Ever since the days of Socrates and the ancient Greeks (and probably longer than that), older and younger generations have always had their differences. And that's playing out in the financial advisory business, where the founding baby boomer generation of advisors is getting ready to pass the baton to Generations X and Y.
And by many accounts, the transition could be smoother. Advisors who've built their practices from scratch see the industry one way, while younger folks who join their firms often see it another way. Different attitudes ranging from work ethic to how to run an advisory practice has caused friction at some firms.
Most important, those differences could be hindering the profession's growth. It's no secret that the average age of the country's financial advisors would qualify the collective industry for AARP membership, and that not enough young people are coming into the business. (Only about one-fifth of advisors are under 40 years old and just 5% are under 30.)
Part of the profession's age demographic problem is about attracting new blood; another part is about maintaining the young people it attracts. During a conference in June, Pershing Advisor Solutions CEO Mark Tibergien told the audience that older advisors are driving away younger advisors by failing to develop them professionally and not providing them with enough growth opportunities.
And that attrition, Tibergien noted, could be a recipe for trouble if there aren't enough younger advisors to take over existing practices as older advisors retire or die.
The online chatter that accompanied an article about Tibergien's comments sparked generational mudslinging from both sides. Some industry veterans bemoaned the work ethic (or lack thereof) and entitlement attitude of young advisors, while some younger advisors decried an industry that's "stuck in the stone age" and declared it's time to take the business into the 21st century.
Is the divide between generations really that wide, or is it just a matter of adjusting expectations on both sides to facilitate the transition between the industry's founders and their heirs?
Tibergien's observations that older advisors were driving younger advisors out of the business were based on a 2006 survey done by Moss Adams of advisory firm employees that found a high quit rate among young professionals. Specifically, 25% of respondents said they were looking for another job, and half of those were looking outside the industry. Tibergien, who worked at Moss Adams at the time, said the survey showed a lack of job satisfaction within the profession.
He believes that a recent study on the quit rate among financial services professionals indicates similar problems still exist. "Treating people like chattel, telling them stories about how they suffered and giving them crap work basically ensures that they'll find something else to do," Tibergien tells Financial Advisor.
"What I see is a missed opportunity among older, wiser people to invest in the development of their heirs," he says. "It's a chronic condition among all retail financial services, and it's particularly true among independent advisors, including RIAs and broker-dealer reps."
Tibergien notes that employer-based organizations such as banks and wirehouses have systems in place to train and integrate new hires, while business owners at smaller firms don't always have the experience, discipline or capacity to groom people to grow the business.
And some advisors, Tibergien says, carry an attitude that creates a negative vibe in the workplace. "Some individual advisors have the attitude of 'I suffered for many years, and if you want to be successful you should suffer too.' The whole idea in business isn't to look at this as an endurance test, but rather as a leverage opportunity."
In other words, use employees wisely to free up the principals so they can do other things to make the company more profitable.
Some young advisors might enter the profession with unrealistic expectations regarding the early part of their careers, Tibergien concedes. "But that can be managed without resentment. The issue is: Are you willing to teach, have patience and channel their energy in a productive way? They may not want to work 80 hours a week, but no wisdom exists that says the longer you work, the better you are."
LeGrand "Lee" Redfield Jr., president of Asset Management Group Inc. in Stamford, Conn., says he's impressed with the quality of young folks coming out of the Certified Financial Planner programs. But he's having a hard time finding people for positions he wants to fill.