YAT, YPA and the Pursuit of Youth

How NAIFA addressed the ‘graying’ of its advisor base with the Young Advisor Team and the Young Professional Alliance

 by P.E. Kelley, Managing Editor, Advisor e-newsLink

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 There is a common presumption in the financial services career that it is an old man’s game, where there are not nearly enough younger people flowing in to replenish the ranks of advisors now preparing for retirement. The problem is, the numbers bear this out, and the demographic profile compresses even more when you consider the relatively small number of women and ethnic people entering financial services.

In either case, the ‘graying of financial services’ became evident to a number of people still in it, particularly those involved with the National Association of Insurance and Financial Advisors (NAIFA). Management there realized that something needed to be done to begin attracting, and then retaining, younger people. What they created was the Young Advisors Team (YAT) and the Young Professional Alliance (YPA).

“The average age of an advisor today is about 58,” said Mike Ross, an independent advisor with Cornerstone Financial, in Burlington, Ma., and the chair for the NAIFA/mass YAT/YPA committee. He explained that part of the problem lies in the industry’s ineffective track record for guiding new advisors through the rigors of the first two to three years of what can be a discouraging indoctrination. “For many new advisors,” he said, “ they sell to their family and friends and then fail out of the business.”

If left unchecked, the ranks of advisors will be seriously depleted in about ten years.

In 2001, said Ross, younger NAIFA members in Massachusetts began having informal networking gatherings, from technical-based presentations to simple wine-and-cheese parties, as a way to create a sense of community. Similar things were happening in New York as well, and before too long, NAIFA/National picked up on it the movement really began to take shape.

A simple mission for success

The Young Advisor Team (YAT) has a simple mission: how does NAIFA keep young advisors, the under 40 demographic (and under 5 years in the business), actively in the business? Ross explained that the basic idea is to simply create events that bring veterans and younger advisors together in a setting that allows meaningful networking. Last year, they sponsored a golf tournament with foursomes comprised of an MDRT Top of the Table advisors and three younger advisors.

Still, the mean age for advisors continues to rise, as younger advisors continue to fail early, despite concerted efforts from both NAIFA and MDRT, which have established resourceful mentoring to address this problem. More than ever, addressing young advisors with viable strategies to ‘know and grow’ their business is critical

The Young Professional Alliance (YPA), on the other hand, has a separate mission that creates avenues for young advisors to network with other professionals, with events that channeled into other professional associations, such as the Mass Society of CPA’s, the Mass Bar and banking associations.

“It’s nice to meet people in social settings and get to know one another,” said Ross, “but our real purpose with these two groups is really to get referrals flowing for these young advisors.” You have to find new and better ways to make things begin to happen along these lines.  So, while beer-tasting excursions to the Harpoon Brewery or a speed-networking concept aimed at a kind emersion-based exercises are effective in breaking down barriers, the real focus is teaching young advisors the critical knowledge they’re going to need to survive.

Still, the mean age for advisors continues to rise, as younger advisors continue to fail early, despite concerted efforts from both NAIFA and MDRT, which have established resourceful mentoring to address this problem. More than ever, addressing young advisors with viable strategies to ‘know and grow’ their business is critical.

Josh O’Gara is an advisor affiliated with First American Underwriters, in Needham, Ma., and he participates with YAT. He recalled a seminar conducted by Cathy Heenan, a local professor of psychology who developed a presentation on how to construct effective working groups, given that the channels through which insurance is purchased have become so diverse. “My first introduction to YAT was through this seminar, “ he said, “and what struck me was the emphasis on building collaborative relationships with other professionals.”

As more attorneys, CPAs and investment advisors become involved with an advisor’s overall value-proposition to clients, it becomes critical to properly network with these professionals. This becomes most pronounced, O’Gara said, with larger cases.

At the bottom line, then, is the need for groups like NAIFA and MDRT to  not only better illustrate the attractions of the advisory career, but to better support the people who do come into the business as they grow into their careers.

“The value proposition for the financial advisor is still compelling, “ Ross said. “Having no ceiling on earnings and being your own boss are offers that still attract a lot of people.” Add to that the Baby-Boom, which presents an enormous pool of prospects to advisors, on paper at least, and there is certainly enough there to entice younger people to come into the business. The challenge remains, however: how to keep them there.