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4 Ways to Prepare Young Advisors to Manage More Wealth

By Michael Lane

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Over the next 20 years, an estimated $70 trillion is expected to change hands from baby boomers to millennials in the largest wealth transfer in history. As this shift will undoubtedly reshape the investing landscape and redefine what an average investor looks like, now is the time to prepare the next generation of financial advisors for the Great Wealth Transfer. 

Millennials are currently 25 to 40 years old, meaning many have just entered a phase in life where they are buying their first homes. Concurrently, they are entering a phase where they will make substantial savings, such as education, to grow their families, and of course for retirement.

The challenge facing many in this generation is that they are relative newcomers to market dynamics. Many savers and investors have been doing so on their own, without having sought experience from tenured financial advisors.   

As a parent of a millennial, I recognize I have not properly prepared my own children with either basic or sophisticated goals-based investment strategies. My daughter has shared that many in her generation lack experience investing their own money and understanding what market shifts mean for their wallets.

For many that are also in my situation, I worry the next generation is not properly equipped with the knowledge or tools to manage their family’s finances, should that responsibility transition to them sooner than expected.

However, ensuring the wealth transition from older to younger generations happens smoothly is not just a family issue. Many will suggest that the burden falls on financial advisors as well, as they are tasked with understanding their clients’ needs and ensuring their financial stability in the long run.

But this is far from a burden; this is a considerable opportunity to manage an important transition of wealth and grow a sustainable business for a new generation of financial advisors.  

With the integral role advisors have in passing the baton to young investors, it’s important now more than ever that advisory firms ensure their advisors are well equipped to support the new client base. Here’s how advisory firms can best prepare the next generation of financial advisors for the Great Wealth Transfer:

1. Lean on younger advisors and their experiences. 

Advisors who can relate to their clients with shared common experiences are more likely to gain their trust and understanding. Therefore, as millennials slowly but surely emerge as the dominant consumer group, it is critical that advisory firms hire financial professionals who come from a similar age group. 

Generational cohorts have shared experiences and understandings that are irreplaceable. That’s why it is critical that we make this industry more attractive for those starting their careers and teach them the skills they need to provide advice to their peers.

Advisors who will have the most success with millennial clients are likely to be those that are younger, tech savvy, and have similar interests. Ultimately, having more diversity of thought by bringing in younger advisors will prove fruitful in the long run as they will in turn attract younger clientele. 

2. Teach advisors how to listen.

Once advisory firms have hired younger advisors to reflect their increasingly younger clientele, they must properly train new advisors on the lay of the land and set them up for success.

With over three decades in this business, I am aware of the increased focus on investment training. It is critically important to understand markets and how investments interact to deliver a successful long-term investment experience, but we can’t forget what I think is the most important act: listening.

Clients aren’t looking for robots crunching numbers, but instead, empathetic and relatable financial advisors who they can build trust and a sense of mutual understanding with. I learned this valuable lesson during my first sales training and haven’t forgotten it since.

I spent hours practicing, listening to what someone would say, and then repeating it back to them using their words to make sure I heard them correctly. By confirming what I understood to be the most important goals to my clients, I was able to successfully determine what they were trying to achieve with their money.  

This lesson still holds true today. I was recently at a forum where a panel of investors who have experience working with financial advisors were asked whether they’ve changed advisors before, and if so why. The answer was always the same; they didn’t feel their advisors truly understood their goals and investment needs.

This is an avoidable issue. Before teaching young professionals how to define products to clients or provide advice to investors, we need to teach them how to listen and show emotional ownership and responsibility towards their clients’ needs and wants. Most importantly, we need to help our clients make better financial decisions.

Financial advisors have a greater purpose beyond raising assets; it’s about helping people define the purpose of their money, and then make better portfolio and planning decisions that result in aligning the best financial instruments to achieve their goals. How would we achieve this without truly understanding what our clients are looking for? 

3. Attract and prepare the next generation of advisors via hands-on programs.

To best prepare our industry, we must identify and build the next generation of financial advisors from early on. I urge my peers to join me in advocating for implementing and strengthening programs that are geared towards training up-and-coming advisors – including those currently in high school and higher education institutions.  

Educational programs will provide valuable hands-on, real-world opportunities to aspiring financial advisors through internships and work-study programs. A notable example is the FinServ Foundation, which offers a training program for college seniors who want to enter the finance industry.

Through coaching, mentorship and networking opportunities, this program provides students with tangible opportunities to truly understand the core of the business, and I’m proud to have played a small part in the development of this program. 

4. Consider more ways to help our industry help our clients.

The shifting dynamic of our society’s wealth and the growing influence of the millennial generation both provide a huge opportunity and a challenge for the financial services industry. To help investors achieve a healthy financial future, the first step is to ensure financial advisors are equipped to properly advise and partner with them.

We must remember advisors’ responsibilities start even before the first client meeting. New and experienced advisors alike must build a solid foundation — through constant education, training, and diversification of the field — to prepare for the future of our business.

Michael Lane is the head of iShares US Wealth Advisory at BlackRock.

(Image: Adobe Stock) 

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