Retiring older male advisors are providing younger independent financial advisors, especially women, with a major chance to progress.
That is a point of emphasis for David Wood, founder and chief visionary officer of Gateway Financial Partners.
"The average financial advisor is a 65-year-old white male," Wood tells ThinkAdvisor in an interview. "There's an overwhelming need for advisors to pick up some of these practices from retiring advisors."
The "change in culture is going to help more women succeed," he argues.
Gateway, an office of supervisory jurisdiction of LPL Financial in Glastonbury, Connecticut, provides services to independent advisors in 27 states. The hybrid RIA supports more than 170 financial advisors overseeing $6.5 billion, with two-thirds operating under the Gateway brand.
Helping independents grow is chief among Wood's goals; in the past two years, Gateway has helped 25 advisors acquire other practices.
Its equity ownership program for employees and advisors, The Gateway Growth Partnership, introduced in June, provides assistance in that effort: Gateway takes a 15% to 20% revenue stake in the financial advisor's practice in exchange for a combination of cash and equity in Gateway's holding company.
Some advisors are using that money to make acquisitions.
In the recent phone interview with Wood, who was speaking from Glastonbury, he opines that now is "the best time ever to be in the financial services space" because of industry consolidation, more people needing financial advice than ever before and a third of advisors planning to retire in the next decade.
Here are highlights of our conversation:
THINKADVISOR: How have you mainly helped your advisors grow?
DAVID WOOD: Through mergers and acquisitions. We've probably helped 25 advisors in the last two years [acquire] other practices.
That's going to continue as a third of this industry retires. There's an overwhelming need for advisors to pick up some of these practices from retiring advisors.
Will that result in more women becoming financial advisors?
Female financial advisors are going to be one of the fastest-growing segments of financial advice because we're in a relationship business, and women are really good at that.
The industry has been saying that for about 20 years, and yet women make up only 27% to 31% of all advisors. The proportion has grown slowly. Why would it pick up speed and expand?
We've had a very male-dominated industry, and now those men are aging out. The average financial advisor is a 65-year-old white male.
As these advisors retire, we're seeing a big [increase] of mergers and acquisitions.
With advisors' retirement over the next 10 years, that's going to create a void and also an opportunity: Women will continue to step in.
One of the big shifts is that a lot of older advisors who grew up in the business selling product are starting to retire.
This creates a change in the culture, which is going to help more women succeed.
Which change?
The industry has moved from selling product to a relationship business. There have always been relationships involved, but older advisors — myself included — were trained to sell stuff.
Now we're more than ever in the planning and relationship business.
Women are better at that.
