Average Age of Advisers Ticks Down

The financial advisory industry is getting younger as more firms hire recent college graduates to fill client-facing and revenue-generating roles, according to TD Ameritrade Institutional’s latest Financial Adviser Insights research report.

“People and Pay” reports that nearly one-third of firms are proactively targeting recent college graduates to fill such roles, and, as a result, the median age of lead advisers has slipped by three years to 47 since 2015.

There is evidence that these graduates emerge licensed and credentialed, but naturally “they are less productive than experienced investment advisers with an existing client base,” at least during their early years in the firm, the report says.

Vanessa Oligino, director of business performance solutions at the company, suggests that the big challenge for firms interested in recruiting a new generation of advisers is to “communicate the benefits they can offer, promote the growth prospects of a financial planning career and structure an organization that can help these new advisers develop and contribute to long-term growth.”

The research shows that the median firm expects to have seven full-time-equivalent employees by the end of this year, up from five just two years ago. And while advisers report that the pace of client growth has slipped to 6.4%, “that growth rate is still slightly above average for the nine-year history of the study.

Still, finding qualified advisers to work with clients is increasingly challenging, as over two-thirds of firms reported.

“As a result of this scarcity, more firms are outsourcing, forming strategic partner relationships and casting a wider net for talent,” TD Ameritrade notes. “Indeed, six out of 10 firms have realized labor savings as a result of some form of outsourcing.”

Besides outsourcing compliance and back-office functions, many firms now use third parties to offer additional services such as tax preparation and insurance, even if they advertise these services as client offerings, TD Ameritrade found. The study also shows that firms are incorporating a range of benefits and non-cash compensation such as flexible work schedules.

“A key offering for younger advisers is a clear career path and the availability of mentoring” from seasoned professionals, Oligino says.