Do you want the wisdom that comes with age or the innovation that comes with youth? Maybe you can have both with an advisory team.
This article was originally published on Kiplinger.com.
Age is a popular subject in the media these days and we all know why. But age isn’t just debated at the national level about politicians. It’s also discussed closer to home about financial advisers.
If you begin working with a financial adviser when you first start your career, most likely you’ll have a financial advisor for sixty years or more through retirement. It’s unlikely to be the same individual. As Baby Boomers and older Gen Xers contemplate retirement, they’re probably wondering if their financial adviser is doing the same. That thought can be frightening because our advisers know us so well. They know our hopes, our dreams, our goals, and everything about our finances. If you’ve worked with your advisor for years, the thought of losing that individual and their constant, calming influence on your life is bound to be unsettling.
When a financial adviser has had a long career, at some point they’re considered “too old”. On the other hand, an individual who just entered the industry may be considered “too young”. Fortunately, this is an industry that employs both mature and less seasoned individuals and reaps the rewards of embracing age diversity. Consider the following:
With age comes wisdom
When it comes to personal finance, the more things change, the more they stay the same. Look at the stock market: every significant directional change, be it a rally or a downturn, is triggered by some current economic, political, or global event. Upon closer examination, these new events frequently exhibit similarities to past occurrences. More seasoned advisers who have experienced a similar event is in past are often in the best position to recognize the similarities and most valuable advice of how to move forward and the potential outcomes.
With youth comes innovation
The current stage of the information age is the era of machine learning. Machine learning, a term that refers to artificial intelligence (AI). In 1962 E.M. Rogers introduced the “Diffusion of Innovations Theory” that described how new innovations are diffused, or spread, widely among a population or group. Although Rogers didn’t specify age as a determinant of adoption, others have suggested that younger individuals are more likely to adopt new innovations. The youngest members of the workforce, Millennials (1981-1996) and Gen Z (1997-2012), are digital natives. As such, they bring a unique perspective to the financial services industry because they have come of age during a tech revolution making them open to new investment opportunities with growth potential.
In reality, the financial services industry doesn’t have a “too old or too young” problem anymore because we have advisory teams.
The benefits of a financial advisory team
Today, the financial service industry estimates that more than half of financial advisers work on teams, and across the industry that number is increasing. Here are three reasons a team makes sense:
- Continuity
Loss of continuity is one of a client’s main concerns when they think about losing their financial adviser. If your adviser is a member of a team, they are part of a group that share a mission and vision. While you will have a new individual you’ll get to know, everything else should be the same. - Consistency
Financial advisory team members agree upon the team’s investment philosophy, their roles, the tools they use to make recommendations and the way they measure client success. - Specialization
The complexity of personal finance makes it difficult for one person to be an expert in everything. The team structure allows individuals to become in-depth experts in one or more areas of expertise. The breadth of the expertise enables them to successfully advise many types of clients and consult with their colleagues on complex client situations.
Finally, many financial advisers who aren’t on teams have informal agreements with other financial advisors who will take over their practice in the event an emergency. If you work with an adviser who’s a sole practitioner, ask if they’ve entered into that type of agreement with another adviser. If they have, ask to meet that individual so you aren’t taken by surprise.
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