Innovation | 01.10.19
Where Will the Next Generation of Advisors Come From? Grow Your Own
Financial institutions continue to churn advisors, losing 8–20 percent every year and replacing them, only to lose a similar number the following year. The net effect is barely any growth in advisor headcount, despite growing opportunity in the institution’s client base. Consequently, the advisor deposit and household coverage ratios are thinning out. Yet, Kehrer Bielan Research has consistently found that the typical financial institution needs to almost double its advisor headcount to meet the investment needs of its clients and realize its potential revenue.
But the recruitment of advisors is challenged by shrinking supply. The advisor population is aging: Thirty percent of advisors are over age 70, and there are more advisors over age 80 than under age 30. The traditional sources of advisor training have dried up, and the press tells us that the younger generations are not attracted to the profession.
To help financial institutions close this shortfall in advisors, Cetera Financial Institutions commissioned Kehrer Bielan Research & Consulting to:
- study how financial institutions find new advisors,
- identify banks and credit unions that are having success recruiting both first-career and second-career advisors, and
- distill best industry practices.
We found that there has been a sharp increase in firms developing advisors internally.
In the past three years, there has been a marked decrease in poaching advisors from other financial institutions to developing advisors internally through internships, promotion of licensed bankers and sales assistants, and associate broker programs. Firms are now four times as likely to grow their own advisors and 43 percent less likely to recruit from another bank or credit union.
The Cetera-sponsored study identifies best practices in growing your own advisors. Click here to obtain your complimentary copy.