Older advisors are burning out their younger colleagues with poor management, prompting many younger advisors to look for employment elsewhere while driving others out of the advisory business completely. That's what Pershing Advisor Solutions CEO Mark Tibergien told attendees in a provocative speech at Pershing's annual Insite conference.
Among young, "next gen" advisors, the quit rate is increasing "by orders of magnitude," he said. He estimated that the rate at which younger people are leaving the business is about 25%, and more than half of these young professionals are looking to transfer into another line of work, underscoring his theory that they are being "ruined" as potential employees for other advisors as well.
Tibergien explained that these figures were based on a survey that interviewed employees of advisory firms a few years ago. The results reveal that this lack of professional management at many firms is undermining their long-term viability.
The upshot is that many older advisors will have no one to transfer their businesses to and will instead be forced to let them die. "All your clients are dying off as well," he added. Tibergien estimates that 12,000 to 16,000 of the 315,000 advisors and brokers currently working will retire every year for the next decade.
Do the math and that means the advisory business will need 237,000 new advisors in the next ten years to maintain its current number. Currently, only 21% of existing advisors are under 40 years old and only 5% are under 30.
Another reason for young advisors' disenchantment is lack of growth opportunities and the inability to develop themselves professionally. Tibergien noted that the "greatest indignity" one commits against another is to underestimate them by expecting "too little" of them.