By Mark David
This year’s WP Top 50 is exposing a growing industry trend, namely the number of young advisors holding books that would normally have taken decades to build.
“Generally speaking, when you see younger advisors with big books right now, it’s because they had an acquisition strategy,” explains Marta Stiteler, owner of Hamilton-based Pillar Retirement Group, and a seasoned industry veteran. “When you see a younger advisor with a bigger book, he’s either worked with mom or dad, or he’s bought it in this stage.”
The phenomenon is only expected to grow as the industry faces a sea-change with retiring baby-boom advisors transferring books that have taken 20 or more years to cultivate. The move comes as the industry faces growing pressure from all sides with the push for commission transparency and the emergence of self-directed investors.
The succession strategies of many retiring advisors have largely focused on maintaining some control of their books while in many cases ensuring a smooth transition to children or a younger associate tapped to take over.
Most young advisors at the banks appear to be acquiring client books through the latter.
“If you work at a bank, you might have been in the position where you were a junior with an older person who has retired, and were in the right place at the right time,” argues Stiteler. “But the speculation is that it’s going to mean more work per advisor, and they will need more people on their team to complete all the regulatory processes. It’s a good opportunity for someone who’s young to get in on the ground floor of something that can be beneficial after a 5-to-10-year period.”
Just like with many industries, it’s not often about what you know; it’s about who you know. Within her own firm, Stiteler has seen advisors increasingly take advantage of industry contacts in order to get ahead.
“I would say that almost all of the new people in here have some relation already in the business,” she says. “It doesn’t mean they don’t work hard; it’s just that there’s a succession plan happening.”
A big book and good contacts might ignite a young advisor, but they face some hefty challenges going forward.
“The costs of this industry have changed dramatically over the years,” Stiteler says. “It’s gone from being a very paternalistic kind of business to a more independent kind of channel.”