The million-dollar question in the financial services industry today is how to find the next generation of advisors, says Geof Brown, CEO of the National Association of Personal Financial Advisors.
NAPFA, a national association for fee-only advisors, tries to draw in younger and more diverse advisors, but “the association mirrors the industry and a lot of our members are over the age of 50,” says Brown.
“However, in the two years that I have been with NAPFA, I have seen a shift. We are seeing more young people who go to college knowing they want to be financial advisors; they did not have another career first,” he says.
Therefore they come into the industry at a younger age and are better able to connect with younger clients, who are going to be the recipients of a vast transfer of wealth as the baby boomers age. Brown and Frank Moore, the group's new chairman, recently talked with Financial Advisor magazine about trends in the industry.
“A lot of older advisors will work until they cannot work anymore,” but when they get ready to transition their business to a successor, there needs to be someone younger to transition it to as a fee-only practice, Brown says.
To facilitate the transition to a like-minded firm, NAPFA can be a clearinghouse. Networking is a big part of the NAPFA semi-annual conferences. The next conference, Racing to Success, is scheduled for the end of October in Indianapolis.
At the same time, more people feel they need financial planners and the RIA business is growing accordingly, says Moore. “Life is complicated, tax laws are always changing, there are different ways of funding education -- it’s all too much for the consumer to keep track of.”
The relationship between the advisor and client also is shifting. Consumers want a holistic relationship with the planner, not just an investment manager, which is why robo-advisors will not hurt the advisory business, Moore says.
“There are always going to be people out there who want to do it themselves; they are not the ones who would have hired a financial planner anyway, so they are not going to take clients away from financial planners,” Moore predicts.