OMG. We’re Dinosaurs

I was talking to a reporter on Monday about how Advisors use social media. I have no idea when the article comes out, or how prominent yours truly will be in the piece, but the one thing we discussed at length was the notion: that people will always need advice about their money.

I actually challenged that notion saying, “I don’t think my 5 year old will have an Advisor when he’s my age.” At least not in the sense of the word today.

As I see it, the next generation will just expect a trusted financial institution to show them some simple model portfolios to choose from. They won’t want to think about who the hot or cold manager is, or if we should overweight emerging markets. They’ll want a clear, repeatable methodological approach. And they certainly won’t expect Joe broker to be the expert moving the dial. They know better. Joe broker will be the translator, not the architect. My son’s generation will want a simple all-weather approach — from the firm.

This next generation will Skype or Tweet with a dedicated team of smart, friendly people 24/7 when they have a question, who are probably salaried & given customer service bonuses based on surveys. And because everything will have a digital footprint, people fibbing over the phone to make the sale will be a thing of the past. The next generation of investors may never meet their service team in-person but will probably video chat occasionally & screen-share often.

My son & his friends will watch their portfolio on an app & if portfolio doesn’t do what it’s supposed to–there had better be an amazing, easy to understand reason about why (that was discussed beforehand)– or they’ll fire you, quickly. They’ll expect clear reports, no paper, consistent, meaningful communication (i.e. not the generic statement insert articles we see today), and low fees.

Wall Street’s Amway days of relationship-based selling through Financial Advisors are probably coming to a close with this crowd. The attitude for this generation? It’s not show friends, it’s show business.

Instead, the next crop of investors will want to cyberstalk a shortlist of candidates & their performance in real time. Those candidates will be vetted through friends or thought leaders on Twitter & Facebook; people they think are more successful than themselves.

To be clear, I do think that the high-end client will always want a dedicated relationship, and that’s why Wall Street continues to swim upstream. But the $500k+ crowd is going to expect way more in the way of services than they get now for their 1%; and way more than Wall Street is prepared to offer. And for most people, with portfolios $500k and under, what I just spelled out will probably be the new normal.

And who will provide this service & advice? That’s unclear at the moment.

From eFinancialCareers:

A senior Wells Fargo executive is warning that the brokerage and wealth management industries are facing a shortage of financial advisors and that it’s not going to be fixed by recruiting talent from rival firms, according to Dow Jones Newswires.

According to a 2010 report from Cerulli Associates, a Boston-based research firm, less than 25 percent of all financial advisors are under 40 while just 5.6 percent are 30 or younger. The financial advisor workforce is aging (the average age of an advisor is just shy of 49 years old while 14 percent of advisors are over 60 and thinking about succession) and there is a shortage of new talent.

Wall Street’s answer? Hire more trainees. But in an industry where 9 out of 10 won’t make it, the fresh crop of new blood isn’t exactly going to be thriving.

What is clear though, if something doesn’t change– we’re not only as old & out of touch as dinosaurs; we’re dead like dinosaurs.


Source: Looming Advisor Shortage, Merrill increases adviser training – eFinancialCareers

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Advisor or Adviser?


Toxic Relationships

Your Stockbroker: The Alpha

Brokerus Stockus: Wile E. Coyote

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3 thoughts on “OMG. We’re Dinosaurs

  1. Hi Scott,
    How could I not feature you and your blog prominently in my article, especially the post that instructs advisers how not to have a website that sucks!

    Regarding the younger generation and financial advice. I notice with my own teenage sons, they seem to be almost allergic to even talking on the phone, and would much much rather send a text or do online transactions than deal with a stranger in person or on the phone. Typical cell phone bill for my three boys might show 100 minutes of talk time and 6,000 texts.

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