Registered investment advisor firms looking to grow and boost profits would be well advised to hire young advisors.
That's according to a study from TD Ameritrade Institutional, "The Rise of the NextGen Advisor." The study found that not only are older advisors poised to retire from the industry faster than they can be replaced, but firms hiring millennials as advisors grew their assets faster than firms that did not.
With only 21 percent of financial advisors aged 40 and under, the industry faces a coming retirement wave as the 45 percent who are over the age of 50 will soon be leaving the workplace. That high a concentration of older advisors will be tough to replace at the same pace they'll be departing, so RIAs would be well advised to look to the future by hiring younger professionals.
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Not only will those RIAs be forestalling a mass exodus of advisors, but they'll also be positioning themselves for growth. The survey also found that firms employing a nextgen advisor saw their assets increase by an average of 20 percent annually between 2012 and 2014, compared with 11 percent among firms that did not.
Firm partners and principals who employ millennials can delegate more work to staffers, freeing their own time to cultivate new business and serve top clients.
The study found that two-thirds of larger firms, those generating at least $5 million in annual revenue, had at least one nextgen advisor. And more good news: firms that have at least one nextgen advisor average about 20 percent higher income per owner than among those firms that do not.
And as RIAs evolve from small practices operated by owners to big enterprises staffed by employees across a range of roles, more job opportunities open up for graduates as paraplanners, support advisors or analysts.
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