Being a financial advisor is not easy, and starting out in this business can be very hard. Cold calling, referrals, long nights spent doing research and pounding the pavement are the norm for new entrants into the field. 

But the opportunities for young financial advisors have never been better. T. Rowe Price released a study showing that nearly 70 million Baby Boomers are in pre-retirement right now, and most of them are in dire need of financial advice. College graduates who have the grit to get into this business can carve out a lucrative future for themselves as long as they are willing to do what it takes to start from scratch.

Read on for why it's a great time to launch a young advisory firm. (For more, see: Want More Referrals? Target These 4 Client Types.

The Need for Advisors

While educational opportunities have mushroomed in popularity, the training packages for new brokers and planners have been drastically reduced by many firms. And out of the approximately 300,000 financial advisors in the U.S., a mere 5% are below the age of 30. But negative press about the financial industry combined with waves of layoffs that have thinned the ranks of those who work in it have made this industry unpalatable for many high school and college students.

One of the reasons why more young people are not joining the industry may simply be due to lack of awareness. Many high school and college students know little or nothing of the existence of stockbrokers or financial planners, let alone what they do or the challenges and rewards that come with the business. They may also be turned off by the amount of cold prospecting that is involved at the outset, or by the level of bureaucracy and study that is required.

The attrition rate for young brokers has also been very high. Research from Cerulli and Associates indicates that almost 30,000 trainee advisors who started their careers in the industry within the last five years washed out of the advisory business in 2015. Some of them will take non-advisory positions within the industry while others will leave the industry altogether to pursue other vocations. This means that many more brokers and planners are leaving the industry than joining it, and this does not bode well for the future of the profession. (For related reading, see: Financial Careers: Financial Advisory Jobs and Trends Challenging Financial Advisors.)

Rising Resources

Thus, the demand for brokers and planners has never been higher. Philip Palaveev, an advisor with Fusion Advisor Network said, “Long term, this will definitely kill us. When this wave of advisors over 50 years old tries to retire, how will we absorb the clients that they leave behind?”

Craig Pfeiffer, founder and chairman of Advisors Ahead—which matches undergraduate students with financial advisors—said that the financial industry as a whole needs to improve its ability to integrate academic learning with real-life experience. He said: “The industry collectively and each industry participant has a responsibility to create an onboarding model that attracts quality candidates and positions them for success, and that comes from watching success.”

To that end, Merrill Lynch created a program in 2014 known as Team Financial Advisor, where team members are required to work in some specific role relating to financial planning for 31 months, such as business development or retirement plans. The program’s current retention rate hovers in the 35% to 40% range.

Students who wish to get into the financial advisory business now have many excellent options to choose from when it comes to academic preparation. More than 100 schools such as Kansas State, Virginia Tech and Texas Tech now offer undergraduate and graduate majors in financial planning, where students will learn the basics of investment, insurance, retirement and estate planning. Most graduates will be prepared to sit for the CFP Board exam once they graduate. 

While the obstacles listed above can be a substantial barrier for many prospective advisors, they should not deter young people from entering the business. There will be fantastic rewards for financial advisors who are able to succeed, and many older brokers and planners are already starting to look for successors for their own practices.

The Bottom Line

There is more opportunity for young people today in the financial advisory business than at any previous time in history. There is already a shortage of advisors who work with Baby Boomer clients, and this shortage is most likely going to worsen in the near future. Fledgling advisors can get a head start by joining programs such as the Financial Planning Association’s NexGen or the Genesis program offered by the National Association of Personal Financial Advisors. Those who are able to overcome the initial obstacles and gain a foothold in the business can reap a lifetime of rewards. (For related reading, see: Is a Career in Financial Planning In Your Future?)

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