A Task Force To Solve The Urgent Next Gen Challenge

The Financial Services Industry Must Solve The Demographic Crunch. We’re Assembling Industry Leaders To Explore Solutions.

If you’ve been in the financial advice profession for any length of time, you know that it is facing a demographic crunch. Even with more open discussion within the industry, the challenge is no less daunting.

The average advisor is over 57 years old, up from 55 just a couple of years ago, and almost 40% of them want to retire within the next 10 years.

On the surface, such numbers suggest that the next generation of advisors have an excellent opportunity to seize a moment like this – especially when you consider that baby boomers will transfer nearly $70 trillion of wealth over the next 20 years or so to their children and grandchildren.

The problem, of course, is that not enough Next Gen advisors are entering the profession to replace the ones who have plans to leave it. In fact, according to Cerulli, via RIA Intel, the number of new financial advisors will actually decline until at least 2025. After that, who knows what will happen?

Greater Sense Of Urgency

To be sure, many firms have made efforts to tackle the industry’s Next Gen problem over the years, whether by establishing formal internal programs, offering internships or teaming with advisors to make inroads in other ways with younger professionals. These efforts have been important in laying the initial groundwork.

Fewer Main Street investors may get needed advice

At the same time, there is still much work to be done. The stakes are too significant to continue to kick the can down the road and rely on tomorrow’s leaders to come up with solutions.

The repercussions include the advisor population not mirroring the public it serves, more investors embracing robo platforms that sometimes offer limited solutions and the financial services industry getting devalued as a viable career path for young professionals. Any way you slice it, it all adds up to fewer Main Street investors getting the professional advice they need to accomplish all their financial goals and aspirations.

Stepping Up To The Challenge

Thanks to the strength of our membership and the breadth of its expertise, I believe FSI is uniquely positioned to help address the problem. While we are undoubtedly best known for our advocacy efforts, we have a long history of devoting our energies to other areas important to our space.

In recent years, we have launched a DEI initiative, provided advisors access to vital insurance benefits through our CoveredAdvisor program and teamed with lawmakers to combat elder financial abuse and promote financial literacy programs at the state and federal level.

In a similar vein, we recently formed a Next-Gen Advisors Task Force, a 20-person group comprised of industry leaders representing firms of all sizes. It will work to create actionable strategies members can use to retain, recruit and train new financial advisors from a variety of backgrounds – which, in my view, is key to solving the industry’s looming Next Gen challenge.

While this is no doubt a heady goal and the journey is unlikely to be linear, the task force is committed to considering this challenge from a fresh perspective. For one, we recognize that more work must go into both understanding and eliminating the barriers that keep people from joining the industry. Also, we appreciate that we need to come up with strategies the independent channel has yet to consider, whether eliminating terminology that’s become quaint or taking a closer look at adopting an alternate approach to training and education.

We won’t pretend to have all the answers, nor can we guarantee that we’ll be able to provide a prescriptive road map for success. If nothing else, though, we can act as a clearinghouse of ideas that will one day form the basis of a collective strategy that will allow the industry to tackle its Next Gen challenge once and for all.

Dale Brown is the President and CEO of the Financial Services Institute.

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