Would it surprise you to hear that currently there are more financial advisors over the age of 70 than there are under the age of 30?
That’s exactly what Cerulli Associates published in their U.S. Retail Investor Advice Relationships Report of 2018. While this statistic alone isn’t cause for major concern, when it is coupled with other statistics it shines a light on a real problem. Put it together with the fact that more than 40% of financial advisors are planning to retire over the next ten years, and suddenly you see the issue. According to consulting firm Moss Adams, there will be a shortage of financial advisors of more than 200,000 headcounts by 2022.
There are many theories as to why this is happening. Future Workplace and Randstad surveyed millennials and GenZers and found that a mere 10% are interested in careers in finance. What’s more, of the small percentage of young workers that banks have been able to attract, only 10% of them plan to stay in the industry long-term. This is a generation that came of age during the 2008 financial crisis. They have grown up watching movies like The Wolf of Wall Street, The Big Short, and the dozen documentaries about the crash. They trust technology with their money versus banks, so why would they trust banks with their careers?
What Worked Then Won’t Work Now
In a different era, it was easy to seduce a college graduate to pursue a career in finance with its fancy clothes, cool appeal, and seemingly limitless income potential. Today, younger workers care about different things when it comes to their employment. They want flexibility, values reflected in their workplace, career development, diversity of job role and people, and creature comforts. These are not typically things people think about when imagining the day-to-day banking life.
While no one has pulled the panic cord in the public eye at any large financial institutions, many new initiatives are springing up from this impending shortfall of talent. There are now large institutions working with universities across the country to create more financial programs, from undergrad through Ph.D. They’re rethinking how they view their employee base as a whole and are starting big shifts that will cause changes for years to come.
It’s Time for a Workplace Makeover
We don’t believe it’s too late. On the contrary, there are fast and lasting actions that financial institutions can take to change the face of their workforce.
Work-life balance: Finance is often depicted as a caffeine-fuelled career full of people who never see their families. Many jobs in finance today require in-office or branch time on a daily basis. Younger generations are more interested than ever in flexibility. There is an opportunity to allow workers to spend time doing things like paperwork in a home office environment. The other aspects of work-life balance are 40-hour workweek, family medical leave, and good amounts of vacation time – all of which are largely seen as non-existent in the finance world. By allowing employees the flexibility to accomplish work where it best suits them, you’re helping make the younger workforce feel more at ease.
Opportunity to learn: As the financial workforce retires, so does their tribal knowledge. The idea of going into a field where there is no one left to mentor is daunting. Mentorship programs are a great way to entice young workers into finance careers. Utilising technology is a great way to help younger employees get the training they need to learn and grow in the financial industry. It is also a great way for those retiring to leave behind a legacy.
Diversity, equity, and inclusion: Strengthening diversity, equity, and inclusion efforts should be a top priority at your organisation if it is not already. Diverse teams do not only lead to better outputs, but happier employees and a richer culture more likely to attract top talent. Many underrepresented minorities don’t see themselves in finance simply because they literally don’t see themselves in finance – this can begin to change through actions such as establishing an unwavering commitment to diversity initiatives, building a diverse talent pipeline, and fostering a culture of that celebrates differences.
Career progression: The financial services industry is actually positioned for growth at rates double that of the average industry. Couple this growth path with the current financial leadership retiring, and there is an incredible amount of progression a new financial employee could see. However, that is not the image we see. When approaching younger workers at career fairs and universities, make sure to explain how much opportunity exists in the coming years. Mention that financial advisors are in the top 20 for highest paying careers, but don’t forget to tell them how they can grow as an individual within your organisation.
Embracing technology: Obviously, as a technology company, we’d say that you should embrace technology. The reason why almost 50% of younger workers want to work in technology is that by its very definition, technology is innovative. Technology is new, exciting, and hasn’t been around for centuries. While we’re many years away from the finance industry becoming entirely technology-driven, there are steps you can take to give younger workers technology to do their jobs. Financial institutions must find a way to jump through the hurdles of moving from antiquated on-prem systems and paper brochures into the digital present.
Here at Highspot, we believe that new financial advisors that have an easy way to onboard and access and send content to their clients will not only be more interested in the roles, but also find greater success. This goes across the gamut of technologies you use, from phone systems to point-of-sale. It’s time to get ahead of the curve – discover how Highspot can help modernise your organisation’s technology.
