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The Next Generation of Retirement Plan Advisors

A generation of financial advisors is retiring en masse. According to Cerulli Associates, more than a third of advisors are expected to exit the industry in the next 10 years, resulting in an estimated $7.8 trillion in assets changing hands.i When it comes to succession, nearly a quarter (22%) of those close to retirement don’t have a plan.ii To compound this inflection, the industry is struggling to recruit and retain those who will be properly prepared to inherit the business.iii

While the retirement advisory community is a subset of this population, the transitional trend persists. We spoke to top retirement advisors to gain their insight on:
• The Future of the Industry
• Detractors and Draws to Applicants
• Advice to a Rising Generation of Retirement Advisors

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The Future of the Industry

The coronavirus has created a crisis felt at every level of society. Recovery will happen, but the changes to industry operations and our collective psyche will be difficult to foretell. However, the following changes, aligned with evolutions identified before the crisis seem likely. Tomorrow’s retirement advisory marketplace will be driven by technology, dominated by aggregators and focused on an expanded skill set in an effort to be competitive while serving evolving employer and employee needs.

  • Technology is a tool, not a strategy, and it can’t replace empathy or experience — organic elements that are critical to a business centered on people. Says Brad Larsen, managing director of NFP, “If advisors use technology correctly, it will further their career, not threaten it.”
  • Firms like 401(k) Advisors Intermountain, CAPTRUST, Clearview Advisory, NFP, M3 Financial and Qualified Plan Advisors believe they have struck the right balance between having the scale to offer support and the oversight to create controlled environments for failure.
  • Embracing failure and resilience as coachable skills and evolving firms’ employee composition and capabilities to be more reflective of the clients served (and the services and solutions required) could become competitive advantages for retirement advisory firms.

Detractors and Draws to Applicants

Given top retirement advisory firms’ awareness and proactive management of key industry issues, like technology, training and a “do-it-for-me” retirement investment future, why is it so difficult to recruit and retain talent? The advisors we interviewed identified 5 areas that may appear like impediments to candidates, but could actually offer professional opportunities:
1. Exploitation vs. Empowerment: The Great Recession of 2008 tarnished the reputation of the financial services industry. The coronavirus crisis will create new associations for Americans, but regardless of market climate, retirement plan advisors believe they have an opportunity to educate and empower plan participants, with the goal of bettering individual outcomes.

2. Complexity vs. Mastery: From a complex and changeful regulatory environment to a vast universe of product and provider information, the retirement advisor space is intricate and evolving — and the fiduciary stakes are high. While the learning curve may appear steep and never-ending to some, for the highly curious and not-easily-daunted, the industry represents an opportunity for mastery. To be an expert in a generalist’s economy can being a meaningful differentiator.

3. No Instant Gratification vs. Tangible Gratification: Converting long-lead sales can be overwhelming, with little immediate reward. “The ‘I could make more money sooner by doing something else’ attitude is where we lose people,” says Corby Dall, president and managing director of 401(k) Advisors Intermountain. Those who will succeed in the industry will have stamina and an appreciation for observable results.

4. Obsolescence vs. Opportunity: For some, financial services is seen as a fading industry, but for those who take a closer look, the opportunity for innovation and technology intersection is clearer. Karen Casillas, vice president and financial advisor at CAPTRUST, recounts speaking to sophomore women at University of Colorado at Boulder: “When I talked about what I did, I could see people physically cringe. Like ‘You work with stocks and bonds in business?’ And what was so funny to me was these were STEM students — applied mathematics, aerospace engineering majors. Once I started to talk about statistics, hard math, glidepath research, equity exposure — there were sparks.”

5. Wealth vs. Value: Several of the advisors we spoke to don’t like the term “wealth management,” believing it’s not reflective of the work they do. Says Katie Green, lead consultant at Clearview Advisory, “Our practice isn’t built around the ‘wealthy.’ We’re helping the everyday American create wealth.” The opportunity for rising professionals to create value — the sort of value that reduces personal bankruptcies, lessens homelessness, alleviates the strain on state services, inspires individuals and buoys communities — is a different proposition than managing wealth, but no less rich.

Advice to a Rising Generation of Retirement Advisors

In considering industry challenges through the lens of opportunities, we asked advisors what advice they would offer to a rising generation of retirement advisors.

The overall message was consistent – and appropriate for a world experiencing true upheaval. New candidates must have the empathy and interest to invest in relationships (with clients and professional peers) as well as the patience and discipline to embrace ongoing industry learning. Here is a sample of their wisdom:

  • Be dynamic, pivoting with the pace of industry change
  • Take a long view; retirement savings takes a professional lifetime to accrue and it weathers a series of market cycles. Apply that long-term thinking to the advice you give.
  • Commit to serving others

In closing

Firms that focus on recruitment and retention by offering comprehensive training programs and an infrastructure that supports flexibility (including working remotely) as well as by prioritizing building career pathways will be better positioned to flourish in the future of the industry.

But the rising professionals who are ready to own the challenge will be the true victors.