Following a report this week that RBC Wealth Management is revamping how it recruits advisors, this publication talks to other firms about their strategies.

Wealth management in North America faces a demographic crunch. The average age of financial advisors is around 50 and rising. A rising generation of high net worth individuals, both self-made and inheritors from Baby Boomer parents, need advice – but the question is who is going to provide it?

With a generation of young adults arguably shunning financial industry careers, with their minds seared by the worst financial crisis since the 1930s and preferring to follow different paths, the sector knows it needs to work harder to recruit talent. And a recent move by RBC Wealth Management in the US to widen the search for advisors demonstrates this fact.

As reported here earlier this week, RBC WM, part of Toronto-headquartered Royal Bank of Canada, is revamping its Associate Financial Advisor training program to allow more “diverse” candidates – from inside and outside of the financial services industry – to join the firm and follow a career in the sector. A person who may have had a career in a sector entirely unconnected to financial services can enrol. 

RBC is not alone. A number of major banking groups in the US and further afield are developing programs, some of them to be more diverse in terms of attracting more women, people from different ethnic groups and some from outside conventional educational or career paths. 

“We’ve established a contemporary training and development program to attract diverse candidates for this “next generation” of advisors,” a Merrill Lynch Wealth Management spokesperson told Family Wealth Report when asked about its own programs. “In February, we rolled out a national Accelerated Growth Program which seeks licensed wealth management professionals with three to eight years of experience and an established book of business.”

“We are supporters of the Center for Financial Planning and its efforts to increase diversity in the financial profession. The Center’s diversity summit in October is focused on ways to ensure that every American has access to competent and ethical financial planning advice,” the spokesperson said. 

With $30 trillion of assets estimated to be shifting to the next generation over the next decade, the need for sound advice is clear. But who is going to advise on this switch? The wealth sector, arguably, has big image problem: it’s dominated by established finance professionals, overwhelmingly male, middle aged and middle class. Figures from Cerulli Associates, the analytics and research firm, find that the average age of wealth advisors is 50 while only 11.7 per cent of them are under 35, raising concerns that as millennials age and move into prime positions in business and other walks of life, there will be a problem. There’s definitely a gender issue: women represent only 15.7 per cent of the 310,504 financial advisors in the industry across the US (source: Cerulli Associates).

Initiatives
Firms such as Wells Fargo - parent of Abbot Downing - say they have been working to widen the talent pipe. “In 2010, Wells Fargo Advisors set out to change the face of the advisor workforce by completely reinventing its approach to next generation talent,” Diane Gabriel, head of Wells Fargo Advisor’s Next Generation Talent Programs, told FWR.

“We’re changing the way we recruit new advisors into our business, by shifting focus away from the traditional variable compensation- only model, and are pioneering the creation of five distinct mentoring, primarily salary-based programs, designed to open the financial industry to a much more diverse advisor workforce ensuring our company make-up is representative of today’s America,” Gabriel said. 

"Our AFA [Associate Financial Advisor] and FRA [Financial Relationship Advisor] programs, just to name two for example, have 36 per cent women and are 48 per cent diverse - meanwhile, the industry average hovers around 16 per cent,” she continued. 

She said Wells Fargo’s branch manager leadership program has an 80 per cent diversity percentage. These programs are also attracting younger team members with an average age of 32, while the typical financial advisor, Gabriel said, is 57 years old.  

Training and development of staff arguably also requires an ecosystem of post-graduate and MBA-level courses, some of which may be directly sponsored by banks or other groups. In the US, a rare example of a focused MBA program for wealth management is the Wharton Private Wealth Management Program at that business school; other MBA with a clear wealth focus tend to be in places such as Singapore and Switzerland. (This publication carries a regular roundup of such courses, see here.)

Other examples
At UBS, the world’s largest wealth manager said it is working hard to broaden the talent pool. It recently launched its Wealth Manager Development Program, which it calls “a one-of-a-kind comprehensive initiative” partnering with Jopwell, a “diversity recruitment and career advancement platform”. This is designed to boost UBS’s ability to source, team and train the next generation of top financial advisors.
 
“UBS understands that the need for wealth management services for a younger and more diverse demographic will only continue to grow and the workforce needs to be reflective of this changing client base in order for businesses to succeed,” the bank said. 

The bank said its program has four main elements. The first focuses on hiring diverse professionals, as it does through initiatives such as its wealth planning analyst program for professionals returning to the industry or looking to get into financial services and the inter-generational advisor program for candidates who have a successful FA parent at UBS. The second element is its “teaming” - a vetting process and coaching sessions for internal FA teams looking to hire new FAs. Third is training - a new three-year training program with upfront onsite training and divisional training that focuses on client acquisition and private wealth management training. Fourth is its approach to compensation and payment for advisors.

Asked why UBS decided on its program, Emily de la Reguera, head of next generation advisor development at the firm, said: “Diversity is all encompassing--we look for a diversity of thoughts, experiences and backgrounds. The consistent theme we focus on is quality - we are looking for top talent, with a track record of success across diverse backgrounds and experiences.”

Citi Private Bank, meanwhile, told this publication: "In the US, we regularly engage with external diversity focused search firms, target alumni of female and historically black colleges and universities and utilize digital networking sites to build a pipeline of diverse candidates."

The publisher of this news service produced a report on talent management issues in wealth management several years ago. See here.