Why Younger Advisors Keep Leaving (And How to Attract & Keep the Best Ones)

The talent crisis in wealth management is here, and it’s worse than most advisors realize. Schwab says the industry needs to hire 70,000 new staff in the next 5 years, yet top young advisors are harder to find and more expensive than ever.

In this episode, Jim Atkinson and Jordan Christa unpack why next-gen advisors are leaving firms (or avoiding the industry altogether) and what forward-thinking RIA owners must do to attract and retain them.

• Why succession planning fails most firms
• The equity path every ambitious advisor demands
• Lifestyle practice vs. Growth platform — cultural mismatches
• Compensation strategies that actually drive performance
• How boutique RIAs can compete with PE-backed giants
• Leadership development systems that turn young talent into future owners

If you're struggling to hire or keep talented younger advisors, this conversation will give you a complete playbook. Stop losing great talent. Build the kind of firm ambitious advisors want to join and grow with.

Follow The Advisor Blueprint for more straight talk on RIA leadership, growth, and succession.

Disclaimer: 

Avidian Wealth Solutions is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. 

Avidian is neither a law firm nor an accounting firm, and no portion of its services should be construed as legal or accounting advice. 

Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

This information contained herein may be dated.

Transcript

The Growing Talent Shortage

SPEAKER_01 0:06

You know, the industry keeps talking about all these retiring advisors, but here's the scarier statistic. Schwab estimates the RA industry will need to hire 70,000 new staff over the next five years. And that doesn't even fully account for attrition in retirements. So at the same time, compensation across advisor rules has risen 23%. And that was from 2020 to 2024. So the translation there are not enough high-quality next-gen advisors, and everyone's having to pay more for them.

SPEAKER_00 0:38

They are really hard to find. And I don't quite understand this one. I've got two kids in college, and I've watched all their friends grow up, some from the time they were in kindergarten, you know, some of the same kids, and they just really don't have an interest in our industry. And, you know, when I was growing up and in college, finance and wealth management was a great, it was very competitive. You had to fight to get those few spots they were hiring for, these training programs. And now people are begging these kids to come in. And then and sometimes when you attract them, then they don't stick. You know, you need them, you find them, and then they just don't want to stick around. So let's talk about maybe the reasons why that happens.

SPEAKER_01 1:18

Yeah, absolutely. Um, you know, it's funny that you say that because I think when I started in the industry recruiting solely within wealth management, it was 2017, and I saw a massive gap then. And I feel like we're that's exactly where we're at now. There's there's a gap. It was like nobody, very little, I should say, numbers of individuals from, you know, mid-20s, late 20s to 50. And now I feel like we're on the brink of another gap. So I think the first one really is, you know, let's talk a little bit about succession. I always say this succession is not a retirement

Why Succession Planning Matters

SPEAKER_01 1:53

problem. It's a strategic, you know, intentional issue that every firm should be talking a lot about. So I think the first reason that there are there's not a lot of interest is that there's not a lot of succession planning. And so there's no clear equity paths.

SPEAKER_00 2:09

There's no clear equity path. There's no clear career path. Exactly. There's no clear path.

Clear Equity Paths Are Non-Negotiable

SPEAKER_00 2:16

And we see this on multiple fronts. And so the equity path is a clear one. And we see a lot of owners, and I know several that have built a firm and they just don't want to let go of the reins. And this is an industry where, you know, you're not uh, you know, you're not lifting heavy equipment, you're not breaking your body as long as you can think clearly, you can still do the job, you can still hold the equity. And a lot of times these folks come in, they realize this owner's not gonna let go. They're not gonna give me a path to ownership, so I'll go elsewhere. In fact, I talked to two advisors at a conference this last week where that was exactly what happened. They realized that the owner was not gonna let go, and they left and took a third of the assets with them, and the owner was left um holding on to the firm because multiple of the advisors left to start a new firm knowing that this person would never let go.

SPEAKER_01 3:06

Absolutely. And I think that's definitely something to talk about because that's actually above the or part of the top-ranked rather reasons why that you know these individuals aren't wanting to get into the industry and aren't really driven to become an advisor because they actually are ranking the ownership opportunity and growth potential as such a driver away from walking into this industry and having a career even above base compensation. These individuals are hardworking, they're willing to, you know, take a step forward, but there's gotta be some kind of path.

SPEAKER_00 3:40

You know, and I would say it's you know, not all of them are hardworking, a lot of them are, but if you want the best of the best, you need to have a clear path. And I think there's, you know, a clearly written having a clearly written equity ladder framework, sort of, you know, revenue thresholds, leadership responsibilities, capital buy-in structure, a timeline, show the math. And if you've got this written out and you've got a plan and it's been structured, you're gonna have a much easier time attracting top-tier talent to join your firm and stick and eventually take over ownership.

Cultural Mismatch Problems

SPEAKER_01 4:15

Yeah, I agree with that. Because I think that the the question really stands out too is you know, even when equity does exist, that framework is so important because why do next-gen advisors still leave? So if that is the case, if you are sitting at a firm, you've got your equity, you know, it's very clear, it's laid out, but you're still having issues with next-gen advisors.

SPEAKER_00 4:37

Yeah.

SPEAKER_01 4:39

I think the what I've seen is that there's a cultural mismatch. There's a lifestyle firm versus a growth platform. So when we're talking about having these very driven, extremely hardworking, top-tier talent join a firm, even if there is that clear path to what that mentorship looks like to take over the firm, really, I think you're you're kind of getting in a place where has the owner settled? Has it become a lifestyle practice? Because now you're looking at this massive cultural mismatch where you have somebody that's very driven, very excited, wants to go, wants to grow, wants to be an owner with a firm that's just not growing or going anywhere.

SPEAKER_00 5:20

Younger advisors um increasingly have a different mindset and they're looking at other things besides just the growth or what's going to help them reach those growth thresholds. Tech-enabled platforms. And I think the older advisors um tend not to be as tech focused. And I think that also um pushes into other areas that then slows their growth. So remote flexibility. Uh, I know that um everybody struggles with this one post-COVID. Uh, you've got to have some folks come into the office um on a regular basis. I think the business development folks probably less often, but um, you know, to demand probably younger advisors come in, you know, five days a week is a is a tough one for them. Faster decision cycles, I think that's another one. That's a huge one. Yeah, we see that um, you know, if it takes six months to make a decision, you're gonna bog down the firm, decisions won't get made. And typically these are sort of autocratic leaders that don't want to loosen the reins. And um, I think some of them actually enjoy really slowing the machine down, and younger, talented folks are just not gonna want to see that. And then merit-based advancement. And this is really good for both the employee as well as the firm. You know, if you saddle yourself with a heavy fixed burden on your expenses, what you'll find is that people just aren't incentivized to take the actions you want. So I think, you know, having merit-based variable compensation structures that are attuned to what you're really trying to incentivize, you can pay folks much more on the top end for outperformance. And it would make sense because the revenues come in through their outperformance on those variable compensation metrics.

SPEAKER_01 6:59

Yeah, absolutely. I think, you know, at the same time, private equity-backed RAs and aggregators are marketing speed, scale, you know, and growth resources

Competing with Private Equity Firms

SPEAKER_01 7:08

aggressively. So when you talk a lot about AI is a big thing, tech enabled platforms is a big thing, remote flexibility is a big thing. And it seems like these larger aggregators and larger RAAs that are popping up everywhere, right? And and buying out multiple firms um and are very private equity backed, they're offering these things. So, how can a small boutique RAA even compete for that?

SPEAKER_00 7:34

It's tough. And I would argue though, that if you're a really talented hunter, you don't want to go to either because the private equity backed firms tend to um incentivize more of the farming, which is easier, you know, just sort of protect the assets. We went out and bought these firms, acquired them, kind of just want to keep the clients happy. We see a lot of those types of structures. And they'd rather pay someone, you know, a third the cost versus a hunter where their payout would be much higher for having brought those clients in. They can pay much less of the compensation. Right. So they tend to have built it for efficiency and low cost. But if you're a really good hunter, you're gonna want to get paid as much as possible. You could be won want to be involved in the development of the firm. And that means not something slow growing, not something where the processes and the compensation is not defined, and also not a firm that's private equity backed.

SPEAKER_01 8:30

Yeah, I agree. I think, I think the biggest uh push here too is if it if anybody's listening and thinking, well, my firm's kind of like this or kind of like that, or it's completely different. I think that as a recruiter, I just want to say, you know, not every firm should recruit every type of advisor. If you are a lifestyle practice, then you need to be very aligned with that said next gen advisor that comes on board and just recognize that they're not gonna have that advancement, growth. I'm gonna get out there and make this, you know, a multi-million dollar, you know, business immediately. Cause that that's not what you're, that's not what you want. It's not who you're looking for. And I think that that's hard because a lot of times, even if you've built a lifestyle practice, what I find is that the founder that is making this the succession plan a reality and retiring, they tend to have the mindset of, well, when I did it, well, when I did it, well, back in my day and I did this and I knocked on doors. And but that's not where we are today. And that's not the practice you've built. So being very mindful of that cultural, you know, alignment of it, are you building a lifestyle practice or are you building an enterprise platform? You know, and recruit according to that identity. Don't promise growth if you want stability. And, you know, articulate that growth vision. Ambitious advisors want momentum, not maintenance.

SPEAKER_00 9:55

Yep, I would agree completely. So we were talking about compensation. Let's go back to that for a minute. So compensation really drives actions. We've seen it over and over. Um, I forget who said it, but there was a quote if you show me the compensation plan, I'll tell you what the results are going to be. And um, so isn't really that the kind of the biggest lever that they've got is the compensation

Compensation That Drives Results

SPEAKER_00 10:21

plan.

SPEAKER_01 10:21

Yeah, you know, I I think this is one of the things we saw in Schwab's latest um report too, in terms of the highest growing or the fastest growing firms are the ones that are paying performance-based compensation. So there's definitely a tie to that, exactly what you just said. You know, show me your company and I'll show you the results. I'll show you the performance. So I think whenever you're looking at, you know, just compensation as a whole, you know, across advisory roles, it did it did rise 23%, right, from 2020 to 2024. But ultimately, you know, we're firms aren't competing, or they're competing not only with other RAAs, but they're also competing with fintech startups and PE back platforms. And essentially young advisors increasingly are expecting revenue participation, bonuses tied to firm growth, and a clear upside beyond salary.

SPEAKER_00 11:12

Yeah, if your comp plan hasn't evolved in five years, you're already behind. I would say with the pace things that are moving at now, it's probably three years. And you probably need to be taking an annual look at what your compensation looks like. We look at the Schwab benchmark survey every single year, but then we dive into the metrics behind that. So how is the variable compensation structured and what goals are we trying to incentivize? And I would say I think since I've been here the last eight years, our compensation plan, and I lead the compensation committee, has changed virtually every single year to some degree to try to fine-tune tune it for the changes in the industry as well as what we're trying to accomplish.

SPEAKER_01 11:51

I mean, I think that speaks volumes of, you know, just the culture with NVIDIA. And I think, you know, one of the things I always say too is that you don't have to have one comp plan that's across the whole firm. Every position and what that position is really the goal and the end result should have a different comp plan. Obviously, you're not going to play pay a client service advisor or a CSA the same as a producing advisor that's going out there and and doing what they do best and getting a new business. So it's okay and to be familiar and to get comfortable with the fact that your comp plan is going to be different per position.

SPEAKER_00 12:28

Right. So let's talk about um one other aspect of this, and that is leadership development.

Developing Next-Gen Leaders

SPEAKER_00 12:36

So these young advisors come into your firm. One of the things they want is a clear path to leadership. They want to know how are you going to help us develop into leadership roles? And I will just kick it off by saying that one of the things that we found is we have leadership teams throughout the firm. And on any leadership team, there may be five team members. There's a chair of that particular leadership team, at which we have 11, usually a senior person, um, could be a partner, someone at least um sort of at executive level. But we will offer to some of the younger staff to join a leadership team that they would have interest in. And in doing so, they get early exposure into how to run a meeting, fall attraction, you know, keep minutes, keep it on track, build an agenda. And over years, they will then move up within that leadership team. And we've had folks that then take over leadership teams. And it's a great way to show them and get them exposure and give them a couple of years to really work up to running a leadership team, which then is kind of just below executive leadership and really prepares them for the next step.

SPEAKER_01 13:42

I think that's a great idea because, you know, I think one of the things I hear most often is there's a massive disconnect between what RAs are training their future succession plans and versus what they're training as a future leader, right? So there's a lot of technical skills, there's a lot of KPIs, there's a lot of production quotas, but there's not a lot of mentor shadowing programs that will actually essentially take you by the hand and say, okay, now we're gonna cross this step, now we're gonna step on this one and move up the ladder. Because if you're not mentoring and you're not leading leaders, what kind of leader are you leading?

SPEAKER_00 14:20

You know, when they've got to have a growing voice in the direction of the firm, they've they've got to feel as though when they come, at least for us, when they come out of those leadership teams, if they make a decision for the firm, it's a decision that's going to be implemented. That they they know that they've actually taken ownership of something and it's going to have an impact. And that matters.

SPEAKER_01 14:40

That absolutely matters. I think one of the things that matters most, apart from compensation, is the value they feel that that anybody can have on the firm. And if they feel like their voice is heard, then you've won them over right there. You know, I think that that really moves mountains when it comes to any advisors that I speak with.

SPEAKER_00 15:00

Yep. So one of the quotes I've heard is if you don't develop leaders internally, you'll rent them externally at a higher price. So might as well develop these folks internally. And I think, you know, I've heard some people say, yeah, but if I develop them internally, then they're just going to take their skills and leave and go elsewhere. But if you don't do that, they're going to leave and go elsewhere. Right. So you might as well develop them, have them stay at a home, uh, which is your organization, um, involve them in the equity of the firm, um, tie them in emotionally, and that's how you get them to stick.

SPEAKER_01 15:32

You know, Richard Branson has a great quote like that you know, teach them or train them so well that they could do it on their own, but treat them so well that they'll never want to.

SPEAKER_00 15:41

There you go. So, some of the calls to action, create a clear and written equity path, replace vague promises with transparent structure, define your from identity honestly, recruit advisors who align with that vision, update compensation models annually, tie pay to enterprise value creation, develop leaders before you need successors, give next-gen advisors strategic visibility and responsibility.

SPEAKER_01 16:11

Yeah, I think all of those are great call to action for anybody who's thinking about succession or not thinking about it and should be, even if it's seven years away. You know, the talent shortage isn't

Actionable Takeaways

SPEAKER_01 16:23

coming, it's here. And the firms that win won't just pay more, they'll build clearer futures.

SPEAKER_00 16:28

So if you find yourself in need of young, talented advisors in that 35-year-old range, we know the statistics. The odds are challenging. So build a firm that they would want to come to and stick with. And if you would like to get more insight or more input, feel free to reach out myself or Jordan. We'd be happy to help you out and answer any questions, dig deeper into the subject. Make sure you follow the podcast for more, share with others, and we'll see you next time.