As the economy evolves and new generations start entering
the workforce, will financial service firms adjust to the barriers to making
the advisory field a career choice? Brokerages are certainly having a harder
time attracting new advisors. Now at least one wire house, Wells Fargo
Advisors, is considering changing its compensation formula, putting more
emphasis on salary versus variable compensation.
Last year, research by Cerulli showed the graying of financial advisors:
the average age is 51, with most wanting to retire at 68.
Not only do experts think a new model is needed for
Millennials, but the world has changed as well — with more no-call lists making
cold calling more difficult for new advisors. In addition, lower earners at
wire houses enjoy a lower payout. Some also think that less emphasis on
commissions would be better for clients; regulators in other countries like the
UK seem to be favoring this model. Additionally, some think a higher-salary
model would be more attractive to women and minorities — groups that are poorly
represented among financial advisors.
But others are concerned that a higher-salary model would
increase layoffs during downturns. It certainly makes less sense for IBDs. But
change is coming — the question is whether brokerage houses will adjust to it.
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