Advisors Are Getting Younger: FA Insight
By: Emily Zulz - September 06, 2017
The financial advice industry is getting younger, according to the 2017 FA Insight Study of Advisory Firms: People & Pay.
The report from TD Ameritrade Institutional, which acquired FA Insight in 2016, draws on data received from 388 financial advisory firms. It finds that the median age of lead advisors has slipped by three years to 47 since 2015.
The study also finds that the median years of experience for an advisor has also declined, to 18 years from 20 years in 2015.
Vanessa Oligino, director of business performance solutions at TD Ameritrade Institutional, attributes this to the fact that more firms are hiring recent college graduates to fill client-facing and revenue-generating roles.
“We think what we’re starting to see is advisors starting to invest in that next generation of talent,” she told ThinkAdvisor.
According to the study, 31% of firms are targeting recent college graduates for revenue-generating roles.
“These things together are pointing to what we think is hopefully a positive trend," she said. "Where after all these years of talking about the talent shortage and you need to start thinking about the next generation, [advisors] are starting to move in that direction now.”
Industry research has shown that a wave of baby boomer retirements would likely outpace the expected arrival of young advisors, resulting in a shortfall.
Cerulli projected in its 2014 Advisor Metrics annual study that nearly 25% of advisors will leave the profession within the next 10 years, and its 2013 Metrics study found that for every eight advisors leaving the profession, only three new advisors are ready to take their place.
The FA Insight study suggests that this talent gap may now be making its presence felt. The study finds that more than two-thirds of firms reported that hiring for revenue-generating roles — lead advisors, associate advisors and business developers — is becoming increasingly challenging.
“It’s just getting harder and harder to recruit from their traditional sources for revenue-generating roles,” Oligino said. “So traditionally what an advisor would do is go out and lure someone from a competitor. Somebody with an established book of business with decades of experience, someone who can hit the ground running right away generating revenue. And it’s just getting harder and harder because people are starting to retire, or they’re not interested in moving because they are three to five years out from retirement.”
As a result of this impending talent shortage, Oligino believes that the recent college graduate pool will continue to grow and become a primary source for advisor recruits.