Once you’ve attracted them how can you keep them? This week, I’ll share what our research points to as good ways to develop and retain young, new recruits.
The SEI Advisor Network surveyed nearly 300 millennial advisors, and I’d like to leverage some of this research to shed light on this topic. Because without young talent, let’s be honest, your practice cannot sustain beyond one generation of ownership, unless you take measures to foster the next generation of management within your firm. You didn’t work this hard to build the business that you have today just to let it fall apart after you leave, did you? I know many of you have built a legacy that is worth carrying on beyond your retirement from the industry. You deserve that. Your clients deserve that. The industry as a whole deserves that.
Help them…and maybe they’ll help you too.
If you want to develop and retain young talent, you need to foster an environment that enables them to test out and develop the skills they would need to become the next generation of owners. You need to look for opportunities to let them try out new concepts or take ownership of new initiatives that they are passionate about. Unless you give them the opportunity to succeed or fail, you’ll truly never see or know if they’re management material. And this isn’t just about giving the millennial advisor what they want – our research tells us that much of what they’re interested in could also help out your business as well.
For one, they could help you engage and serve that next generation of investors, so your book isn’t so concentrated in HNW retirees who are aging and distributing assets. If you want a long-sustaining practice, you will need younger clients in the accumulation stage of their lives as well. Some good news for you: an overwhelming majority of the millennial advisors are very interested in serving their peers. Of those surveyed, 39% of them are already successfully serving millennial investors today and another 35% of them are at least trying to find a way to successfully serve millennial investors.
Allow them to help advance your practice in this age of technology. Of those observed in our study, more than 6 in 10 millennial advisors indicated that they believe robo-advisors won’t replace advisors, but that that this technology could definitely help financial advisors in their profession. Even though robo-advisors are commonly associated with lower-end, younger investors, incorporating this type of technology into your service model not only could help drive efficiency within your business, but it could also create for a better client experience and service model for some of your existing clients.
Related: Are Millennials Going to Pursue a Future in Financial Services?
Don’t wait until it’s too late
Judging by the results of our study, interest level in starting a financial advisory firm increases around 26 and peaks when millennial advisors are in their 30s. Advisory firms tend to wait until it’s too late to discuss career tracks with their para-planners or young employees, and they’re unaware that there could be a real opportunity for a management role in the future. This doesn’t mean that you have to make promises before you’re fully convinced this employee is management material. Rather, you need to set goals, not just for the individual but also for the firm as a whole. Explain that if the young advisor wants to be a leader, they need to demonstrate that they get the big picture and can help contribute to the overall success of the entire business.
Moreover, discussion about potential partnership tracks or succession planning shouldn’t wait until your employees are well into their 50s and 60s. These discussions need to happen earlier on and they need to be real, genuine discussions. You can’t just mention in passing that maybe they’ll take over whenever you retire. Because each year they’ll continue to hear those words “when I retire” come out of your mouth, and then they’ll wonder when are you going to actually retire? It’s a tale as old as time in our industry – the young para-planner starts out his or her career at an established firm, learns the ropes, then after years and years of waiting finally jumps ship to start his or her own business… probably taking your clients with them as well.
Our research indicates that smaller firms, with 1-10 employees, tend to have better luck with fostering young talent that wants a management role. If you want to retain the young talent that you have, show there is a long-term career opportunity with your firm. With these discussions, you’ll not only have to have some complicated discussions around what your succession plan might look like, but you’ll also have to take a hard look at your compensation structure and how it incentivizes your young employees to not just produce but to contribute to the overall profitability of the firm. I never said it was going to be easy, but it’s definitely important if you want to solidify the future of your business.
Here’s the bottom line
Foster a workplace where you enable young talent to thrive and develop. Allow them to take on key initiatives that they’re not only passionate about, but that also help your firm. Use these moments to test their entrepreneurial-like skills and to look for whether they have what it takes to be a leader. Most importantly, make them aware that there is a real long-term opportunity with your firm. Set a career track with meaningful goals that’ll not only help the young employee with their own personal development, but that’ll also contribute to company-wide business goals. These are the keys to retaining young talent.