Many financial advisory firms are finding it necessary to hire young advisors to assist them in attracting younger clients and to help them adapt to the increasing use of technology in the financial services sector.
Younger clients represent a growing and attractive target market, which also stands to benefit from the intergenerational transfer of wealth, says Francis D’Andrade, vice president with Forstrong Global Asset Management Inc. in Toronto. Younger clients relate better to younger advisors, D’Andrade says, because “they speak the same language.”
In addition, like young clients, young advisors are much more tech-savvy than their older counterparts, and can assist you in fulfilling the growing demand for technology-related services.
“The demand for digital solutions goes beyond the needs of young clients,” says Ahad Ali, analyst with Octane Capital Inc. in Toronto. “It is critical for the survival of advisory firms, from lead generation and communication to reporting, marketing and client maintenance.”
Young advisors can also play an important role in the succession plans of an aging advisor population,” he says. They can help in client retention in day-to-day operations of their practices.
“If you cannot retain your clients and do not have the technology infrastructure in place,” Ali says, “[your practice] would be worth less when you are ready to retire.”
Here are five reasons why you should hire young advisors:
1. They are driven by a desire to succeed
Young advisors are hungry for success.
“Give them the right tools, training and guidance and they will probably go out of their way to prove themselves,” Ali says.
Young advisors would likely begin with a small book of business, or no book at all, so they can be acquired at a much lower cost than an experienced advisor. And if they’re happy working with you, you can retain them for a long time, supporting your growth as well as your succession plan.
2. They can help attract and retain young clients
Having young advisors in your practice can help you retain the assets that your older clients will leave to their heirs. Young advisors also can help you position your practice to serve other young clients.
Young clients typically connect better with younger advisors, enhancing your chances of retaining the assets being transferred, D’Andrade says.
3. They can open door to new niches
Young advisors can help you penetrate new markets, those niches to which they belong as well as those they are aware of.
“It is easier for young advisors to penetrate niches of younger clients,” Ali says. And that includes clusters of young high net-worth clients.
“Birds of a feather flock together,” Ali says. Young advisors might have the same social pursuits, experiences and views about money as the young prospects, he says.
4. They are easier to integrate
Young advisors might have their own way of doing things, but once they understand your objectives, they are generally adaptable. “You must make sure they understand your values and what you expect of them,” Ali says.
He advises allowing some independence: “Give them flexibility to implement things in the way they believe will work.”
That flexibility is especially important when it comes to dealing with clients in their age group. “Supervision must be at a distance,” he says. “They don’t mind being measured by their success, because they are driven by it.”
This is the first part in a two-part series on young advisors.
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