Over the past few years the financial services industry has been struggling with the surging demand for financial advisors. Rather than looking to recruit fresh college graduates, financial services firms have largely ignored this demographic and instead have engaged in bidding wars with competitors for experienced advisors.
A recent Pershing study highlights the industry's dire need for new advisors, and aims to help firms understand how Gen Y can solve the industry's recruiting woes.
Here are six key takeaways from the study, titled Regeneration: How Gen Y Could Revitalize the Industry -- and Bring New Life to Your Firm.
1. Advisor Shortage
Bottom line: There are not enough Gen Y advisors replacing boomer advisors. With a growing number of financial advisors retiring yearly, not enough young talents are stepping up to the plate to replace them. The financial industry will need to add a total of 237,000 new advisors across all business models over the coming decade to meet projected market demand, Pershing finds.
And only 7% of college graduates from 2013 expressed interest in pursuing a career as a financial advisor, according to a study conducted by Pershing.
With this growing disparity between new recruits and retirees, it is absolutely crucial for businesses to turn their focuses toward expanding the pool of Gen Y advisors to recruit from.
2. Reasons for Hope
Pershing sees an opportunity, though, in the sizeable amount of college graduates who are interested in working in the financial services industry. With more than 7.2 million students obtaining a degree each year in the U.S., those students could represent a fresh annual influx of over 500,000 interested new prospects, the study argues. The responsibility falls on firms to transform that potential into measurable action, Pershing concludes.
3. Ideal Career for Gen Y
Pershings study suggests that a career as a financial advisor meets a large percentage of college graduates requirements for an ideal career. Advisor careers meet several of these top criteria: a job that cannot be outsourced, a career in a growing field, a job where people willing to work hard can earn more money and a career that has a positive impact on others peoples lives.
Financial advising may in fact be most college graduates dream job -- even if they may not know it.
4. Gen Y Advantage
So what can Gen Y do for your business? Gen Y advisors often bring fresh new perspectives, new ideas and up-to-date skills that can help businesses prosper in todays new environment, the report says.
This demographic brings several things to the table that can help strengthen your business, Pershing finds, listing a number of positive Gen Y traits: adaptability, technological savvy, better organizational skills and better connectedness.
5. Recruiting Makeover
The key to increasing the number of Gen Y advisors in the pipeline is to change the existing recruiting model, Pershing suggests. Because many young graduates won't even know to look for advisor positions, job listings won't be enough to address the problem.
Pershing suggests that firms create programs aimed at bringing Gen Y into the field: scholarship programs for financial planning students, career day attendance, participation in campus competitions, and summer internship and training programs. Another idea: Get involved with the children of both clients and "centers of influence," discussing career options and networking through them.
6. Cultural Shift
To recruit and retain younger advisors, firms may need to rethink their own professional culture. Pershing suggests several changes: a greater orientation toward teamwork, salary-based compensation to attract risk-averse candidates, workplace diversity, formal mentoring and training programs. "Firms will need to retool the workplace to meet today's changing expectations.
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