Tom Nally, the new President of TD Ameritrade Institutional said it is critical for the industry to focus on the next generation of investors and advisors.
“There is a tremendous generational shift we are starting to see already,” Nally said during a sit-down interview at the TD Ameritrade Institutional Elite Summit in California. “By the end of the decade, the next generation, will have over $28 trillion, up from $2 trillion. It is incredible.”
If advisors continue to ignore the next generation, they will not be prepared for tomorrow, he said. Some advisors will wait for the assets to transition, but by then it will be too late, as Gen X and Gen Y will already have advisor relationships.
At a time when many wirehouses are purging younger clients that don’t have a sizable amount of assets, Nally said that RIAs can begin bringing those clients onboard, solidifying the future of their businesses.
According to the April Cerulli Edge report, wirehouses lost 11% of their market share from 2008 to 2011. Nally said most wirehouses are so focused on ultra-high net worth clients that they are “disincenting” reps from working with accounts with less than $250,000.
With the opportunity to beat their competitors to the punch and the upcoming asset shift, advisors need to make a cultural shift, he said.
This process begins with the way in which advisors communicate. Nally said that Social media and mobile technology are very popular with younger generations, but advisors have not fully adopted this communications revolution.
“Advisors have to communicate the way [younger clients] like to communicate,” he said. “It is not really an option. The next generation is going to demand it so advisors need to embrace it.”
Nally said that he thinks now is a great time for advisors to bring on a junior advisor, if their firm does not already have one. A younger advisor is likely to connect better with younger investors, he said, and most advisors do not have a well-thought out succession plan.
“Sixty-two percent of our advisors have a formal succession plan,” he said. “They are getting the message, but many of these may not be implementable.”
Bringing on the junior advisor is like hitting two birds with one stone, but it might not be as easy as it sounds. Advisors that do have younger staff still need to improve what they are offering them to fully invest in their future.
“Some advisors are bringing junior advisors onboard, but we are seeing turnover,” Nally said. “The junior advisors do not see a career path and our study shows that 40% of advisors offer no leadership development for junior advisors.”
Mike Byrnes is the founder of Byrnes Consulting Read more at
