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?

80-Hour Workweeks
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."

Avoiding Potholes
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.

"The people who apply for jobs are just different," says Redfield, 57. "They seem to believe they know more and are smarter than their elders. I know this sounds like every generation from the past.

"Some younger planners don't appreciate what it took to actually build a business," he continues. "What the experienced planner has to offer a younger planner is avoidance of potholes."

Redfield says his firm has several twenty-somethings who were hired as administrative assistants, became paraplanners and are taking courses to become CFPs. But he adds that his firm, which has more than 290 clients with about $215 million in assets, has reached the point where he needs new hires with more training and experience.

"Instead of training somebody from scratch, I'd like to take advantage of someone who's already got a CFP or ChFC and have a leg up beyond just book smarts," he says. "I'll even take an insurance salesman with a CLU."

It would help, Redfield notes, if young job candidates came to interviews with realistic expectations about their roles and their potential value and how to measure them. He says he recently interviewed five job candidates, none of whom could answer two basic questions: 1) At the end of the first year of employment, what metrics would you use to decide if you made the right decision to join this firm? 2) What metric should I use at the end of the first year to decide whether you were a good hire?

"They [employees] leverage my time, and that's what any new CFP or planner brings because it gives the senior planner more time to do more complicated tasks that a new planner might not know," Redfield says.

He adds that he uses what he calls a two-times rule to gauge whether or not a new planner has been a good hire. "If I pay them $80,000 to $100,000 a year, I have to make $200,000," he says. "I have to show them I generated that someplace else as a result of them being here. That's the leverage."

Bridging The Expectation Gap
Caleb Brown, 32, got his CFP license and entered the advisor profession 10 years ago, and in that time he's seen a number of his contemporaries leave the business. "I've seen a lot of people who could've been good financial planners who never found a good fit and dropped out of the industry," he says.

Brown gravitated toward career development, matching job candidates with advisory firm owners, and in 2009 co-founded New Planner Recruiting LLC, which specializes in placing students and career changers enrolled in CFP Board-registered programs, as well as CFP certified practitioners with less than five years' experience, with financial planning firms-mostly RIAs and small, independent advisors.

Brown says he recently received a couple dozen calls from prospective job seekers who've worked at reputable, nationally known advisory firms for one to three years and aren't happy. Their common refrain is that they're not getting growth opportunities and they want to see what else is out there. "That's very interesting to me because of the names of some of those firms," he says.

But Brown notes that it's a two-way street, and he explains to job candidates that employers take most of the risk when they hire someone. "I tell them they need to do things to reduce the firm owner's risk and to make it easier for them to say 'I want to keep you on staff and move you up the ladder.'"

Brown says most job candidates want to work at a firm where they can work under a senior advisor. They also want mentoring, a paid salary and client interaction, and they want to learn the business in order to take as much as they can off of the senior advisor's plate.

"I think it's all about an alignment of expectations," Brown notes. He says he works with clients to map out what the firm owner expects from new hires at certain time increments of, say, three months or six months or one year and beyond.

"It shows a young advisor what's laid out for them in order to get promoted and to make more money," Brown says. "That's worked out really well."

Cracking The Code
Matthew Boyce, a principal and chief financial officer at American Financial Advisors in Orlando, Fla., offers that the boomer generation who built businesses have a different mind set from those people walking into existing businesses.

"The boomer generation is much better at selling the business and are better relationship builders," says Boyce, 39. "The Gen X side is much more pragmatic and focused on the operations side with an eye toward efficiencies and profitability."

He adds that among advisor friends in his age group, a commonplace argument they hear between senior and younger advisors centers on what's the best way to run the business going forward.

Boyce believes the old, personality-driven model that relies on relationships forged by one or two main principals isn't sustainable. Instead, he thinks clients are better served long-term by a more corporate-type model based on a team approach with an eye toward greater efficiency and profitability.

Boyce posits that his fellow Gen Xers and the incoming Gen Y crowd share a similar pragmatic, operations-focused approach to the business. "I think Gen Y is a cross between boomers and Gen X in that they have larger social networks and tend to be more optimistic than Xers," he says. "But I see less conflict between X and Y than between X and boomers, and that has to do with technology and connectivity, which makes them more relatable.

"That's why moving things forward with the X and Y crowd will be a very powerful business model versus the old model," he continues. "I think the younger mind set will win, not because they're smarter, but because they're more pragmatic and efficient."

And that, he says, can create a better value proposition for clients, who increasingly might question why they should pay an advisor a 1% fee when they can pay 0.7% at another firm.

Boyce credits American Financial Advisors' two co-founding principals--Paul Auslander, 57, and Leslie Kelly, 62--for their willingness to upgrade technology and to explore new ways of doing things to make the firm better. "They realized the client is the most important thing," he says.

For Auslander, his firm's operational transition through the years coincided with his learning to adapt to the ways of the younger advisors at his company, which currently includes two thirty-somethings and one twenty-something.

"It's a learning curve that I went through and am still going through," he says. "You appreciate them for what they are. You can't motivate them the same way we were motivated. The idea of a bonus or BMW doesn't motivate them. More free time is what they want."

"We've cracked the code, and as a result we've had a bit of a cultural shift at our firm," he adds. "I give them what they want and they're very hard working. They're not lazy; they just work differently. That's something I had to learn."

Getting Comfortable With Change
Mark Tibergien from Pershing believes that professionally managed, growth-oriented advisory businesses that have established career paths, invest in the education and development of young talent, have mentoring programs, take a team approach to client service, and value all positions--whether its revenue generating, operations or compliance--are better positioned to see their businesses survive into the next generation.

Accredited Investors Inc. in Edina, Minn., appears to be one such firm. Two-thirds of its roughly 30 employees are CFPs, and new planners are brought along in a formal career path that embraces the team approach. Its new hires tend to be in their late 20s to early 30s, and generally have at least three years of experience.

"That's because we want them client-facing sooner than later, and our client minimums are $2 million and these people want to work with people who are seasoned," says Ross Levin, the firm's founding principal and president. 

Levin acknowledges he's very different from the next generation of advisors entering the industry, and he embraces that and strives to capitalize on it.

"My generation of advisors who started businesses probably wouldn't be hired today," he says. "For example, I was very entrepreneurial, didn't take directions very well and wasn't good at following processes. Today, I'm hiring people who are very different than I am and who are much better at the things I was able to get by with while I was growing my practice.

"The next generation of financial advisors have several advantages over someone like me," he continues, "but there are some areas where they need to be trained or taught. For example, I do well at business development because I had to. But business development isn't required for the next generation of advisors, and client handholding and service is a huge requirement."

Levin believes that older advisors need to do some soul searching about their expectations for younger advisors and their place in the industry's next phase. 

"That's part of the navel-gazing our generation is doing, and sometimes we put it in the context of the things we did, and we assume the next generation can't do what we did. But that's an unfair way to think about it.

"What needs to happen is my generation should look at itself and ask what can we do to make the next generation more prepared to run these businesses differently than we did," he says. "And to accept the fact that in some ways those businesses will be better and won't be run the way we'd do things. So we need to get more comfortable with change."