As it turns out, people want to meet their advisor through introductions from people they know who have had a good experience, similar to how they might want to choose a doctor, lawyer or any other professional in their life.
Those entering the financial advice industry don’t have the mentorship or sales ability of the older generation, who themselves have struggled with redefining their own value proposition as times, technology and the industry has changed.
The new crop of advisors finds it difficult or impossible to attract enough new clientele to stay afloat. After all, the way the current crop of successful advisors built their businesses no longer exists (no cold calling or cold walking) and the value proposition is certainly not what it was.
The New Value Proposition
What was the norm, is now the minimum. Whereas advisors in the 80s merely needed a series 7 (Registered Representative license), that no longer has the draw it once had.
Today, advisors are adding more and more advanced certification and degrees in an attempt to differentiate and elevate themselves from the field. It’s not uncommon to see Financial Advisors who also boast their CPA, CFP, CFA, CIMA, AMWA or any number of certifications.
The general idea is that individual advisors must stay a step ahead of technology and apply these new skills in a way that builds a new value proposition. This in and of itself doesn’t get it done. Remember they still need to be able to prospect with it, sell it to people, and build a business to critical mass. Easier said than done.
The Future of the Industry
I have seen very few young advisors who have put all the pieces together to successfully build a business from the ground up. Many are brilliant young entrepreneurs with a lot to offer, but the ground up approach to building and growing a business in the current environment has proven to be too steep a climb.
Those younger advisors who have survived and thrived have done it through merger and acquisition with older advisors who understand and have lived through the changes in the industry. These older advisors are starting to think about retirement and clearly recognize and appreciate the value proposition offered by the next generation.
What better way to retire than to put your existing clients and their intergenerational wealth transfer in the qualified hands of someone well versed in the new value proposition. It’s starting to become very clear that the next generation of financial advisors will have to figure out what the new paradigm of client acquisition looks like but until they do the path of least resistance and perhaps the path to survival may be through merger and acquisition of existing financial advisory business.