More than a third of financial advisors are expected to retire within the decade, and firms must find ways to fill that gap while simultaneously addressing industry changes, according to industry executives.

Thirty-five percent of advisors are planning to exit in the next 10 years, and 26% of those are uncertain about their succession plans, according to research published in January by Cerulli Associates.

Hightower Advisors chief development officer Matthias Kuhlmey pulled no punches in his estimation of the challenges facing the industry, saying that it is not only facing “a succession crisis” but also “a relevance crisis.”

The lower barrier to entry and changing client expectations have triggered the relevance crisis, according to Kuhlmey.

“Digitization of the wealth management space” has “allowed non-industry players to enter the market for financial advice,” he said, citing PayPal and Walmart as examples.

PayPal has been exploring ways to enable its customers to trade individual stocks. In January, Walmart said it was partnering with Ribbit Capital, the investment firm that backs Robinhood Financial, on a financial technology startup that would offer digital financial solutions.

Those firms are entering the industry at a time when self-directed trading is on the rise, and advisors must increasingly demonstrate their relevance. Advisors “now sit at a critical juncture” where they need to prove their worth to investors by providing client-centric tools, products and advice, according to Andrew Guillette, vice president of distribution insights for the Americas at Broadridge Financial Solutions.

Matthias Kuhlmey
Looking for fresh talent from outside the industry is one way of meeting the changing demands of the evolving client landscape, according to Hightower's Kuhlmey. Social workers and psychologists, as well as others in the “behavioral space,” would potentially be good targets since the job has widened significantly from just giving financial advice, he said.

Existing employees could also be retrained to help develop new skills, produce different outcomes and advance to other roles, according to Kuhlmey.

From marketing golf to providing financial advice

Financial Freedom Wealth Management has had “success” hiring talent from outside the industry, according to Julia Carlson, the firm’s founder and chief executive officer.

The Newport, Oregon-based practice affiliated with LPL Financial, for example, brought on a marketing manager from Topgolf, a chain of golf-focused entertainment and events venues, Carlson said, without naming the individual.

The Topgolf hire, who has 10 years of marketing experience, wants to become an advisor, according to Carlson. The new hire has taken on a marketing role at the firm because that’s the current need but is training to become an advisor, she said.

Julia Carlson
Financial Freedom also takes interns or fresh graduates and trains them to become advisors or to take on other key roles, according to Carlson. Wealth advisor and portfolio manager David Wright began at the firm as an intern, then became a client service associate before assuming his current role. Wright leads the firm’s portfolio management team in finding investments for clients and building customized portfolios.

Heather Ettinger, founder and CEO at women clients-focused RIA firm Luma Wealth Advisors, said being on the lookout for potential recruits at all times helps.

Heather Ettinger
Ettinger urged firms to practice what she calls “always-on recruiting.” While on a webinar, for example, she says she will “reach out to women — and particularly minority women — who are different than me but might have an interesting background that could transfer into the industry based on their skill set.”

She added: “No matter where you go, what you do, [continue] to build those networks.”

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