Current failure rate is unacceptable and that’s on all of us, says portfolio manager
It is a well-known fact that the average age of a financial advisor in Canada is well into the 50s, with some estimates ranging as high as 59 years old. I started my career as an investment advisor back in 2012, starting at a bank firm. Many of you will likely remember your rookie training. For me, it involved spending two weeks in Montreal with 39 other rookie advisors from across the country. Not a bad way to spend a summer!
So, 40 of us entered the industry together … five years later four of us remained. A 90% failure rate in my mind is absolutely atrocious. At first, I thought this might be an issue specific to the firm I was with, but after hearing similar stories from across the industry, I realized this was more of a systemic issue. What needs to happen if we are going to turn a 90% failure rate into a 90% success rate?
Sink or swim
First of all, we need to get over this idea that every new advisor entering the industry needs to endure the same challenges that we all faced. I have seen far too many good advisors not make it simply because they didn’t get the right opportunity at the right time or even worse or be tempted to do something that is not in their client’s best interest. Many of us made it as advisors despite the system, but it would be a mistake to believe that all successful advisors must go through the same trials in order to be successful.
We need to focus instead on mentoring young advisors and helping to develop them into becoming great professionals. Having a process for building strong wealth management teams is a start. Hiring junior associates onto a team, giving them the opportunity to learn the advisory business from the ground up and establishing a plan for advancement with an emphasis on guidance and mentorship is also vital. This can be a win-win situation but I cannot stress enough the importance of having a well thought-out plan. If that plan is a sink or swim scenario, you won’t be doing your new associate or yourself any favours.
If you want good people, you need to offer competitive compensation that is also in line with the times. This doesn’t necessarily mean that you need to overpay or even meet the unrealistic expectations that some people are coming out of post-secondary education with. But this does mean that you need to be competitive in your compensation structure, with a plan for the future.
Many people will accept a lower income to start if they know that they are working towards higher rewards in the future while working for a business that is in line with their values. But don’t take this for granted because it can quickly work against you if you become complacent and you will end up losing good people. I firmly believe that when you find good people, you find a way to hire and keep them. Once again, don’t make the mistake of thinking that because you were put in a sink or swim situation, earning commission right out of the gate, that this is the right approach for your new associate. The fact is, not everyone is destined to be a fully commissioned advisor and salaried advisors can add significant value to your business. We need to offer an opportunity for advisors to succeed on both tracks. The industry needs hunters and shepherds.
Sharing the pie
One of the biggest mistakes I see advisors make comes from their fear of sharing ownership in their business. We hold onto ownership so tight that we miss out on the exponential opportunity that can come with sharing the success with others. If you’ve got a superstar young advisor on your team, don’t be afraid to bring them in as a partner in your practice. If they are a quality person and professional, you will earn back what you give up multiple times over. If you ever intend to grow your practice into something more and multiply your value, you need to be open to letting other people in. With the right people, it will be the best decision you ever made.
The world has changed in so many ways since most of us started our careers and so have the expectations of the next generation of advisors. If this industry is going to continue to be competitive in attracting top talent, we need to change how we do things. Frankly, a 90% failure rate is simply unacceptable, and that’s on all of us.
- Grant White, CIM, CFP®
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with iA Private Wealth, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.