The Bureau of Labor Statistics has indicated that financial advising jobs are projected to grow 32% between 2010 and 2020. This will result in the addition of 64,000-plus jobs during that time frame. Good news to be sure. A driving factor behind this growth in jobs is the increased demand for financial advice, which is being fueled in part by the 75 million baby boomers readying for retirement and by Gen Xers coming into their own with their wealth.
In a market already accustomed to dealing with advisor recruitment challenges, firms will likely see even keener competition for talent. Why? Because in addition to job growth rates that are twice that of the national average, the industry is going to be dealing with the retirement of existing advisors and the need to replace them. According to Accenture, “the average age of a financial adviser in the U.S. is 50” and financial advisors past the age of 60 control $2.3 trillion in client assets. Thus, it stands to reason that many, if not most, of these newly created FA positions will be filled by younger college graduates, also known as “Millennials.”
This youth movement will have a profound impact on how firms go to market in search of both clients and in their advisor recruitment efforts. Today’s college graduates and young professionals do not utilize traditional media like their predecessors. They have come of age in an era of technology, where they access the Internet via smartphones, watch video online and communicate via text messaging and social media. Addressing evolving media consumption behaviors and closing the digital gap will be crucial to financial advisor firms in the future.
According to sociologist Paul G. Schervish, “Younger clients have different needs, unique tastes and require a different approach to client services, advisors say. And they stand to inherit $1 trillion a year for the next 40 years.” That means recruiting younger investors will require a paradigm shift for many firms in their client acquisition and retention efforts. It stands to reason that the same can be said of a firm’s advisor recruitment practices.
Consider two separate studies from Cisco. In 2012, Cisco Internet Business Solutions Group conducted a study among 1,200 investors with more than $500,000 in investable assets and found the following:
• 40% of global investable assets are held by investors under the age of 55.
• 57% of those younger U.S. investors were willing to move assets and switch firms to gain technology-based services.
• 61% of that same age group said they were interested in having video meetings with advisors.
In its 2011 “Connected World Technology Report,” Cisco found that technological flexibility was a major concern for younger job seekers. “The desire of young professionals and college students to use social media, mobile devices and the Internet more freely in the workplace is strong enough to influence their future job choice, sometimes more than salary does.” The study pointed out that nearly “two of three college students said they planned to ask about social media usage policies during job interviews.”
Further, a recent Pew Research Center study found that 91% of U.S. adults use cellphones, and that number rises to 97% among young adults. Other interesting findings from this study include the fact that 17% of cellphone owners “do most of their browsing on their phone” and that 72% of online adults utilized social networking sites in 2012 compared with only 8% in 2005. Of note, these technology trends are driven largely by younger, better-educated adults.
For FA firms, these technology trends and stakeholder media consumption patterns may seem daunting. Viewed through many firms’ current marketing and communications prisms, which too often lack a digital media focus, the changing times may represent a significant impediment to their future well-being.
Firms that have or are willing to embrace these technology-driven influences on advisor marketing and workplace constructs have an opportunity to truly differentiate themselves for competitive advantage. Those that choose to follow the pack and ignore the realities of today’s marketplace risk obsolescence. In the words of the poet Robert Frost, “The middle of the road is where the white line is and that’s the worst place to drive.”
You should ask yourself this question: In a time of increased demand for financial services and increased competition for talent, what would prevent you from tailoring your approach to increase your chance for growth and success?
Cliff Campeau is a partner with Evolutionize LLC and a regular blogger on financial services marketing best practices. Evolutionize specializes in providing independent financial services firms with a suite of proven practice development solutions, including Web site development, inbound and outbound marketing tools and compliant social media marketing program support. Campeau can be reached at email@example.com.