The demographics of the financial advice industry are one of its biggest threats. As the population ages, demand for advisors’ services is increasing. At the same time, much of the advisor workforce is moving swiftly toward retirement. Sound familiar? The industry’s talent gap isn’t breaking news. It also isn’t going away.
The talent issue is significant and it is starting to have real impacts. The Department of Labor projects that employment of financial advisors will grow 15 percent by 2026 (much faster than the average occupational growth rate), which made financial advisor one of the top 10 toughest jobs to fill in 2018, according to CareerCast. High demand and growth for our industry is exciting, but it also hits on a pain point: new talent hasn’t flocked to our space over the last couple of decades and we’re starting to show our age. Only about 12 percent of advisors are under age 35 while advisors who are 55 years or older make up about 39 percent of advisor headcount, according to Cerulli Associates.
There are reasons for the demographic imbalances within our industry aside from our own complacency. The world of work has changed drastically over the last 20 years and trust within the financial services sector has declined. It might feel like an impossible challenge to address at the individual firm level, but there are concrete steps that advisory teams and IBDs can take to turn the tide. Here are some actions to consider taking in 2019 to help fill the talent gap:
Swipe Right On Technology
Savvy young candidates are looking for firms that take a progressive approach to technology. They seek workplaces that provide the right experiences and tools to do the job well. As part of your long-term approach to talent development, consider an assessment of your firm’s technology capabilities. Investing in digital technology can increase your firm’s appeal to new talent while also improving efficiency and client experience, meaning you’ll kill two birds with one stone.
Go Beyond Your Go-Tos
We not only need to attract fresh talent, we need to ensure that the talent pool reflects the diversity of the client base of the decades to come. Growing diversity is not an empty platitude. It is a reality. A 2017 report from the United States Census Bureau brings things into focus. Between 2015 and 2016, all race and ethnic minority groups grew faster than whites. Additionally, non-Hispanic whites were the only group in which deaths outpace births, experiencing a natural decrease of more than 163,000.
Will your team include a diverse mix of people who can emotionally connect with and guide tomorrow’s clients through their financial journey? For most firms, the answer is no. According to the CFP Board Center for Financial Planning, less than 3.5 percent of CFP professionals in the United States are black or Latino.
When looking for your next new employee, make it a priority to source a diverse group of candidates. Consider looking beyond the recruiting channels you’ve used in the past. Area universities, community organizations and social media groups could offer new and more diverse candidates.
Let Them Choose Their Own Adventure