By now it’s cliché—the 401(k) advisor industry is overwhelmingly male, pale and stale. The average age of 401k professionals is somewhere in their 50s, and too many have done nothing to plan for their own retirement (ironic).
New and depressing research from Cerulli Associates confirms it all.
The Boston-based research and consulting firm finds that only 11.7 percent of advisors are under age 35.
While awareness about continuity and succession risks has increased in recent years, more than one-quarter (28 percent) of those within 10 years of their anticipated retirement are still unsure about their succession plan, Cerulli notes.
“Financial advisors are aging, and the industry has been scrambling to find a proactive solution to this demographic problem,” Marina Shtyrkov, a research analyst at Cerulli, said in a statement. “Advisors who are 55 years or older manage 36.9 percent of assets and comprise 39.2 percent of headcount.”
Filling the pipeline with quality talent poses a challenge for broker-dealers RIAs, she adds, and they should consider how existing compensation models, work/life balance expectations, training support, mentoring, and company culture meet younger generations’ needs.”
“As a critical succession cliff approaches and aging advisors begin retiring in greater numbers, younger advisors and candidates will increasingly wield stronger leverage,” Shtyrkov explains. “Firms will need to take their preferences into serious consideration because this next generation will ultimately shape the financial advice business.”
Building and managing a team poses a challenge for advisors, she concluded, and therefore beginning early is key.
The skillset needed to perform well as a financial advisor differs from the one needed to be a good leader and manager. Advisors who excel in their day-to-day work with investments or financial planning can struggle to groom junior advisors and hire quality staff. A lack of clear communication regarding expectations, goals, and a path for growth can derail junior advisor hiring attempts.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
