By Susan E. Campbell
The aging population may signal a predicament for the investment advisory industry.
On one hand, more and more people are requiring expert management of retirement assets. On the other hand is a question of attrition: Who will replace retiring financial planners?
“Our industry is getting older,” said Anthony J. Capobianco, president and CEO of Capobianco Financial Advisers of Clifton Park. “I have seen studies that less than 5 percent of financial professionals today are age 30 or younger.”
These professionals include registered brokers, financial advisors and certified financial planners, all designations that indicate that certain levels of education and proficiency have been achieved.
When this issue was posed to Steven Bouchey, CFP, he recalled that it was not that many years ago that anyone could hang out a shingle and call themselves a financial planner. Today the regulators demand higher standards and the public demands more experience.
Bouchey, who is president and CEO of Bouchey Financial Group based in Saratoga Springs and downtown Troy, said that with today’s technology, anyone can go online and write their will. But with a do-it-yourself financial plan and no experience backing it, the plan won’t stand the test of time.
“The beauty of this industry is that it will never go out of style,” he said. “Everybody needs financial planning guidance, especially for retirement. But experience is very important.”
“Our industry, like many, is continually evolving,” said Capobianco. “Many people try to figure out financial management on their own. But it takes time and expertise.”
“Clearly more people with gray hair are leaving than young are entering this profession,” he said. “The future could be a problem.”
A 70-year-old whose main focus is portfolio protection and outliving his assets may find it difficult to put full trust in a newcomer who has not experienced a major market drop.
“The trust issue is huge, plus new ones don’t know what it’s like to lose money,” said Bouchey.
“There are people who are very good at what they do in this profession,” said Hal Allen, president and CEO of Allen Financial Consultants of Clifton Park. “Those individuals have integrity, put customers first, and truly care and are passionate about the industry. And some don’t.”
“Clients are scrutinizing the individual planner more now, and that’s a good thing,” said Bouchey.
But there’s a rather small talent pool for the next generation of planners and advisors.
“About 96 percent of college students have heard about financial advisory, but only 7 percent are actually interested in pursuing this as a career,” said Capobianco.
“It’s hard especially for a young person to come across as a wealth manager and capture trust,” Bouchey said. “He or she needs to get as much experience wherever and whenever possible, put in extra time, and work two or three years on a CFP, the certified financial planner designation.”
Capobianco himself got his start in the insurance industry.
“I was 22 years old and not from the area. zero experience. I didn’t know any warm prospects or doors I could knock on,” he said. “It was a cold-calling business then, but not so today. Today there is often no soliciting so it is difficult to reach a business owner in person, plus there’s the National Do Not Call List.”
“The industry has changed in such a way that a young person could be affiliated with the senior advisor in an established firm and be mentored,” Capobianco said.
This junior advisor would then mine the senior’s book of existing business for prospecting. Perhaps these were individuals the senior advisor did not have time for.
“Just making an appointment would be a win, an opportunity to sit in at the meeting and learn,” Capobianco said.
Bouchey said even finding CFPs is challenging. “Every time I build out my team, it gets more difficult to find qualified professionals, especially women,” he said. “I’ve been searching for a female CFP for eight years.”
He said the industry “does a great service” because people do need financial guidance and hand-holding to stay on track.
“Our value comes in especially when there’s volatility,” he said. “Clients love to hear from us and learn what we’re doing” to navigate the course.
“Retired clients have made their money, and it’s our job to help them keep the money they have, “ said Allen. “They should be prepared with a portfolio make-up to ride out the storm and be able to sleep at night. People want management and their money to be protected.”
“We cannot avoid market downturns, but we can prepare, not necessarily through the investments per se, but through the architecture we design for the individual’s portfolio,” said Allen.
Along with the aging population comes “a lot of wealth that will transfer to children and grandchildren,” Capobianco said.
“There are good opportunities ahead to get into this business. In fact, opportunities are endless,” he said. “Good, solid investment advice is always in demand.”