Why aren't advisors building multigenerational practices?

According to one veteran advisor and one of the industry’s rising stars, advisory practices are not doing enough to build cross generational teams that combine the skillsets of youth and experience. They agree that in failing to harness multigenerational talent, firms are not preparing properly for their own succession and legacy.

David Little, founder of Little Wealth Management and 30-plus year industry veteran, and Darcie Crowe, founder of Crowe Private Wealth and a member of WP’s 2016 Young Guns class, agreed that wedding experience with young talent can be key to building a practice with legacy beyond its founder. Crowe outlined how young advisors can partner with veterans to establish themselves in the industry. Little explained what a practice founder is looking for in their young partners and potential successors. They both say that, in general, older and younger advisors each come with their own set of strengths and weaknesses.

“I'm not here to retire right now. What I want is to build something that I know will have a legacy,” Little says. “The problem, and it’s a problem for the whole industry, is that I get [younger advisors] that want to come in without anything to bring to the table. They just think they're going to inherit a $100 million plus practice.”

Little says that what he’s looking for in an immediate successor is who can bring in a sizeable book of their own and shares his client-centric investment philosophy. He says that his priority, and the priority for his successors, should be in facilitating a lifestyle for their clients, not in building a lifestyle for themselves.

As for a young gun, Little say’s he’s got one in his license assistant Arpit Grover, who joined the practice at age 27 after completing an MBA in India. Grover proved his value to Little by working diligently, demonstrating loyalty, and growing his skillset, especially in client relationships and product innovation.

Crowe says that a quick understanding of novel products, as well as an ability to connect with younger clients, and older clients’ children and grandchildren, are some of the key skills a young advisor brings to their practice. She says that older advisors, who established themselves with an older product set, can miss the opportunities presented by new products. In establishing her own practice, Crowe focused on new product development. She says that in an era of new funds and liquid alts, young advisors can demonstrate value by keeping their practices ahead of the curve.

On the other side of that coin is a tendency, Crowe says, among some young advisors focus too much on what’s new and ignore the tried and true. She says that’s where older advisors show their value best, demonstrating the experience that can only come from living through several market cycles to make sure the fundamentals of the practice are solid. It’s Crowe’s view that the strengths and weaknesses of each generation balance each other out.

“From where I stand, I would say that we are not making use of [multigenerational teams] enough,” Crowe says. “I've started speaking to an advisor a generation or two ahead of me. The first thing that we realized was that we appeal to different clients, that there's great strengths in terms of what they bring to the table with their experience and, and great strengths that I bring in terms of product development that they hadn't necessarily looked at. I think it is really important that we start to address this gap because it can ensure that clients are continuing to get the best service.” 

Little and Crowe both see a dearth of young advisors rising up the ranks in the modern industry. Little attributes this, in part, to regulatory changes like the elimination of trailer fees which were an important tool for advisors to generate necessary cashflow in their first few years. Crowe acknowledges the new challenges of building a book of business independently. She was able to do so, she says, because she started in the investment banking space and entered wealth management with a roster of clients from that industry. If she hadn’t, though, she says she would have partnered with a veteran advisor. Crowe says that young people looking to join the industry should look to join an established practice.

“My advice [for young advisors] is rather than starting out on your own and trying to build a book from scratch, you should find an advisor that you respect and that you align with their investment philosophies and business practices,” Crowe says.

David Little, as an established advisor, is looking for younger advisors to partner with, provided they can prove their value. He says he wants to see brand new advisors acting like Grover, his licence assistant, ready to pay their dues. In terms of succession, he’s looking for a philosophical and a personal fit as much as for an established book of business.

“[A colleague] once said to me, ‘I'm always impressed that you still have such a passion for this business. I don't know anybody that has that passion about your clients,’” Little says. “I told him that’s the business, and it shouldn’t be that hard to understand. If I can get other people that think that way, then that's a big part of me bringing anyone into the office.”