Advisors Must Do More to Recruit Next-Gen Planners

Today’s financial planners must work actively through local schools and colleges to recruit their successors.

This Practice Management article is intended for financial advisors only (registered representatives of broker/dealers or associated persons of Registered Investment Advisors).
 

Advisory firms that are worried about the next generation of financial planners need to take a more active role in engaging with college and university programs to help bring more students into the workforce, industry officials said at the Certified Financial Planner (CFP) board's recent academic conference.

There may be no simple answers to the complex challenge of cultivating the next generation of advisors, and it seems clear enough that universities, on their own, won't be able to meet the need, according to Kate Healy, managing director of institutional marketing with TD Ameritrade.

"One of the things that we've been trying to do is make sure that advisors know how important it is to have a relationship with your programs," Healy said in remarks to program directors and faculty members at the conference. "Whether it's their local [school] or their alma mater, it's a great pipeline for them."

At present, there are a little more than 70,000 CFP professionals in the industry whose credentials are up to date. And the board's education division is working actively to expand the number of collegiate financial planning programs at the degree and certificate levels, of which there are now 372, with 55 more in the pipeline.

But even with that brisk growth in the academic community, many programs struggle with enrollment, and industry practitioners worry about demand outpacing supply as they consider the next generation of planners, according to Joe Maugeri, managing director of marketing and corporate relations at the CFP board.

"We believe there's not enough CFP professionals to serve consumers," Maugeri says. "What they've all told me is they have a tremendous need for new talent in the industry. There's not enough out there. They have trouble recruiting financial planners and CFP professionals."

Employment Opportunities
The CFP board presented new research at its conference that examined some of the reasons why students in registered programs either go on to take the CFP exam and complete the work experience requirement, or drop out of the pipeline, either working in financial services without the credential or leaving the field entirely.

That study found that the decision to pursue the CFP is closely coupled with recent graduates' employment situation, with those who didn't sit for the exam saying that their employer didn't encourage or require them to attain the credential.

The board is urging firms to do more to guide young advisors through the CFP process, but it also would like to see university faculty promote the certification as a way to stand out in the job market.

At firms like Fidelity Investments, for instance, an academic background in financial planning and the CFP certification automatically give candidates a leg up on the competition.

"When they have a CFP on their résumé or a degree from one of these schools, it takes a lot of the guesswork out," says Matthew Gibson, vice president of national sales at Fidelity. "That's somebody who basically has said this is where I want to be, I'm making the effort to educate myself, this is what I want my career path to be, and you would assume they've got the passion around it as well. And that fits ideally with the type of person that we're trying to attract."

Worries about the next generation of advisors aren't limited to succession planning and the viability of the firm. Increasingly, industry officials are growing concerned about meeting the needs of a younger set of clients.

"We can teach people about financial planning skills and products and all of that stuff, but how do we interact with some of these younger investors?" Gibson says. "If they could also help us, too, with how do we engage with some of our younger clients, that would be a huge win for us that we're still trying to tackle. And last I checked, college kids were pretty good with things like that."

Small Firms
Those issues are only magnified in smaller firms, Healy points out.

"It's crucial, especially in the RIA space, where a lot of these offices are one, three, five people, to make sure that they are hiring the next generation for their own clients," Healy says. "They have a fiduciary duty. We want to make sure that they are keeping their succession planning top of mind."

Later this year, likely in September or October, TD Ameritrade is planning to launch a nationwide database where firms can post internship and job openings and students can upload their résumés.

Too often, Healy says, small RIA shops operate under a just-in-time mindset when it comes to staffing.

"Firms, sometimes don't think about it far enough in advance," she says. "I think a lot of firms don't really think through their whole human capital and what should their office look like."

In the same vein, Healy notes that new entrants into the workforce want to see where a career at a firm might take them.

"When young advisors come on board they know they're going to have to pay their dues, but they want to see that there's a career path," she says. "And if advisors have thought out what that career path will be and they can show the milestones and the different roles that the young advisors can take, I think that goes a long way to a successful onboarding and a great way to start a career."

—by Kenneth Corbin

Kenneth Corbin is a Financial Planning contributing writer in Washington.