If the business doesn’t start “attracting more Gen Y [advisors], it will turn into a crisis.” In fact, Moore intimated that it already might be too late.
Rooney was less alarmist in his outlook. Millennial advisors, given their very nature, will be “more inclusive.” Several B-D execs in the audience appeared to concur, noting the financial advisory profession remains a second career for many, and most millennials are just reaching the age where people traditionally consider switching careers.
If there is a shortage of advisors, there is an ironic surplus of investors looking to invest in every aspect of the advisory world, from financial technology to actual B-D and RIA firms. “It’s easy to find the capital to do transactions,” Rooney said. Getting the parties to agree on multiples isn’t as easy.
Consolidation is an embedded trend that spans many industries. Moore noted that private equity firms, once seen as transaction-driven entities looking for quick exits from their investments, are becoming more like strategic partners with longer investment horizons.
Rooney was asked about Commonwealth’s envied culture, given that it has remained independent for nearly 40 years and is known for high levels of advisor and client satisfaction. “A lot is serendipity,” he explained, adding the firm’s principals had a common vision.
Moreover, the firm is very selective, or “self-selective” in Rooney’s words. “We just want the advisors who fit our model and we’re content to grow 10% to 15% a year.”