they all said something different, but they all wanted to be in environments where people were invested in their success,” she explained.
2. Consider a Team Oriented Approach
Interestingly, the study showed that younger people were more collaborative than those over 50. In fact, over 60 percent of financial advisors over 50 said they preferred to work alone. On the other hand, younger advisors were more likely to call themselves “team-oriented.” And that interest extends beyond group – younger workers identified strongly with their colleagues. Dellarocca said, “The younger generation takes an interest beyond work in how the team is doing.” A collaborative approach to coaching may help managers better engage younger employees.
3. Keep Feedback Discussions Client-Centric
According to the report, younger advisors were more highly motivated by the prospect of making a difference for their clients. Almost three quarters (73 percent) of respondents between 35 and 39 said “having clients who appreciate the value they provide” is one of the top three most rewarding parts of their job.
One common complaint of older advisors is that younger people don’t provide the same level of hands on, personal service as they would. When coaching younger advisors on improving client service skills, it may be helpful to connect the dots between providing more personal customer service to the client experience, and thus their own personal satisfaction with the job.
4. Keep an Open Mind
It may not be surprising to learn that younger advisors were much more technologically savvy than their older counterparts, with 85 percent of advisors between 25 and 30 calling themselves “technology-embracing.” That’s a good thing too – according to the report, investors are becoming much more technologically savvy as well. Pershing says 73 percent of high net worth investors do research on LinkedIn to make financial decisions. While there is much for managers to coach younger advisors on, there is plenty that managers can learn as well.
Pershing notes that 98 percent of Millennials believe that working with mentors is an important part of their professional development. They want to be coached, and a good coach can do a lot to help keep talented young professionals on board, while ensuring their own professional legacy is strengthened.