Business

As financial advisers age, customers worry about who will guide their portfolios

Kim Fleming, chairman of Hefren-Tillotson, in her downtown Pittsburgh office. Fleming saw the demographics of the region trending younger and decided to diversify her team of advisers to serve a younger population.
Kim Fleming, chairman of Hefren-Tillotson, in her downtown Pittsburgh office. Fleming saw the demographics of the region trending younger and decided to diversify her team of advisers to serve a younger population. TNS

In the wealth management world where financial advisers are responsible for handling trillions of dollars in client assets, a significant number of industry veterans are either near or beyond retirement age.

That could spell trouble for some firms that have no plans for passing the torch to a younger generation.

The average age of financial advisers is 50.9 years old and 43 percent of all advisers in the U.S. are over the age of 55, according to Cerulli, a Boston-based research company that focuses on adviser trends and consumer information. Cerulli found nearly one-third of advisers fall into the 55 to 64 range.

“It’s an under-the-radar issue,” said Andrew Stoltmann, a Chicago-based securities lawyer. “We always talk about investors getting older. The flip side is advisers are aging as well, and that’s problematic for investors.”

While the industry as a whole is faced with this looming quandary, sole practitioners and smaller firms that lack the resources to recruit and train young people are most vulnerable to leaving their client’s assets in limbo or becoming extinct.

As chairwoman and CEO of Hefren-Tilliotson, one of the largest wealth management firms in the Pittsburgh region with nearly $10 billion in assets under management, Kimberly Tillotson Fleming saw the demographics of the region trending younger and decided some years ago to work to diversify her team of advisers to serve a younger population.

Today — thanks to a summer internship program and new hire training – 70 percent of Hefren-Tillotson’s 75 full-time advisers are under the age of 50 and 38 percent under age 40. Fleming hopes that puts her firm on solid ground to grow a client base when other firms cannot.

Hefren-Tillotson has a system that encourages teamwork on client portfolios. New hires typically work three to five years as financial planners on a team, gaining knowledge analyzing estate plans, taxes, insurance, investments, retirement planning and college funding. After gaining expertise and earning the proper securities licenses, they move up to a financial adviser role.

She thinks clients like it because they worry about the future. “As you get older, clients will say, ‘Well, what happens if something happens to you?’ So they like the fact that there is someone older and someone younger working with them.”

When her late father suddenly passed away five years ago, Fleming, 57, was a member of his team. Because of that arrangement, the clients he worked with already knew her and were comfortable continuing the relationship. Now her son, Grant Fleming, 27, works on her team.

“I can bring him in and say, ‘Grant will be here to work with you if something happens to me. And he’s here to work with your children, too,’” she said.

  Comments