As the average age of the advisor force sits above 50, there is concern that the industry will not be able to bring in talent quickly enough to replace retiring advisors.
But D.A. Davidson president James Kerr is not so worried.
How many older advisors really want to see that book go away without finding some way to be compensated for it? Kerr said. There are financial incentives for this problem to take care of itself, and its going to be a natural process.
Because of the money at stake, Kerr thinks advisors will ultimately find a way to transition their clients and the problem will resolve itself. Good advisors, he said, will be motivated by client interest as well to seek out and recruit a strong candidate to whom they can transition their book of business. Firms can then funnel that talent into existing training programs, he said.
That person might be a daughter, neighbor, family friend or son or daughter of a friend, Kerr said, and you have to have a training program to be able to take care of that.
Kerr said that one of the main challenges for D.A. Davidson, which is based in Great Falls, Mont., and has around 450 advisors, is competing with some of the lucrative recruitment packages offered by the larger firms.
Theres a real concern that the amount of money that is being paid has distorted the competitive landscape, Kerr said. If we leveled the playing field, I believe I know where people would want to work.
The firm focuses on home-grown talent, but the firm has difficulty identifying and recruiting career changers who may not have an existing connection to the industry or a book of business to take on. That group of recruits is also difficult to train successfully. Kerr noted that the firms training programs and the industry in general see success rates as low as 15% to 20% despite selective recruiting. Getting that person to be successful in our business, the odds are very much against him or her, because of the competitive nature of the industry in general.