What’s the Future of Financial Advice?

March 20, 2017 By Signator Investors


Low angle view of happy businesswomen using smart phoneWhen I discuss the future of the financial advisory space, I always point to succession planning being a key to developing the next generation of financial advisors.  However, these questions still remain: What does that next generation of a financial advisory firm look like?  How do we attract talented, innovative, and motivated individuals to this industry? 

There are some important trends happening inside the industry that will help answer these questions and shape the future of the financial advice space:

  • The aging population of current financial advisors.
  • The introduction of technology and digital advice tools.
  • Regulatory changes designed to increase transparency and eliminate conflicts of interest.

The aging advisor population and transition of their practices creates an opportunity for the next generation of advisors.  However, its technology, regulatory changes, and client expectations that will determine what these practices and the next generation of financial advice looks like.

I believe the future of financial advice firms will be teams, that engage, interact, and provide advice to clients in multiple ways throughout a client’s lifecycle.  These teams will be comprised of multiple generations of advisors to provide advice and service multiple generations of clients.  This model will allow firms to integrate younger advisors into an advisory practice following a support, associate, and lead advisor model, with these lead advisors ultimately growing into equity partners.  Revenue to the firm will be primarily generated through the planning and advice provided to the clients versus the products sold. This fee-based recurring revenue model will allow firms to provide more consistent compensation to new advisors and staff, and ultimately increase the overall value of their equity in the firm.  This approach will attract future advisors that are interested in making a difference in a client’s life and view their work as a career instead of a sales job.

So, what do firms need to do to attract smart, talented, and caring future advisors?

1.) Recruit more women financial advisors. According to Cerulli Associates, today, only 16% of financial advisors are women, and 86% of current women advisors believe an aversion to an aggressive sales culture is a major factor in discouraging other women from pursuing financial advising. It is important that women understand the value they bring to the industry and that being an advisor is more about building a relationship with the client than acting as a salesperson. According to the same Cerulli study, the primary reasons for new women advisors joining the industry is the desire to help clients achieve their goals and an interest in financial planning topics.

2.) Recruit students specifically at schools that are partnering with the CFP Board to offer Financial Planning degrees.  These programs meet the educational requirements to sit for the CFP and prepare students for what it means to be a financial advisor. This approach will require an investment from the firm, however, the long term benefits of bringing in young talented CFPs will pay financial dividends for the firm in the long term.

The transformation of the financial advice industry is happening before our eyes. Firms that are able to adapt their models, create a culture of advice and planning, and build diverse teams will attract the next generation of advisors, and in turn, the next generation of clients to create a lasting business.



Malcolm Thomas is a Director of Recruiting at Signator Investors, Inc.

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