We Must Have More Advisors

Today, too many Americans continue to feel uncertain about their financial future.

Over half of U.S. adults (54%) are anxious about their finances, according to my firm's annual Planning & Progress Study.

And unfortunately, many are not where they should be to feel financially secure.

More than 60 million Americans lack life insurance or are underinsured, creating a $12 trillion gap in protection and generational wealth.

To bridge this gap and help more people build their wealth through planful investing, we must come together to address an immense challenge: dramatically growing the advisor population to meet a growing client demand for financial planning in traditional and underserved markets.

The good news is this: Americans are more open than ever to working with financial advisors to build financial security through robust financial plans.

Our study found that 62 percent of Americans believe their financial planning needs improvement and nearly one in five said they didn't have financial plans or a financial advisor pre-pandemic but are now working with an advisor or planning to engage one.

This is a golden opportunity for financial advisors, and for the industry to expand its impact and help millions of people who have a desperate need for financial security.

However, the hard truth is that there simply are not enough financial professionals to meet this growing demand.

Total industry advisor headcount has been stagnant for years.

LIMRA says the number of affiliated or career life insurance agents has steadily declined over the past two decades, and according to J.D. Power, the average age of a financial advisor has climbed to 57.

Some believe that technology is the answer.

While it is true that technology is both helpful and promising, it's also become abundantly clear that "robo-advisors" alone aren't leading people to financial security.

For example, fin-tech insurers are struggling to acquire clients at a reasonable cost and they are finding that most consumers want and need to talk to a person at some point in the process.

Ultimately, financial planning is a people business, and we need more advisors in more markets serving more types of clients.

It also isn't a problem that we can compete our way out of.

Too often in our industry, company growth strategies are focused on recruiting talent from other firms rather than organically growing and developing talent.

That's a zero-sum game, and it doesn't add the capacity that our industry and our prospective clients need.

Five Growth Strategies to Increase Our Impact

To unlock this possible golden age of financial advice, we need to transform ourselves as an industry to attract and develop the talent needed to guide clients today and tomorrow.

Here are five critical ways we can make tangible progress if we come together and work intentionally.

1. Foster and invest in leadership.

Distribution directors cannot drive growth from a corporate headquarters hundreds of miles away.

We rely on local champions to lead the charge.

That's why we need to recognize local leaders as the drivers of growth they truly are — not simply an overhead expense.

We need to support the individuals who will drive this transformation and invest in their compensation and professional development.

2. Leverage diversity and inclusion.

It's no secret that the population of advisors does not reflect the ever-increasing diversity of our marketplace.

In 2021, 83% of certified financial planners were white and 77% were men.

If diversity, inclusion and culture become a growth priority, and — importantly — we set and track specific goals, steady progress can be made.

To collectively grow, we need to ensure that we reflect and serve the total marketplace.

3. Create compelling career paths to attract new talent.

This profession can't be a "one size fits all" career.

As leaders, we can create opportunities for people to work on teams or to work independently, in technical roles or client relations.

It is up to us to get creative with what this career can look like to attract new talent with different skill sets and expectations.

To future-proof our industry, we must inspire more people to join and give them opportunities to succeed.

4. Improve the advisor experience

We're all aware of how important it is to deliver a compelling client experience if we want to be competitive.

But what about the advisor experience? Getting the field experience right is essential to future success of our business.

Equipping advisors with the best technology empowers them to deliver the best client experience and also helps attract the next generation of talent who wants to work with the industry's best technology.

5. Prioritize a mission-driven, welcoming culture.

We need to accelerate the evolution of our industry away from stereotypes of the past and toward a more meaningful culture comprised of more than financial rewards.

Talent will flock to this industry if they see the impact they can make in people's lives and society.

To attract the next generation of advisors, we must prioritize building mission-driven practices around advisors who are motivated to serve others.

This is a good time for all of us to think about our collective futures — to consider the legacy we want to build for the clients we serve today and in the future.

Collaboratively, we can reduce the financial anxiety of Americans with thoughtful financial plans that help them lead more financially secure lives.

Our companies and advisors do incredible things every day, and if we work together, we can ensure we achieve our greater purpose — grow our impact by growing our industry.

Tim Gerend is executive vice president and chief distribution officer at Northwestern Mutual. This article is drawn from remarks he made at the recent 2023 LIMRA Distribution Conference in Orlando, Florida.