We have a big problem in our industry: There is a chasm between the number of financial advisors and the number of people who need financial advice, said Bill Williams, executive vice president of Ameriprise Financial’s franchise advisor group. Williams spoke Sunday morning at the Financial Planning Association’s annual Experience 2012 conference in San Antonio, Texas. Since 2005, there has been an 8 percent reduction in advisor ranks industry-wide; we’ve got to get more young advisors into this industry if we’re going to meet the demands of clients, and if advisors expect to grow, Williams told attendees.
“You are the problem,” he said. “And the problem is that many of you are so wrapped up in having to touch everything, having to control so much of what’s going on, of giving up something to get something, because it’s going well for you. You don’t pay to come to the FPA conference if you’re really struggling in the business.”
A growing trend, one strategy advisors are using for growth, is teaming. This is something we’ve written about time and again in this publication (see the upcoming October issue of REP.). Williams said there are 10,000 FAs at Ameriprise, and over 50 percent of those are in team structures. How has that worked out? When just looking at the individual producers in the business, teams have seen their revenue grow 18 percent higher than solo practitioners, Williams said. They are also 65 percent more productive at bringing in clients and 38 percent more productive in financial planning relationships.
“If it’s all about you, it’s really hard to write a check.”
Bringing on a junior partner, or partnering with an attorney or CPA firm can free advisors up to work on a strategy for growing the firm. The problem in this industry, he said, is that the industry is not hiring novices at the rate we used to.
But here at FPA, I’ve seen that there are initiatives to change that. I ran into Craig Pfeiffer, a former executive at Smith Barney, who recently founded Advisors Ahead. Pfeiffer is working on partnering with major firms, including the wirehouses, to bring preparatory programs to recent college graduates, a “residence program” of sorts for the financial advisory profession. Rather than just throwing young graduates out there on their own to sink or swim, this would give them a training grounds, a place and way for them to learn without even building a book of business yet. The idea would be to help an existing advisor with their client base or join a team, with the hopes of becoming a licensed advisor once you go through the program. It also offers existing advisors a succession plan.
The FPA itself is also striving to get young people into the industry. The average age of FPA’s membership is 52, but the organization hopes to bring it down in the next several years. The group also wants to expand its university chapters, with plans to visit many colleges and universities in the next 12 months.
The first step, however, is for advisors to surrender some control over their business.
“The harder you close your fist around your practice, the less you can grab for opportunity,” Williams said.