As many financial advisors approach retirement age, the wealth management industry is searching for ways to draw more young people into the profession.
The need for an infusion of young financial advisors is urgent and immediate, said Joseph Maugeri, managing director of corporate relations for the Certified Financial Planner (CFP) Board of Standards.
"We have more CFP professionals over the age of 70 than under the age of 30," he said. "It's important that firms small and large see this as a problem that will only worsen in the short run."
As veteran advisors prepare to leave the profession, baby boomers — members of the demographic bulge that followed World War II — have begun passing their wealth onto their children, often called millennials or Generation Y. Over the next several decades, Americans will transfer about $30 trillion in assets to the next generation, CNBC reports.
While a huge transfer of wealth is good news for the industry, there may not be enough qualified advisors to meet the demand, if more people don't begin choosing financial planning as a profession.
Moss Adams has estimated that the industry could face a shortfall of more than 200,000 advisors by 2022. Citing research by Cerulli Associates, Financial Advisor reports that the average age of wealth advisors in the U.S is nearly 51, with 43 percent over the age of 55.
The industry needs to look for ways to persuade young people to try a career in wealth management, said Kate Healy, TD Ameritrade Institutional's head of marketing and industry sustainability. She oversees the company's NextGen student scholarships and university grants program.
"There aren't enough young people joining the industry because they don't know about it," Healy said. "We need to raise awareness."
Attracting millennials
One way to draw young people to financial planning is to show them that it's a rewarding profession, she said. According to a recent report by Gallup, approximately 73 million Americans were born between 1980 and 1996. This demographic is having a hard time finding satisfying work. They have the highest rates of unemployment and underemployment in the U.S. Only 29 percent of them feel engaged in the workplace.
Healy believes more young people would choose financial planning as a profession if they realized that it would give them an opportunity to improve other people's lives.
Because many of the millennials began to reach adulthood during the Great Recession that coincided with the mortgage market meltdown, they understand the consequences of not having a sound financial plan for the future.
"A lot of them saw their parents get hard hit in the financial crisis of 2008, 2009," she said.
The more support that young advisors receive from their firms at the beginning of their careers, the more likely these professionals are to experience lasting success, according to LIMRA. (Photo: iStock)
Promoting the profession
Andrew Marshall, an independent financial planner in Carlsbad, Calif., said advisors historically have been focused on sale of financial products rather than providing guidance.
