The next two decades are set to see a sweeping shift in American wealth, as it transfers not only from baby boomers to millennials but increasingly from men to women. By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers currently possess according to a study by McKinsey. For RIAs nationwide, now is the time to develop the next-generation and female talent who will serve as financial advisors for this new landscape of wealth.

It’s no secret the financial services industry has traditionally been dominated by older men, partly because American wealth, in general, has historically been controlled by this demographic. Currently, men are the key financial decision-makers in two-thirds of affluent households. However, the landscape is already shifting. Compared with five years ago, 30% more married women are making financial and investment decisions. Just as older male clients have typically felt more comfortable with older male financial advisors, younger and female clients will likely feel they can relate better to younger and female advisors.

Personal Perspective
I serve as the president of a Los Angeles-based independent RIA that was founded in 2007 and has $2.2 billion in assets under management. Over the last several years, we’ve built a team composed largely of next-gen advisors who drive our growth and innovation.

Speaking from personal experience, I started as a 20-year-old college intern at our firm, working my way up from an analyst role to become president last year at age 27. My rapid progression was only possible because our managing partners have created a culture that emphasizes recruiting young advisors, putting them in positions of responsibility early on, and encouraging high achievement.

40% of our advisors are under the age of 40 and 50% are female. Compare these statistics to a recent survey conducted by the Certified Financial Planner Board of Standards, Inc., which indicates that 72.2% of CFP professionals nationwide are age 40 or older and 76.8% are male.

Addressing The Issue
Why are there so few next-gen advisors in the industry? For the most part, we don’t believe it’s because of a barrier to entry. Plenty of large banks and brokerage firms have recruiting programs targeting young advisors. But there seems to be a barrier to success because not many of those new trainees become successful long-term advisors.

Perhaps that’s due in part to a lack of mentorship and collaboration. Another issue at larger firms is the high sales expectations placed on next-gen advisors, who are almost destined to fail when judged by such harsh measures. From the outside looking in, it appears that many of the training programs offered by bigger firms are prime examples of what not to do. Instead, RIAs should focus on identifying next-gen advisors with great potential and surrounding them with extensive tools, resources and support.

That is not to say sales goals shouldn’t be emphasized with younger advisors, just that equal emphasis should be placed on providing one-on-one coaching and training to help them reach those objectives. Additionally, many larger firms look only at the end result, whereas our firm tends to provide next-gen advisors with a much longer runway if we see that they’re showing great dedication, but the results aren’t there yet.

It’s also important to offer opportunities for younger advisors to add value beyond bottom-line sales, such as by partnering them with existing teams to help service current clients. In this way, they can assist with compiling financial planning information and play a supporting role in addition to focusing on inbound sales.

Within the demographic of next-gen advisors, RIAs should emphasize identifying female talent specifically. Over the years, there has been a fundamental lack of education for young women about opportunities in financial services and how rewarding this industry could be for them. Fortunately, that’s starting to change and independent firms like ours recognize not only that women can make great financial advisors, but how important it is to diversify staff with a strong female presence.

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