For most of the past several decades, getting started as a financial advisor meant "smiling and dialing", reading cold-calling scripts while sitting in a cubicle, trying to convince the person on the other end of the phone to buy something. The bad news is that cold calling was a brutal numbers game full of rejection. The "good" news was that at least young advisors didn't have to worry about age bias from their prospects, who couldn't see them and had no idea how old they were. But as financial advisors shift to actually giving face-to-face financial advice - and with the rise of the Do Not Call list - it has become an even greater challenge for young financial advisors to get credibility with prospective clients and overcome (young advisor) age bias.
And so in this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we look at the steps that young advisors can take to overcome the inevitable age bias they will face in meeting with prospects and clients, particularly as the advisory industry increasing focuses on Baby Boomers (who in many cases are old enough to be a new advisor's parent or even grandparent!).
The first key to success is simply building confidence as a young financial advisor. Because if you're not confident that you can deliver value to your (older) clients, they won't be confident in you, either. For some, it might be enough to "fake it until you make it". For others, it's necessary to get certifications like the CFP marks, or even additional post-CFP designations, to really establish their credibility and find their confidence.
Second, recognize the impact of first impressions... and the ability you have to control it. How you dress, and the impression it gives, is something you can control. As is the way you communicate with clients by telephone or email before you meet with them. While you can't eliminate the fact that you're young, you can at least give the impression that you're an especially competency and well put together young man or woman!
Third, consider taking classes to build your skills of active listening and empathy. Because the truth is that clients won't really trust you, until they truly feel that they're being heard and understood. Doing that well is a skill that takes time and effort to develop.
But the bottom line is that if you're a young financial advisor struggling with age bias, it doesn't have to be crippling. Find what it takes for you to be confident in yourself, and do your best to manage the first impression that prospects and clients form of you... and if necessary, ask your mentors and senior financial advisors to support you and your credibility in front of clients as well!
(Michael’s Note: The video below was recorded using Periscope, and announced via Twitter. If you want to participate in the next #OfficeHours live, please download the Periscope app on your mobile device, and follow @MichaelKitces on Twitter, so you get the announcement when the broadcast is starting, at/around 1PM EST every Tuesday! You can also submit your question in advance through our Contact page!)
#OfficeHours with @MichaelKitces Video Transcript
Welcome, everyone! Welcome to Office Hours with Michael Kitces!
This week, I want to talk about age bias, and the challenges that younger advisors face when becoming a financial advisor.
So this week's question comes from Ashley. Ashley says:
"I'm 27 years old. I work in an RIA that serves mostly retirees. And when I talk to our clients, sometimes it feels as though they view me more like one of their grandkids, than a financial advisor. Meeting with prospects is even worse."
And the crux of Ashley's question:
"How do I overcome age bias that older clients have against younger advisors like me?"
Prospecting Self-Confidence and Cold-Calling Scripts [Time - 0:53]
Ashley, I feel your pain. Truly. I lived this as well. I was a life insurance agent, coming straight out of college. Literally, I graduated on a Memorial Day weekend, which means I graduated Saturday, I packed everything I owned on Sunday, I drove home on Memorial Day Monday, and the first thing Tuesday morning, I reported for work as a "financial advisor" in an insurance agency.
I was 22, and I sucked at it. I was a bad salesperson. Or technically, I was a mediocre salesperson, and I was a horrible prospector. Prospecting was the worst part for me by far. And the only alternative to getting out there and prospecting was: "Well, if you don't want go out there and prospect, here's a cubicle and a phone."
So you could do cold calling, and use the cold calling scripts - because this was still early enough that the "do not call list" was not fully implemented yet. But frankly, I think the only thing I hated more than prospecting was getting rejected while reading a cold calling script, which was even more horrific! This was a huge challenge for me.
It took me a while to realize that my problem in trying to prospect was I was embarrassed to meet with prospects and people who had money, and ask them to do business with me! I was young. I didn't know very much. I knew that I was young and didn't know very much. I knew they knew I was young and didn't know very much! So basically, I had zero self-confidence, and implicitly communicated that I didn't deserve their confidence. It probably didn't help that I was an introvert as well, so just meeting strangers in general is a little scary for me!
So I decided to solve this problem. Or at least the self-confidence part. I can't "solve" the introvert part! But I solved the self-confidence issue... with education. Because the truth is that a lot of age bias really isn't age bias per se. It's how people react when you don't have any confidence in yourself... which happens to often be the case when we're young and new as professionals and were not quite confident in our own knowledge and abilities yet.
Building Confidence with CFP And Other Professional Designations [Time - 3:11]
So I tried to get confident in my knowledge and abilities by getting educated. I went to get my CFP marks. Ultimately for me, finding a CFP program was not enough. So I went even further. I did my CFP program with the American College, and then I went on for more post-CFP designations after that. I got my CLU, I got my ChFC, I did my master's in financial services. I was still working at the time, so I just studied part-time during evenings and weekends, a couple of hours a week. Enrolled for a long period of time, eventually I popped out some designations!
And I have to admit, for me at least, as I got the education, it was truly transformative. In part, it was simply because my sheer technical competency improved. I knew my stuff. I could talk intelligently about the issues that clients were facing. As I realized I knew my shit (pardon my French!), it really built my self-confidence. And once I could talk confidently in front of clients, because I knew that I knew my stuff, that I was an expert, and that I had a bunch of recent designations to substantiate it. That's what I think really started changing the conversations with prospects and clients.
So when I wasn't confident in myself, prospects and clients weren't confident in me either, and it showed in the crappy results. When I knew my stuff and I really knew I knew it, and I communicated more confidently, that showed in getting better results.
I suppose this is sort of like the infamous "fake it till you make it" thing. Now, some of you out there may be awesome at the whole "fake it until you make it" thing. But I suck at it. I don't have the confidence to "fake it" until I make it. I only know how to actually do it right the first time. It's just how I'm wired. So I had to find a path to get the confidence in myself to be able to speak confidently for clients - to not just fake it, but really know it - and for me, that was education.
First Impressions Matter - How To Dress As A Financial Advisor [Time - 5:10]
Now, there are some additional issues regarding young-age bias that I think are worth recognizing as well.
The next is about first impressions. We have lots of research out there that first impressions are crucial. They have a really big impact on people. They're really hard to overcome later. Which means if you don't do anything to control the first impressions that are formed of you, you may struggle a bit with how those first impressions may adversely impact you.
In other words, if you're not doing anything to try to control the perception, you're most likely going to be stuck in the bucket of "young financial advisor." And if that's the first impression you give off, that's gonna be hard to overcome later. So I had a couple of deliberate steps I took, to try and overcome this.
First, I considered how I dressed. How you dress has a big impact on first impressions. I realize this is a very unpopular thing to say. We all like to say like, "We're our own special human beings. Everyone should value me because of my own special snowflake self!"
I'm sorry, but accept reality. No one is going to care enough to learn more about you and why you're special, if their first impression of you is so negative, they don't care to invest the time and energy and effort to learn more about you and understand you!
In other words, if you don't control the first impression that occurs, you don't get to the second part where you get to show why you are special and valuable and meaningful and all that. So I hate to say it, and I know it's unpopular, but... the clothes matter, and the looks matter.
What did this mean for me? In our firm, people in our office don't always wear a tie. So I always wore a tie. If everyone else was wearing a tie, I wore my suit coat. I wanted people to have a good first impression of me. So at least, if it had to be, "Wow, this is a young guy sitting across from me", I wanted to change it to "This is a really well-dressed and well put-together young man!"
Now, I'm still a frugal guy. There was a recent controversial post in "Advisor's Perspectives" talking about particularly how female advisors should dress. It suggested that female advisors not only need to dress nicely, but that "nice shoes" meant by $600 Manolo Blahniks. But I was not buying $2,000 suits, which I think is our male equivalent of buying $600 pumps. I was buying 3-for-$500 suits off the rack from Jos. A. Banks or Men's Wearhouse.
So this isn't about "can you be the most tip-top, fancy-dressed person" because frankly, when we're getting started as younger advisors, we probably can't afford it. But you can still be appropriately well-dressed and put together. Tasteful and respectful, and in recognized professional dress, because that's the impression you're trying to set: that you're a professional!
The second important part of first impressions is communication. I figured out pretty quickly that some of my best prospect and new client meetings were the ones where we communicated by email first. And it's a little counter-intuitive. The reason why it worked, at least for me, is that I can write well.
Not just that I write long massive blog posts, as many of you know about! But I write clean emails, with proper punctuation, proper spelling, clean grammar, well-written sentences, paragraphs that have paragraph breaks where they should occur. And my signature block had that growing list of the alphabet soup of designations.
I'll admit, it looks a little bit ridiculous sometimes, to have more letters after my name than in my name. But it left an impression.
So now, when I met people, the first comments usually that I heard were something like: "Wow! I was expecting someone older" or, "Wow, you've accomplished a lot for being such a young advisor!" So I couldn't escape the fact that I was young, but now my age was an asset! People have far more confidence in someone who's young, who is also clearly an up-and-comer and successful. So by showing off my capabilities, while still being young, now my age was now a plus. It was, "Wow, not only do you communicate well and interact well and you've done all this education and these designations, but you've done so much at a young age!" That actually increased the confidence level of the prospect, because of my age! My age was now an asset instead of a liability!
The Importance of Empathy [Time - 9:36]
The other skill that you have to think about, in trying to connect as a young financial advisor with older clients and overcoming the age bias, is this thing called empathy.
The technical definition of empathy is:
Empathy: the ability to understand issues from someone else's perspective, and then respond accordingly.
This is a skill set that frankly some advisors just have naturally, to be able to listen and build rapport with other people. But what it means is you have to learn to be an effective listener. I've written this in the past on the blog. In fact, notwithstanding how much I pound the table about the importance of technical competency, I truly believe it's your listening skills and your ability to connect and hear clients, and make clients feel heard, that ultimately is the biggest driver of financial advisor success.
If you're trying to move up the career track as an employee financial advisor, empathy is the key skill that lets you move up from just being a paraplanner where you focus on technical competency skill into a full advisor where you actually manage client relationships. When you have empathy abilities, you can build rapport with clients and build relationships.
Now sadly, there's not much training on this in the industry. I think it's going be a growth area going forward. For right now, look at some life planning programs like Money Quotient, which has some good tools around helping to better understand clients in their own perspective. It's not billed as empathy training abut effectively you'll get a bunch of from in the program. The Sudden Money training is another option. You can also just search locally for classes on active listening and empathy. It really matters.
Now for some financial advisors, when they're getting started, the truth is that it's really hard to pay attention and listen to the client. Because we're still so self-conscious about whether we're giving off the right impression, and doing the rest of what we need to do as advisors. And if you struggle with that, the first thing I recommend is don't go to class about empathy. Go to Toastmasters and learn to stand up in front of an audience and speak some words to strangers and not freak out about it. Once you can get through that, then it's easier to start focusing on the client and practicing empathy.
Avoid Age Bias By Serving Clients Your Own Age! [Time - 11:56]
Now, the last thought I want to touch on before we wrap up. There is one other alternative about how you avoid the issue of age bias with clients. And the answer is you work with clients your own age, where you don't have an age bias problem!
I recognize that so many firms in the industry are focused on baby boomers and retirees, because that's where the money is. That's where the pools of assets are. But more and more firms are recognizing that it's important to build relationships with the next generation of clients, with younger professionals. So if you're in a larger firm, maybe you can be that person in your firm. You can be an intrapreneur and build a young client initiative in your firm.
Alternatively, some younger advisors ultimately decide to leave and go out on their own. We see this all the time within XY Planning Network. We've added nearly 300 advisors in two and a half years, all coming because they're tired of serving older clients and they want to serve their peers. Now I don't know how many of them are doing it because they're tired of the age bias, versus just proactively wanting to serve their peers. But recognize that older clients are not the only people on the planet that you can work with in doing financial planning!
You can work with people your own age. The business model is a little different. The income dynamics are a little bit different. But it's certainly not impossible. Admittedly, working with retirees is where a lot of the jobs are right now if you want to be an employee. But if you're ready to launch a firm, you do have other options. That's not the only potential client base that you can serve!
Final Tips For Overcoming Age Bias [Time - 13:50]
But the bottom-line, in wrapping up and getting back to Ashley's original question... the challenge of perceived age bias against younger advisors from older clients, it's real. I've lived it too. It's not insurmountable though.
Ironically, we dealt with this less in the past. Because when we were cold calling using cold calling scripts, the prospect on the other end of the line didn't know how old we were. The irony is that as we go more towards real financial advising, and paired with the rise of the "do not call list" which forces us to see prospects face to face, I think the more that age bias has become a recognized challenge for young advisors.
But the path to overcoming it is, first and foremost, your confidence. If you are not confident in being an expert, your clients will not be confident in you. So find what it takes to get your confidence. Maybe it's technical competency and education. That was my path. Maybe it's post-CFP education because the CFP course isn't enough for you. Maybe it's Toastmasters so you can just get more comfortable talking in front of strangers.
Second, recognize the importance of first impressions. I know it sucks. It's one of those "life is unfair" things. But it's reality. And you can control it. And you need to control it. How you're dressed, how you're groomed, how you look, how you communicate with clients, both verbally and in writing... it matters. But you can control it, in positive ways.
And then the third piece is to recognize and eventually get confident by learning to listen better. Clients will have the confidence in you, when they feel heard and understood. That ultimately is a skill you can train and practice. It takes time. The faster you're confident in yourself, the faster you can get to learn and listen to your clients as well. Really listen to them.
And frankly, that's also an area where mentors can help. I know there was a mention [on Periscope] of the value of mentors. I know a lot of advisors that had success by sitting in our client meetings with senior advisors to just learn some of these skills, and see them modeled by a mentor.
Now sadly, I know that when working with some senior advisors, this actually gets harder. Because sometimes the experienced advisors undermine our young advisor authority without realizing it. You know, calling us "young", making jokes about movie references, "Ha-ha, Michael won't get it because he's too young." I'm seeing a lot of hearts [on Periscope] that many of you have experienced that one as well!
In fact, one of the senior advisors I know used to have this terrible habit of calling the paraplanners in his firm "the kids" in the firm. LIterally, he would call them "the kids". He would call them "the kids" to his clients, he would call them "the kids" internally to other staff members. But calling them "kids" is very belittling and demeaning, and undermines their credibility with clients. So he started calling them "the Wonderkids" instead. You know, the German wunderkind. And once he started calling them "the Wonderkids"... now the perception changes. Now this isn't a denigration about their age, it's an uplifting statement about how much they've accomplished while also being so young!
You can talk to the senior advisors in your firm if you're a younger advisor who's struggling with this. Say something to the senior advisor if you feel like they're undermining you. You have to say it nicely and respectfully, but it's an okay thing to point out to them. And say, "hey, maybe you can try calling me something different...Wonderkid instead of kid...haha." It might feel a little self-aggrandizing, but try to make the point to them that sometimes you will need their help to establish your authority, because if they're going to use labels like "kid" in front of clients, they're going to undermine your credibility.
So, I hope that helps a little as food for thought, around how to overcome age bias as a young financial advisor, in a world where prospects actually see us because we're not just smiling-and-dialing with cold calling scripts anymore. This is Office Hours with Michael Kitces, 1pm East Coast time every Tuesday. Thanks for hanging out everyone, and have a great day!
So what do you think? Did you struggle with age bias as a young financial advisor? How did you overcome it? Are you still facing it as a young financial advisor today? Please share your thoughts in the comments below!
I’m a millennial with my CFP/CLU/ChFC and expecting to go to law school in the next couple years. I struggled psychologically with age bias early on, but it never really showed itself in client interactions. I am passionate about planning and am confident enough that it comes through in conversation.
Even with the success I’ve had, I still worry that my lack of gray hairs will affect how clients view me and my recommendations. It’s hard to shake that feeling.
Andy Welp says
Barney – I came to the industry after having gone to Law School. The one piece of advice I would give you, if you know financial planning is the route you want to go, is to look into how many classes the law school you are looking at has that will be of use to you. I went to a small local law school, that I loved, but their offerings related to tax and estate planning was very limited. Had I gone there with the intention of improving my planning ability, it would have been a poor return on investment.
Thanks for the advice. Basically all the research I’ve seen on going to law school screams at me to run the other way. With that said, there’s a need for another JD in my small team so there’s an immediate financial incentive for me to pursue it (to the point where’d I’d make up any tuition cost within 3-5 years). I’m looking at a school that offers a strong part-time program with great estate planning classes.
I realize the majority of the work though would be outside of my field, which I see as being good and bad. I may learn that I want to change careers OR all that time/money has been wasted on things I’ll need touch again. I guess my biggest dream for law school is for it to change my view on things. I’m hoping it’ll change my decision-making processes for the better.
I know law school will delay my life personally so it may never happen. Now would be the time though.
Andy Welp says
I am a huge proponent of law school as long as people go into it with open eyes and expectations. It will most definitely change how you think and approach problem solving. Plus it is something that the general public understands and will be impressed with (not sure that is a good reason but it definitely helps, people are impressed with my JD/CPA even though neither had all that much to do with financial planning).
Michael – I didn’t start as young as you did but pretty close – age 24. That was 23 years ago this month. Like you I started in insurance and obtained my CFP, CLU, ChFC by the age of 27-28. That helped. But more than anything, I turned a negative into a positive. When I heard the “you’re too young to advise me” objection, I replied, “So you would rather have an advisor your own age who is going to be looking to retire at the same time you are and will therefore break off the relationship at the time in your life that you need a trusted advisor the most?” No prospect had ever looked at it that way, and I built a very successful fee-only practice working with clients 15-20 years older than me. What’s the saying? When someone gives you lemons…
Michael Kitces says
Thanks for sharing!
I had actually meant to mention this during the broadcast, and forget.
I hear this as a (successful) strategy a lot from advisors in their 30s and 40s, saying to prospects (especially potential retirees) something to the effect of “Don’t you want an advisor who can actually be with you through your retirement journey, and not an advisor who’s going to retire at the same time you do?”
I have to admit, I’m not sure if that would work as well for advisors still in their 20s, as some of the other confidence and credibility issues have to be overcome first. Even making that statement requires a certain level of confidence and credibility to pull off. 🙂 But I think it’s a really valid point and strategy once you’re a few years into the business and have that initial layer of confidence and credibility…
I have followed you for a long time, and first time commenting. As an INTJ who ended up very successful I relate to your story! I have CFP, CLU, CHFC, REBC CASL, FSCP, RICP and should have my CAP and AEP by end of the year.
Starting 21 at an insurance company. Now 27 and independent hybrid RIA and never happier.
It must be my confidence at this point, but even if someone has an advisor who is doing a fine job I just remind them I’m not going anywhere. When some firms have more advisors under over 80 then under 30 it usually is a good bet. I like to say that “I will be around longer then you will” which usually gets a laugh or two from the older clients.
I love the fact I have enough older clients and assets under management that I can spend time on the clients my own age without the need to sell them something. In this for the long run and I would rather point them at a fidelity account until their assets get larger or they need more. I like to believe people remember that sort of thing.
Tunc Tanin says
I also used a similar line. There is also the point of hiring an advisor when you have 500K and if your advisor becomes really successful and raises the minimum account size to 3 million or 5 million over the years, the amount of service they will give to a 500k account will go down. There is a slight advantage to hiring someone 25, because they will depend on that 500k account much more than an advisor who has 400 million under management.
Dennis Markway says
I started my career backwards (spent the first 10 years in the fin industry before advising clients directly). For many of the next gen advisors coming out of great planning programs, your education level trumps what many of us learned in college programs. What you need most is experience/opportunity/repetition that only comes with time. In terms of pairing with an advisor who is a little longer in the tooth – it’s a great way to gain experience and perspective . . . provided said older advisor treats you with the dignity you deserve and you don’t become an indentured servant (treat you with the financial dignity you deserve also).
I can’t wait to see what the Wunderkinds bring to our profession if given the chance to flourish.
Mike W. says
Michael, excellent video. I am struggling with being a new and not so young advisor. I’m 33 and have just got 1 year under my belt. I vacillate between, “You know what? I can do this, I got it, give it time” to “What on earth am I doing? Is this ever going to click?” The struggle is real. I have been working towards the CFA charter, passed Level 1 and I know, given I put in the time, that I can pass level 2. I am a few years out of being able to undertake the CFP designation, which I plan on doing provided I am still in the business. Your thoughts, insights, or words of encouragement are more than welcome.