It’s no secret that the wealth management industry is facing something of a youth crisis.
The average age of advisors is over 50, and Cerulli Associates estimates that 41 percent of the industry is older than 55. The number of advisors in the industry continues to drop since 2008 peaks, and Cerulli expects 35 percent of current advisors to retire or leave the industry over the next 10 years.
At the same time, the U.S. Bureau of Labor Statistics reports that demand for financial advisors will increase 30 percent by 2024, and public accounting firm Moss Adams predicts a shortfall of 200,000 advisors by 2022. The industry just seems unable to attract new blood to the industry.
One company that has found success is Northwestern Mutual, which celebrated the 50th anniversary of its internship program this summer and has been named in the top 10 on Vault’s top internship list for 21 consecutive years. In 2016, it was rated the best internship program in financial services and fourth across all industries.
The internship program accepts more than 3,500 students a year, a third of whom are college seniors expected to join a full-time career with Northwestern after graduation. Michael Van Grinsven, the programs director, said 59 percent of the field officer leaders—managing partners or directors at advisor firms—are former interns. He believes Northwestern has cracked the code of how to get young people interested in a career in financial services.
“The aging of the financial services representative has been on our mind, and we know we have a strategic advantage by leveraging our internship program,” Van Grinsven said. “We have done a lot of things in the last couple of years to understand how to develop a larger group of people.”
So what can other firms learn from Northwestern? One key, according to Van Grinsven, is to not give interns "busy work" or back-office experience. Northwestern pairs interns with veteran advisors and their teams to watch how cases are reviewed and how financial recommendations are crafted. The interns then sit in on client meetings to note what kinds of questions are asked and how clients make decisions. Van Grinsven says this is probably the most valuable part of the program.
“Students like having that frontline or field-facing experience with the client,” he said, adding that it helps confirm for the intern whether this is a career path for them or not. “They love the planning side, but the energy for them and the future is in seeing how the client engages with [the plan].”
While many internship programs end with a licensing exam, Northwestern requires students to pass their local state insurance exam before joining. While it may not be the most thrilling activity for a college junior, Northwestern sweetens the deal by covering the cost of licensing and training, paying a stipend and allowing them to make commissions on any financial product they sell.
The program can also be used to earn CFP credit, and many schools let the internship count for elective credit.
Van Grinsven added that the company has also adjusted its program to be friendlier to millennials. For example, Northwestern is more sensitive to how it provides feedback and only accepts students it thinks can receive feedback well. The program has also embraced the so-called “helicopter parent” trend and actively tries to build a relationship with interns’ families by explaining what a career in financial services looks like and how parents can be supportive.
If other firms want to successfully engage youth, Van Grinsven said advisors have shown them how the career is about more than making money.
“There are a lot of emotional challenges with this business, in addition to hard numbers and the business cycle,” he said. “Students are looking for opportunities that take them outside of their comfort zones—beyond where they are currently. We can grow [them] outside of [their] comfort zone in a very constructive way.”