Building the New Millennial Financial Advisor with Sales Readiness

*Editor’s Note: In this blog post, guest author and financial Services and Go-To-Market leader, Cory Haynes (click for LinkedIn profile), shares his thoughts on building and growing a financial services team with the “IG Generation.”

Sitting at a lovely French-inspired restaurant overlooking the Napa River on an unseasonably warm day in Autumn, I spoke with a veteran financial advisor, whom I’ve known many years. I wanted to get his perspective on the Wealth Management Industry, as it has come through the 2008 global financial crisis, the onslaught of robo-advisors, and the greatest wealth transfer in history is taking place as baby boomers transfer their wealth to their children. “The average financial advisor acquired 1.3 net new households; however, our advisors acquired 5.2 net new households”, said Eric Gonzales, Senior Vice President at Merrill for over twenty years. In his time with Merrill, Eric has been quite successful managing a team of twenty advisors and his own book of business This is despite a crowded marketplace of generational wealth family offices, fiercely independent Registered Independent Advisors (RIA), cheaper and increasingly more sophisticated robo-advisors and zero-commission online brokers. Not to mention the demographic shift among his advisors to a younger generation. This shift aligns with the overall industry trend with millennials set to replace the 25% retiring by 2024, according to Cerulli Associates, a leading global research firm for financial services. The majority of advisers industry-wide at end-2017 were between 55 and 64, according to Cerulli. Only around 9% are under 35. For Eric and other leaders in the wealth management space, these statistics highlight a challenge faced by many financial institutions – it’s becoming harder and harder to attract and retain new talent. 

Merrill Lynch, which is among the largest US wealth managers with 17,657 financial advisers and some $2.9 trillion in client balances, is a great case study for this broader theme playing out across the wealth-management landscape.

To be successful with the next generation, the secret sauce for senior managers like Eric, is finding the right technology and incentives to recruit, train, and nurture current and new financial advisors into exceptional, client-trusted advisors. They need coaching and guidance that can evolve with them at their different career growth stages. “We want to model the behaviors of the best advisors and find the right formula so that others can replicate the behavior. We understand every advisor is different, and their clients and demographics are different but behaviors and actions can be controlled and replicated to produce consistent and positive outcomes,” said Eric.

Efforts to train and retain new advisers are hardly unique to Merrill Lynch, with rival wealth managers grappling with demographic shifts across the wealth-management space. Wells Fargo Advisors introduced their internal “Summit Program” earlier this year, which is designed to encourage retiring financial advisers to sell their books of business within the firm. High failure rates to be sure, churn is common in the classic wealth-management industry. Cerulli Associates’ research says that the industry attracted about 20,000 trainees in 2018, with a failure rate of approximately 75%. Large broker dealers can spend on average $85,000 on training and coaching, which underscores their laser focus to find the right candidate and retain them. Over five years, successful financial advisors can become extremely profitable to the firm. Merrill’s parent company, Bank of America, reported a third-quarter profit that topped Wall Street analysts’ expectations. The wealth-management arm reported record net income of $1.1 billion, a rise of 8% compared with the same time last year.

Most aspiring money managers end up failing early on as the pressure to take on new clients and generate sales burns out newcomers. A pattern among newbie advisers that’s unfolding in Bank of America’s wealth-management unit shows how traditional wealth managers are adapting to that reality. Financial-advisers-in-training at Merrill Lynch who exit its trainee program are now often transitioning to other roles within the firm instead of leaving altogether. This keeps the talent in the firm, but doesn’t erase the deficit of financial advisors.

Managers are clamoring for tools to enable them to coach and guide at scale. They want to employ repeatable and measurable methodology to help financial advisors on prospecting, lead generation, and closing deals. As Eric stated, “A successful financial advisor trainee lifts all boats, the customer is happy, the brand becomes stronger, the firm becomes more profitable, and I have yet another success story to share with new recruits.”  

 As a former financial advisor, I have found that enterprise platforms like Mindtickle can bridge the financial advisor skill gaps in knowledge, compliance and field execution to drive more sales at higher margins. Mindtickle’s Readiness platform enables sellers to develop their capabilities through virtual practice and coaching, empowering them to:

  • Speak with more authority to prospects by building credibility
  • Better handle common situations with video role-plays and simulated customer scenarios
  • Receive effective and continuous 1:1 coaching 

Mindtickle leverages AI and Machine learning to personalize the training and coaching for the financial advisors through a patented data-driven Readiness platform. Nothing can be improved unless it is measured. Out-of-the-box reports can drive enablement with data to:

  • Understand the status of existing enablement programs
  • Easily report on effectiveness to management teams
  • Drive internal compliance

Eric and other wealth managers are grappling with the outsized margin pressures and the seismic demographic shifts in their business. So the demand  for more technology is only increasing. Mobile-first tools that learn and evolve to train and retain might very well help stave off the fully automated solutions and the changing preferences of customers and incoming financial advisors alike.  Leveraging mobile-based training and learning platforms of the future might even empower new financial advisors to simply pull out their phones to do augmented reality prospecting with geo-targeting and simulated financial planning with virtual clients. It’s this type of innovation that will attract and retain Gen Y & Z advisors, but more importantly, it will help them service their clients better as true fiduciaries – doing what’s in the best interest of the client, which is what the business is all about…serving the client.

As the sunlight dances on the river and the din of the restaurant patrons increases, fittingly Eric’s grin widens. He can see a bright future ahead as he embraces this new frontier in technology, which will no doubt give him an edge in recruiting and retention. His KPIs to reduce turnover by 25% and reduce training expenses by 20% will take at least a quarter to realize. In the interim, he can envision his practice exponentially growing — outpacing his industry peers –while maintaining the highest fiduciary standards and trust with his clients. “It’s nice to be on the positive side of the wealth management industry trends and statistics,” smiled Eric.