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How Firms Can Cultivate Age Diversity

Firms must strike a balance between appealing to a younger generation of advisors and maintaining a level of support that allows everyone on their platforms to thrive.

By Erinn Ford

With each passing day, it’s becoming more important for independent RIAs and investment advisory and brokerage firms to have a healthy mix of youth and experience among their advisors. This, in part, not only leads to better connections with potential clients within varying age groups but also boosts the chances of retaining multigenerational wealth.

Achieving that type of balance can be tricky because sometimes younger advisors favor service models, tools and products that their older peers are more hesitant to embrace. Firms, however, can grapple with this dilemma by providing access to specific offerings without forcing everyone to use them.

Here are the most important service model, tool and product considerations when cultivating age diversity at firms.

Fee Structures

A Cerulli report from early 2019 found that 61% of clients preferred paying AUM-based fees, with 13% favoring commissions. IBDs and RIAs, therefore, would be wise to encourage advisors to consider adopting more fee-based solutions.

Even so, there are valid reasons to provide commission-based products such as annuities or insurance, or to charge clients commissions if they trade infrequently, meaning long-tenured advisors with strong, commission-heavy businesses deserve continued support and resources from their firms.


Millennials and parts of Generation X have come of age in an era where smartphones and social media are ubiquitous. As a result, they are not merely comfortable with the most up-to-date hardware and software—they expect it in their workplaces.

To attract advisors within these demographic groups, firms must have a holistic and integrated platform that combines financial planning, investment management and customer relationship management tools with automated solutions and intuitive, user-friendly features. Moreover, although it may require additional compliance oversight, millennial advisors may also want to develop active social media profiles that highlight their professional experience, as well as to text clients on their smartphones.

Advisors should not feel pressured to adopt digital tools just for the sake of modernization (i.e., if your clients are not active on social media, spending a lot of time on Twitter and Instagram could be a waste of energy). The caveat here is that when it comes to the broader fintech platforms, IBDs and RIAs may have strategic reasons to seek software upgrades that are more in line with what younger advisors desire. In this case, the firm should clarify to every advisor why this platform shift is in their best interest.

Values and Giving

Values-based strategies have become popular among next-gen clients and advisors. Socially responsible investments (SRI), environmental-social-governance (ESG) and impact investing strategies can be an excellent way to attract young talent who want their careers to have a positive impact.

During the last several years, publicly traded companies have begun to embrace SRI and ESG values, modifying their production processes to be eco-friendly, their management styles to be more transparent and their community enrichment programs to be more extensive. This makes it easier for IBDs and RIAs to find funds that specialize in values-based strategies that also have competitive returns.

Advisors with older clients, on the other hand, may have less of a need for that. Instead, they may need financial vehicles and strategies that solve the charitable giving goals of retirees, widows and multigenerational families. These can include endowments, trusts and insurance products that allow advisors to start conversations with grandparents, parents and adult children of clients about their family’s legacy and philanthropic mission.

Balanced Approach

Firms must strike a balance between appealing to a younger generation of advisors and maintaining a level of support that allows everyone on their platforms to thrive. These priorities are complementary and create a healthy environment.

Indeed, older advisors will remain the revenue generators of the firm until younger advisors develop the experience and relationships to serve a significant client base. With a bit of collaboration and open-mindedness, generations can learn from each other, benefiting both their practices and their firms.


Erinn Ford is CEO of KMS Financial Services, an independent advisory and brokerage firm based in Seattle and a subsidiary of Ladenburg Thalmann.

TAGS: Technology
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