An aging workforce is as much of a certainty as death and taxes, but the financial services industry has some time before it faces any critical shortage of seasoned talent.
Only 10% of advisors in Invest-ment Executive’s 2007 Advisors’ Report Card are 60 years of age or older, while 60% were in their 40s or 50s, giving company executives a little time before their advisors’ ranks are depleted by retirement.
The banking sector has less to fear: 10% of its account manager workforce is under the age of 30 and 32% is between the ages of 30 and 39 — giving it the highest percentage of under-40s of any channel. Only 2% is in their 60s.
The younger crowd is a result of steady recruitment of recent university graduates to its entry-level ranks. Michelle Height, assistant director of business career services at the University of Alberta’s School of Business in Edmonton, notes in IE’s 2007 Account Managers’ Report Card that banks are actively recruiting at universities.
“We do hire externally through colleges, universities, referrals, the competition and a number of recruiting sources,” says Wendy Hannam, Bank of Nova Scotia’s executive vice president of domestic personal banking and distribution in Toronto. Most account managers, she adds, are recruited from personal bankers and other sales positions. Talented tellers are also tapped to take on account manager positions.
“We certainly want them to have the opportunity to take on these roles,” she adds.
But it is not unusual to find a banker who has climbed the corporate ladder. “I started at the bank at 19, straight out of school, and I’ve never wanted to go anywhere else,” says a Scotiabank account manager in Manitoba. “I’ve been headhunted and I still refuse.”
The insurance industry, in which 24% of advisors are under the age of 40 and 40% are 50 and over, has also been luring younger recruits.
Aurora, Ont.-based State Farm Insurance Cos. often hires advisors based on desired qualities rather than proven experience, says public affairs supervisor Peter Karageorgos: “We look for people who have specific qualities, skills, entrepreneurial spirit, a customer-service focus — things like that — and we do an extensive amount of training with them.”
A Great-West Life Assurance Co. advisor in Ontario says he has hired several recent graduates to work in various parts of his practice in order to groom them to take over when he retires.
HUB’S APPROACH
Woodbridge, Ont.-based Hub Financial Inc. takes a two-pronged approach to dealing with its aging advisor base, says Hub president Terri DiFlorio. The company supports the business insurance program at Seneca College in Toronto, and it also hammers out a succession plan when each of its advisors approaches age 55.
Still, rookies often find it difficult to break into the financial services industry and compete with older, wiser and more established advisors. Besides, many 60-plus advisors are loath to retire. As a veteran Alberta advisor with a Toronto-based firm notes: “I’m 67 and I’m not ready to retire. This isn’t a stressful job.”
The financial planning channel appears to be the most age-challenged. Fifty per cent of advisors working in the planning sector are age 50 or older, and only 20% are under the age of 40.
Yet those 50-plus advisors don’t seem to be planning on retiring anytime soon. Company-supported succession planning is becoming more common, but the group intends to work well into old age.
“There’s enough demand within our system to purchase the books [of business] of retiring advisors,” says Glenn Pittman, senior vice president of business development and marketing at Burlington, Ont.-based Berkshire-TWC Financial Group Inc. “Unfortunately, I don’t see the retirements happening at the pace people expected. I have a lot of people looking to buy, but not too many sellers.”
An Ontario advisor with Mis-sissauga, Ont.-based Investment Planning Counsel praises his firm’s support for helping younger advisors buy books of business, but points to the obstacles. “There isn’t enough depth; there are more buyers than sellers,” he says.
The brokerage industry is experiencing the same problem. New National Bank Financial Ltd. recruits are trained by older advi-sors, who often offer to sell them their book when they retire, says Gordon Gibson, senior vice president and managing director at Montreal-based NBF.
NO PLACE FOR ROOKIES
@page_break@“The era when a rookie could come in, be given a phone and a phone book, and be successful a couple of years down the road has pretty much passed,” Gibson says.
The broker channel has the greatest portion of its advisors in the 40-49 age group — 38%. That being said, 73% of brokers are over the age of 40 — 10% are in their 60s. In the next 10 to 15 years, there are going to be more brokers than ever reaching the age of retirement.
At the core of the issue is recruitment. Many firms really lack the drive to infuse young blood into their ranks, preferring to recruit professionals from other fields who want a second career.
For example, IE spoke with a NBF broker in Ontario who was formerly a university law professor, as well as with a Raymond James Ltd. advisor who had been a geologist.
There is also a great deal of lateral movement of advisors from firm to firm. Many advisors interviewed by IEhad moved firms at least once. Most firms prefer the proven profitability of experience and will happily pay for it; few firms make an effort to hire young advisors.
Hamish Angus, head of Toronto-based ScotiaMcLeod Inc. , says his firm tends to focus on seasoned advisors and complements their experience with further training.
“We make a real effort to hire properly,” he says. “These are mature advisors who have had business careers, who built their careers, who come with a modest book of business and are much more likely to succeed.”
Younger advisors tend to have a high attrition rate in the brokerage business. David Agnew, managing director of Toronto-based RBC Dominion Securities Inc. , admits that the survival rate among rookies at his firm is only 50%. IE
No lack of rookies eager to replace aging advisors: Includes Charts
Many professionals show no signs of slowing down as they get older, but firms are making sure they’re hiring the next generation
- By: Marshall Bellamy
- August 28, 2007 October 28, 2019
- 14:34