(Reuters) - Small U.S. brokerages are beefing up their training and presence on campuses to woo future employees as the industry faces a mass exodus of retiring financial advisers over the next decade.
Some 25,000 brokers and brokerage firm advisers will retire over the next three years, a trend that is expected to continue for more than 10 years, according to research firm Cerulli Associates. Within 10 years, roughly one-third of U.S. financial advisers will retire, it estimated.
Not enough young financial advisers are available to take their place. Only 5 percent of the 308,000 brokers and advisers at U.S. firms are younger than 30 years old, according to Cerulli.
"The issue isn't that the seniors are leaving. It's that the industry doesn't have many freshmen or sophomores to replace them," said Craig Pfeiffer, founder and chief executive of independent training program Advisors Ahead.
Training can be costly: about $250,000 to recruit and train a rookie adviser in a four-year program that only one out of four will complete, Andre Cappon, president of research firm CBM Group, said.
Though traditional brokerage firms like Morgan Stanley & Co and Wells Fargo & Co can recruit more rookie advisers because of their size, these so-called wirehouse firms are not expanding their training programs the way small firms are. Larger firms can be more successful at hiring established advisers and have been fine-tuning their training programs to focus on certain niches.
Morgan Stanley does not plan to increase the 1,000 trainees it annually accepts into its program in the near future, spokeswoman Christine Jockle said. Wells Fargo, which adds 600 to 900 participants per year, is trending toward the lower end of that range to "focus on quality," Tom Allen, learning and development manager, said.
Smaller firms cannot easily poach experienced financial advisers from bigger firms, so they use training programs to build up their workforce.
"(Our increased training) stems from the need for building and investing in talent in the near future," said Kimberly Theakan, director of talent acquisition and integration for Robert Baird's private wealth management business. Baird is accelerating recruitment on college campuses and helping to develop a wealth management and financial planning track at the University of Wisconsin-Madison's business school.
Regional brokerage Edward D. Jones Investments has 400 recent college graduates in its current group of 3,000 trainees. The company, which spends $250,000 on each new adviser over two years, plans on increasing enrollment every year to accommodate growing customer demand for advisory services, said John Rahal, principal and financial adviser for talent acquisition at the firm.
Raymond James Financial will triple the 100 participants annually enrolled in its Advisor Mastery Program over the next three to five years, said Tash Elwyn, president of the firm's private client group. He said he intends to use the program to replace the company's retiring financial advisers on a one-to-one basis.