Top Tips for Young Financial Advisors

Reviewed by Pamela RodriguezReviewed by Pamela Rodriguez

The financial advisory industry faces a significant demographic shift, with the average age of advisors in the U.S. at 56 and about 20% set to retire in the coming years. This suggests plenty of changeover toward younger talent over the next decade, which also means that younger advisors will have a greater chance than previous generations to shape the industry. But first, they need to get their footing in a challenging and competitive career that often throws unexpected obstacles their way.

To help aspiring and early-career financial advisors navigate their early careers, we sought the insights and advice of experienced professionals. In addition to the six main tips outlined in this article, we’ve included standout bonus tips throughout the piece. From emphasizing the importance of lifelong learning to finding a niche and honing communication skills, these advisors share the lessons they wish they had known when starting.

Key Takeaways

• Continuous learning is crucial for financial advisors to stay up-to-date on the latest trends in investments and planning, especially given the ever-changing landscape of taxes and regulations.
• Finding a niche early in your career and becoming known for it can help attract prospects and set you apart in a competitive industry.
• Teaching financial concepts can reinforce your knowledge and boost your confidence when speaking to prospective clients.
• Empathy for clients’ financial stresses while recognizing their decisions are their own is essential for long-term success as an advisor.
• Staying motivated to serve clients is crucial since that will keep your own goals in mind when facing tougher parts of your early journey.

The Field Young Advisors Are Entering

We can quickly sketch three significant shifts underway as newer advisors are entering the field:

1) Economic Changes:

Brian M. Schmehil, managing director of wealth management for the Mather Group in Chicago, said all advisors, not just newer ones, are adjusting to recent economic changes. He noted that higher inflation has “put pressure on certain asset classes, forcing advisors and their clients to rethink portfolio construction.”

He also pointed to advances in healthcare that are expanding the time retirees are expected to live on their retirement savings—perhaps for up to 50 years in the near future. Changes to Social Security and other programs could face demographic pressures that lower benefits for younger workers. There are other generational challenges: student debt is causing many to put off saving for retirement and buying their first homes, and no doubt further shifts are in the offing.

Ashley Folkes, a financial advisor in Hoover, Alabama, said not to assume you’d be better leaving your current firm. “Staying with a good firm and team can bring excellent rewards. With the average advisor’s age being high, young advisors have a unique opportunity for succession plans if they remain with a firm, learn its processes, and build strong relationships with clients through exceptional customer service and client experience,” he said.

2) Technological Changes:

As if that weren’t enough, Schmehil pointed to technological shifts that might continue to lower the fees advisors can charge for portfolio management, a task that will increasingly be automated. The rise of robo-advisors and other technology-driven products presents challenges and prospects for young advisors. For example, if fees continue downward, Schmehil said that advisors might have to bring on more clients to make their careers tenable.

While young advisors are anxious that AI-driven processes could lead to job losses in the sector, the advisors we contacted were anything but naive about such fears. After all, they had survived past threats to jobs in the industry. Yet, they were relatively uniform in saying that automation could be a boon if it relieves advisors of the administrative tasks that take advisors away from the one-on-one service to clients.

As it is now, about a third of advisors say they don’t have the time they want for clients, given their other tasks. In addition, clients overwhelmingly prefer human advisors over their automated alternatives, meaning doing away with human advisors isn’t going to be the answer. As such, younger advisors must take the best parts of automation while centering their practice on client interactions. As Schmehil puts it, “The key is to leverage technology but also have heavy human interaction when required.”

3) Broadening What It Means To Be an Advisor:

The kind of interactions advisors have with clients has been changing for a long time. First, there are the services that advisors offer. “Clients increasingly are looking for one place to handle everything, so being capable of offering tax and estate planning is imperative,” Schmehil said. Robo-advisors will have their place, but they have limits. They “fare well when investors are comfortable sitting on autopilot, making money,” he said. “But the market doesn’t always cooperate, and their service model doesn’t work in times of distress.”

In 2023, Schmehil’s firm established an “innovation lab” to anticipate client needs – to offer “what they want before they know they want it”—and keep ahead of changing trends. Younger advisors without such resources may be encouraged to know that Schmehil and other industry standouts aren’t fixated on the latest tech trends. “The desire will always be there to have a human being assist you in making sense of everything and ensuring you don’t let your emotions get the best of you,” Schmehil said.

With these trends in mind, let’s share the top tips for younger advisors.

Tip 1: Advising Is About People

David Gibson, a financial advisor in Northern Ireland, said he thinks that technology will never replace the human connection in financial advising. “In my experience, once you’ve been through coaching and counseling as an advisor … you are better equipped to have conversations with clients about what matters to them. The investment element could be done quite easily by AI in the future, but getting out of clients what’s important to them is key to developing a financial plan… I’m less convinced that AI could do that well.”

Neil R. Waxman, a certified financial planner (CFP) at Capital Advisors in Shaker Heights, Ohio, said something similar. His firm thinks of its role as engaged in “financial social work,” and younger advisors will find success by “respecting the role that human factors play in the financial planning process.” Waxman said, “Ignoring these emotional and human drivers can result in predominantly legalistic and tax-driven plans” that often miss the mark.

“Your client’s financial stresses are not yours. You are their guide, not their keeper,” said Brian M. Schmehil of the Mather Group. “If you take on all your clients’ financial issues and stresses, you’re going to have a tough time being an advisor. That doesn’t mean you shouldn’t have empathy.”

This highlights a crucial first tip for aspiring advisors. While the technical knowledge advisors have trained on is essential, much of your work will involve building relationships and understanding the emotional terrain your clients are journeying through. This shift in focus from products to people is a crucial part of financial advising today.

Tip 2: Keep Studying

It’s likely the last thing you’ll want to read if you’ve recently finished exams or coursework. Nevertheless, more work now could boost your career in the long term. Gibson stressed the value of obtaining advanced qualifications early. “Get chartered and certified level qualifications ASAP,” he said. “It demonstrates to clients the highest level of technical competence and will be what employers are looking for.”

Doing it while you’re young is challenging enough, especially if you’re working full-time, but it’ll be more difficult to pick back up with studying later on. As Gibson points out, “It’s tempting to sit back once you’ve achieved a certain level. But once you’re in the ‘studying for exams’ zone, just keep going and get the qualification—it’s much harder to get back into the exam mindset after a prolonged break from study.”

However, even after you get your credentials and exams out of the way, you’ll still need to make a habit of learning. It won’t just be for the next credential. Ashley Folkes, a financial advisor in Hoover, Alabama, said a commitment to lifelong learning is a nonnegotiable part of the trade.

“In a constantly evolving industry, staying up-to-date on the latest trends, regulations, and best practices is essential,” Folkes said. “Your clients deserve an advisor who is up-to-date on the latest trends in investments and planning, especially given the ever-changing landscape of taxes and regulations.”

Young advisors should always be reading books and articles, taking online training courses, volunteering with professional organizations, and securing new educational credentials to continue enhancing their value to both clients and employers.

However, you’re not expected to know it all out of the gate. Yes, you’re going to feel out of your depth at times, Schmehil said. “You’re supposed to be nervous and stressed when starting out. You lack knowledge and thus confidence.” But, he added, “The nerves also show you care.”

Schmehil suggested “getting reps,” as you would at the gym, to strengthen your muscles. For an advisor, that’s working with prospects and clients. “Learn as much as you can every day, and eventually, you’ll have the knowledge and confidence to make a difference in a lot of people’s lives. That’s when it gets fun,” he said.

Tip 3: Advising Is Teaching

Dennis R. Huergo, a certified financial planner at the Wealth Enhancement Group in Warren, New Jersey, suggested one way to get more “reps,” as Schmehil suggested, is to take advantage of any opportunities to teach finance to others. He noted something professors and teachers know well: the best way to become an expert on a topic is to teach it. This helps you identify any gaps in your knowledge, develop examples that resonate with clients, and solidify your understanding.

Huergo recalled when a young woman at a library seminar said, “I dislike IRAs [individual retirement accounts] because I can’t get my money out until I’m 60.” He knew it wasn’t correct but patiently explained various tax code provisions. “I felt more secure in my IRA knowledge after this encounter and even referenced study materials to ensure I hadn’t missed anything.”

In another presentation, an attendee asked, “Does a late filing or payment on taxes hurt my credit?” While this question might seem rudimentary to a professional, Huergo said such inquiries challenge advisors to strengthen their knowledge.

“I’ve found that explaining financial concepts, even seemingly simple ones, to a lay audience is helpful because the questions they ask challenge our most fundamental understanding of financial concepts,” Huergo said. “It will also boost your confidence when speaking to prospective clients.”

Having that confidence will hopefully stop you from trying to prove yourself by dropping complicated financial jargon. Experts of all stripes know that expertise is best shown explaining complicated things in simple language, not simple things in complicated ways.

“There is a temptation to over-share your technical knowledge or jargon to compensate for the fact you may be newly qualified or just young in age,” said Joshua Nash, a Dubai-based chartered financial planner. “This will come across as you are insecure and won’t gain the trust of your prospective client, who already assumes you have the required knowledge, skills, [and] qualifications.”

One of the best ways to become a top advisor is to learn from those with more experience. “Spend time watching and observing experienced advisors to develop soft skills, including conversation themes,” said Minesh Patel, a chartered financial planner in England.

Tip 4: Find a Niche

Folkes told us he wished he’d received this advice earlier in her career. “Identify a niche early in your career and become known for it.”

“Some of the most successful advisors specialize in specific strategies or planning techniques,” Folkes added. “Prospecting can be challenging, but being recognized as the best in a particular area will attract prospects to you.”

By developing expertise in a particular area, advisors can attract clients seeking specialized knowledge and tailored products.

Nash said your niche could be something that already sets you apart. “It could be that, as a young advisor, you have a greater understanding of influencer finances and sponsorship deals, and you can make this your niche,” he said.

Drawbacks of Niches

David Flores Wilson, a certified financial planner at Sincerus Advisory in New York City, said a niche can be good, but he pointed to potential drawbacks: “A niche can backfire if you don’t have sustained passion for it down the line. Moreover, your niche could be less favorable during certain times. For example, focusing on pre-IPO tech startup executives was very lucrative a few years ago, but is likely less profitable in the current market.”

Tip 5: Build Relationships

For young financial advisors, building strong relationships with clients and establishing a presence in the community is vital for long-term success.

Minesh Patel, a chartered financial planner in England, told us it’s important to start by getting to know clients and their lifestyles. “The assets and income support and facilitate their lifestyle, and this should be at the forefront of an advisor’s focus,” he said. When meeting with clients, ask open-ended questions that allow them the space to tell you about themselves.

Nash agreed. “Ask great questions to get an understanding of what the client needs from you. Your aim here is to uncover the emotional triggers that lead them to this point.” This way, you can “move the conversation on to the why and not the how.”

Find Your Passion

“When I’m in a room with the top financial advisors across the nation, there’s a clear indication … they wake up most mornings asking themselves what they can do to better their client’s lives. I’m a firm believer that the money will come if you do right by your clients,” said Valerie Leonard, one of Investopedia‘s 100 Top Financial Advisors and CEO of EverThrive Financial Group in Birmingham, Alabama.

To hone these skills, Patel recommends that young advisors “spend time watching and observing experienced advisors to develop soft skills, including conversation themes.”

In addition to engaging with clients, young advisors should actively participate in their communities to build their networks and establish themselves as trusted resources. “Whether it be a religion, charity, walking, sports, or volunteering, be a part of a group where you are known as the ‘go-to financial advisor,'” Nash suggested. “You can build genuine relationships, and it’s a great way to break down a lot of trust barriers people have with financial advisors.”

However, it’s important to approach these interactions with authenticity and a genuine desire to help others. Clients and community members can quickly detect insincerity, damaging an advisor’s reputation and hindering their ability to build lasting relationships.

“I’ve gained so much personally from my favorite groups, whether or not they have directly led to new business, I know they have helped me grow as a person and business owner,” said Stephanie McCullough, founder of Sofia Financial in Berwyn, Pennsylvania, and an Investopedia Top 10 Financial Advisor.

Tip 6: Have Fun Doing It

Starting a new career can be stressful. However, it’s important you don’t lose your enthusiasm. “Your work will be infinitely better … if you enjoy the process of becoming a first-class financial planner,” Patel said. “People like to work with people who bring enjoyment and joy to others.”

Schmehil said that if your intentions are there and you’re always open with your clients, “the rest will follow.” But if you don’t, “your clients suffer.” If you’re an advisor, you’re not only interested in finance but how to help people with finances. A focus on that will see you through, Schmehil said. “The profession is for people who see the honor in serving and taking care of others.”

Why Are There So Many Financial Advisor Jobs?

Many financial advisors are in their late 50s and closing in on retirement. There’s also massive turnover at the beginning of careers, with some years seeing about 70% of advisors washing out their first year.

How Can I Succeed as a Financial Advisor Just Starting Out?

Building a book of clients is the most difficult task. Young financial advisors should prioritize building strong, trust-based relationships with their clients. This involves actively listening to clients’ needs, understanding their financial goals, and providing personalized advice that goes beyond mere investment management.

How Can Young Financial Advisors Attract and Retain Clients in a Competitive Market?

To attract and retain clients, young financial advisors should leverage social media and digital marketing to build their brand and reach a broader audience. Providing educational content, such as blog posts, webinars, and social media updates, can establish you as a knowledgeable and trustworthy professional. Networking is also vital: attending industry events, joining professional associations, and connecting with other advisors can lead to valuable referrals and partnerships.

The Bottom Line

To succeed in this competitive and evolving field, young advisors must be assertive in their approach to professional development, client engagement, and community involvement. By prioritizing continuous learning, young advisors can build a strong foundation of knowledge and skills that will serve them throughout their careers. Identifying and focusing on a specific niche can help them differentiate themselves and attract clients seeking specialized expertise.

Equally important is the ability to engage with clients on a personal level that builds trust. Success in the financial advisory industry requires technical knowledge, interpersonal skills, and a genuine commitment to helping others. By embracing these principles and consistently working to improve themselves and their practices, young advisors can navigate the industry’s challenges to have a rewarding, impactful career.

Read the original article on Investopedia.