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Attracting millennial advisors requires a fresh approach

By Susan Yellin | May 30 2016 03:00PM

Part one of a series of three articles by Susan Yellin

Part two: Millennials seek financial mentoring from their advisors
Part three: Advisors who bring adult children on board find success together serving families


Sara Zollo was finishing a double major in sociology and music at Wilfrid Laurier University in Waterloo, Ontario, en route to entering law school when her father helped persuade her that the legal profession was not for her.

But it was a summer job that turned into a full-time marketing position at Sun Life Financial that was her real turning point. She eagerly embraced the life insurance industry and secured her mutual fund and life licences as well as her Certified Health Insurance Specialist (CHS) designation.

Now, just one exam shy of her certified financial planning (CFP) designation, Zollo, 29, looks back seven years when she started out and the “absolutely” difficult time she had with the well-meaning, but dated, mentor advice she was offered.

“I would try these things for months: door knocking, cold calling, hard closings – these are the things of the past. Things that used to work back in the day don’t work anymore. You’re dealing with a different customer and a different time,” Zollo says from her office in Richmond Hill, Ontario.

While many younger clients say they don’t want their parents’ advisor, Zollo says they do want to achieve what their parents have. “They look up to the baby boomer generation and they are concerned that they are not going to be as comfortable or amass as much wealth as their parents. But if their parents say: you should work with an advisor – it doesn’t have to be my advisor – if their parents are echoing the importance of having a financial plan, then that might help as well.”

Both Zollo and Sun Life realize that in order to capture the younger millennial market they have to take a renewed attitude. Sun Life, for one, has refreshed its recruiting material, is helping new entrants understand the importance and role of the advisor, the advisor’s flexibility of direction and the ability to become autonomous by building their own businesses.

Attracting new advisors into the fold is a topic both Advocis and managing general agencies (MGAs) are trying to address.

Greg Pollock, president of Advocis, says the industry isn’t seeing a lot of millennials coming into the business. Pollock says part of the problem is that the industry is not as career oriented as it used to be when insurers concentrated on their own dedicated life agents. At that time, insurers brought their advisors into the fold with mentoring from older and wiser in-house agents in addition to educating them to their products and services.

Mentoring opportunities

The industry is now trying to find mentoring opportunities for new advisors in a number of ways, says Pollock. Advocis has been encouraging boomer advisors to provide guidance to their younger counterparts through programs such as Five after Five, aimed at advisors who have been in the business for less than five years. Networking events are held with more senior advisors, sometimes in an informal setting like a pub or in a more structured, office environment.

“It is successful, but there needs to be a lot more of it, otherwise, over the next 10 years in my view, we’re going to see a shortage of advisors in the industry,” says Pollock.

MGAs are also trying to step in where the agency system left off.

Jim Virtue, president and CEO of PPI Solutions Inc., says he has seen some younger advisors show up at meetings across the country over the past few years.

PPI, like other MGAs and insurance companies, is working with older advisors to try to match them up with their younger counterparts for both mentoring and succession purposes, and there has been some success doing that, says Virtue.

“I think there’s a tremendous opportunity in this business for younger advisors. We just have to show them the opportunities,” says Virtue. Part of that will come about by connecting less-experienced advisors with more successful ones and allowing them to work out the best way to go about mentoring.

Robust educational programs are de rigueur these days, aiding younger advisors with the technical knowledge and sales techniques that will work for them, says Virtue. In most PPI offices across the country, more than 150 hours of continuing education courses are taught every year.

HUB Financial has a program in place for all its new advisors. Called “Value Planner Development Program,” the plan gives new advisors sales and product training and access to one of its broker development specialists across its 16 offices, providing mentorship over the course of the entire first year, says HUB president Terri Botosan.

The program began in March 2013. Since then, about 190 people have gone through the program, which includes all new advisors to the industry. About 25%-30% of participants are millennials. The program involves one full week and then 10, 2.5-hour follow-up sessions.

The increasing number of people going through the program at HUB stems from family financial planning firms. “We are finding that a number of our older, existing advisors are actively looking to train their own children,” says Botosan.

Financial Horizons is trying to get advisors to join its MGA through a plan called Horizons Club. Developed about five years ago and open to all advisors with less than five years’ experience, its goal is to provide extra attention, sales tools, conferences and meetings for young advisors to give them the latest information they need to move forward in sales, says Justin Hamilton, director of national education at Financial Horizons.

“Typically, the MGA channel has not been very productive in getting that young blood in,” says Hamilton.

After he went through an eight-month course at Fanshawe College in 2009, Hamilton says he received his CSC, a full life licence and credentials to write the CFP exam. But after that, MGAs had nothing to offer in terms of training. Now, he says, Financial Horizons representatives are going out to universities and colleges and outlining its value proposition.

Technology lag

What’s also been keeping young people away has been an industry-wide lack of technology – just the opposite of what online-savvy millennials crave.

“There is no question that the industry is very far behind technologically,” says Virtue. “Millennials find that frustrating. We live in a world where if you want to know something, you get on your phone or computer and you know it instantly. The insurance industry just isn’t that way.”

He notes the industry is finally making some advances by bringing in electronic apps. While others catch up, some MGAs have introduced ipad apps for local branch managers and online calculators.

Financial Horizons is revamping its website to provide technology-based tools. “This is something millennials want to see,” says Hamilton.

“Also, the insurance industry is a very people-based, sales-based business, and I don’t think they are as comfortable with that,” says Hamilton. “Millennials are more comfortable texting someone than talking with someone.”

But probably one of the biggest problems the industry faces has to do with succession. Some older advisors are ready to sell their books of business – but who wants to buy? Some financial planners and advisors want to remain active, keeping top clients for themselves and handing over new or B-list clients to younger advisors just starting out. Others want to hang up their shingles for good.

Advocis has developed educational materials beyond the traditional CLU designation to help new advisors with meatier business issues, says Pollock. The organization is reaching out to younger advisors with business-oriented courses like how to get established; how to start a business; how to write a marketing or sales plan and more knowledge about tax issues for the business. “We have built a plan where individuals can come into the industry,” he says. “There are 40 different activities advisors can work through over a couple of years with a mentor to help them become inducted into the business.”

Even in cases where an older and a younger advisor click, there has to be a transition period with the more experienced advisor introducing the millennial to clients. “During this time clients will realize that this wet-behind-the-ears advisor can take care of their business, does understand their needs, does understand their business and they will have confidence in this individual,” says Pollock.

There will be some clients who are undoubtedly not comfortable with a much younger advisor, but if the baby boomer advisor wants this person to succeed, he or she will find an alternative way of moving forward with their succession plan.

Hamilton says Financial Horizons tries to encourage its older advisors to bring a Horizons Club member in to discuss succession planning. But it also has a succession agreement it can put together with seasoned advisors in cases of death or disability. In those instances, Financial Horizons can buy the block of business and offer it to a younger advisor, perhaps helping out with financing or a salary to start. “Otherwise, it’s a tough trek to do it on your own,” says Hamilton.

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