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Finding and Keeping Millennial Advisors for Your Firm

By Crucial Clips     June 6, 2018
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FA-IQ, May. 8, 2018 

GARRETT KEYES, REPORTER, FINANCIAL ADVISOR IQ: Hello. My name is Garrett Keyes. I’m a reporter for Financial Advisor IQ. I’m here today with Kate Healy, the head of Generation Next at TD Ameritrade Institutional.

Do you think that it’s an issue advisors are facing in finding new millennial employees?

KATE HEALY, MANAGING DIRECTOR, GENERATION NEXT, TD AMERITRADE INSTITUTIONAL: It is. There’s a couple of reasons for that. I think they’re having trouble finding advisors and keeping advisors.

So they’re having trouble finding advisors because our industry has a perception problem, and people don’t know about it, and they don’t enter it. Advisors, first and foremost, should go to the financial planning programs at the schools, get to the program director, have the students over summers for internships. But that’s not enough, because there aren’t enough students in those programs to fill the need that we have for advisors.

So look for students who are in other programs that want to help people. We’re an industry of helpers. So look for the teachers. Look for the social workers, people that are studying more humanities-based courses. It’s great to find them.

But once you’re finding advisors for your firm, you need to also make sure that you are a firm that they want to work at. And so that means making sure that they know you’re going to develop them. And so that means there are career paths for them. You’re showing them a way forward. They have either a mentoring relationship or development conversations with you or someone on your team on a regular basis so they know that you’re investing the time in them so that they can grow in the firm as well.

They want to work with you, but they want to make sure that they’re working at a firm that allows them to grow and to also serve their peers. So you have to consider what your service model is and whether or not you are a firm that the next generation sees their friends being a client of, because that’s really important to them.

GARRETT KEYES: And why do you think it’s important that advisors build up this pipeline of young employees or young potential employees?

KATE HEALY: We know that advisors -- the average age is in their mid-50s, and they’re going to be retiring soon. But, more importantly, there is a generation of clients out there, the accumulators -- we talked about this -- the HENRYs, the high income, not rich yet, they need help. And they want to see someone who’s got similar life experiences to them.

So seeing advisors that are of their age group is important to them. They want to work in a team. They want to work with someone who understands their age. But they also want to work with someone who’s got more experience. So putting younger advisors and older advisors together is a great way for you to attract that next generation of clients.

We did research recently at TD Ameritrade, and in five years, 41% of clients will be millennials or Generation X. So it’s really important for advisors to really concentrate on the accumulators that are coming in to help sustain their businesses.

GARRETT KEYES: And kind of along the lines of what you were saying, do you think that younger advisors working as employees will help firms to better understand their client base?

KATE HEALY: Yeah. I think once you start to work with younger people, you start to understand them differently. That helps you understand who your client base could be. So it’s important to see what kind of life stage are they in, what are their challenges, what are they asking you for from an employee benefit perspective, from a pay perspective. That’s going to show you what kinds of challenges your clients can be having as well and help you develop real financial planning expertise around what your new clients could be looking for.

We know millennials are saddled with student loan debt. Are you offering debt counseling? Are you helping them with the problems at hand that they have now? It’s a little bit less about investment management the younger the clients are because they haven’t built up that wealth yet. But they want to build up that wealth, and they want you to help them do that.

You just have to look at it from a different angle, and it’s not just purely investment management. It’s the ancillary things. How can you help them grow their career so that they do make more money, figure out where the right place to live is. Should they buy a house? Should they lease? What are the different kinds of decisions they’re going to make around their retirement investments, their 401(k), traditional Roth? What are the kinds of considerations they should be thinking about? Having the expertise in your firm to be able to help those types of questions for the next generation is really going to make your firm attractive to them.

GARRETT KEYES: And what would you say to advisors that recognize this issue but have been facing troubles or struggling to find these young advisors to join their firms? What advice would you give them?

KATE HEALY: Start. Just start. I think that’s what stops a lot of advisors is, they say, 'OK. Well, it’s not happening. I’m still making money. I know my clients are starting to be in the decumulation phase, but we’re still doing well as a firm, so we’re not worrying about it.' Well, in five years, 2/5 of your clients are going to be those next generations. You’ve got to start working on this now. Five years is not long away.

If you want to hire younger advisors, there’s a graduating class that’s happening right now. Those students have been snapped up for probably a year or more through the internships that they have. So now you’re looking at juniors, who are probably at an intern right now. So now you’re looking at sophomores. You’re already two years out from hiring your next generation talent.

Thinking about this broadly, you need to think strategically about growing your firm. You need to think of what are the steps you have to put in place now to make sure you’re hiring talent in one, two, three, four years. It’s a long-term proposition.

So while it seems daunting, it’s not going to get easier. So you need to just start. And start by going to the program directors. Have relationships with them in the schools. And hire interns. It’s your best way to build out your pipeline of talent and get to know what the next generation is like from a work perspective.

GARRETT KEYES: And what risks exist for the advisors who don’t think they’re interested in devoting resources to bringing in young talent?

KATE HEALY: If you don’t have young talent in your firm, you’re going to be less likely to attract young clients to your firm. So advisory firms that want to build a sustainable business really need to start to think about this. There’s no businesses that are run that don’t have succession plans and development plans and client acquisition plans.

If you’re not thinking about the next generation of clients and how you can help get them by having the next generation of advisors, you’re not going to be in business for a real long time.

GARRETT KEYES: Great. Thank you for speaking with me today, Kate.

KATE HEALY: Thank you, Garrett. Appreciate it.