In last month's post, I shared some recent comments that I received from college students looking to enter financial planning that shed light on what could be causing a current dearth of talent in the profession. The question to be considered is what should we be doing now to ensure that current and future potential entrants into our profession consider financial planning as a career of choice.
Here are some commonly cited hurdles and some possible solution ideas to attract mass top talent:
Problem: "I wasn't aware of the financial planning major at my school and then when I was, it was too late to change."
Solution: In an ideal world, students would be aware of the Financial Planning career prior to beginning their college career. Financial Planning programs should have a consistent location and title within educational institutions contrary to the current assortment of programs housed in the business school and others in various other non-business related schools. The Finance and Financial Planning degrees should be grouped together in all promotional materials. Additionally, educate university career advisors about the benefits of the Financial Planning major and who would likely be a good match. As of August 2013, there were 166 undergraduate, graduate and PhD degree programs registered with the CFP Board.1 As of the 2009-2010 school year, there were almost four thousand four-- year public and private degree-- granting institutions, according to the Institute of Educations Sciences.2 I realize it is unrealistic to expect that a financial planning major be offered at each of these degree granting institutions, but even increasing the current 4% to a simple 51% majority is a big hill to climb. Bear in mind that current practitioners donating to their alma maters – tied to the establishment or support of a Financial Planning program – can go a long way to change the mentality of administrators about the opportunities in offering Financial Planning curriculum!
Problem: "I can get a higher paying job right out of college "
Solution: National salary data for entry level accountants was $46,641 as of March 2014.3 Based on the 2013 Investment News Compensation study, the median compensation for a Support Adviser (Level 3) is $50k/yr.4 In our recruiting business, we see the majority of new college graduates entering entry-- level advisor positions in the $40-50k range, depending on geographic location. Realize that accounting is only one example, but one that I encounter frequently and, based on this data, financial planning is competitively positioned, at least at the moment.
Problem: "There seems to be a lack of quality career opportunities, and I do not know what my career trajectory looks like, anyway"
Solution: Financial planning is frequently named as one of the fastest growing and most rewarding careers. According to the 2012-2013 FPA Compensation Study, 43 % of firms surveyed were planning to hire additional staff in the next 12 months.5 Additionally, Financial Planner was named the #6 best job in America by CNN Money in 2012 and #5 by CareerCast.com for 2013.6 It is also worth noting that CNN Money listed Financial Planner as #3 Best Jobs for Fast Growth.7 We need to remind students of this frequently. Keep in mind however, that hiring is cyclical and heavily dependent on the health of the financial markets. Currently, there are many firms looking for exceptional talent and this will inevitably slow down temporarily the next time the stock market corrects. That said, candidates that are passionate for the profession, are coachable, have demonstrated initiative, and want to spend their life and career serving others will continue to remain attractive, even in the downturns. Developing consistent titles for a new planner's growth path should help, as well. The natural progression of an aspiring planner career could be as follows: Financial Planning Student, Financial Planning Intern, Financial Planning Resident, Associate Financial Planner, Lead Financial Planner, and Partner. Furthermore, if firms eventually want their new planners working directly with clients, referring to new planners as "Junior", "Support", and "Assistant" externally is not as effective in positioning them to do so. Think about it, how many times have you wanted to work with the "Junior Dentist" or "Assistant Accountant"?
Problem: "I don't know what financial planning is." or "I have heard of Financial Planning, but I don't really want to be an insurance salesperson or stock broker"
Solution: For the profession to continue to develop there must be a standard definition of financial planning, and financial planner, as well as credential and/or licensing requirement. Even with all of the recent mishaps, the clear frontrunner is the CFP Board's definition and the CFP ®certification. How about, beginning in 2015, all new entrants who want to call themselves a financial planner must be a CFP® professional? Current non-CFP® certificants would be granted an exemption. Once this is enacted, the current Financial Planning Coalition, made up of FPA, NAPFA and CFP Board, should begin and/or improve outreach to state boards of education and legislators, and secure a required personal financial planning course as a mandatory course for high school graduation. This would increase awareness of the potential career path in addition to the financial literacy benefits.
These are just a few ideas on how to cast a wider net, engage potential future entrants earlier in their career decision-making process, and more effectively communicate the benefits of the financial planning profession. Over the next decade, ideally we would see a redirection of firms' time and resources from higher payouts and toward attracting and training new financial planners. I think Mark Tibergian said it well in his recent article "What can you do to recruit, retain, and develop the next generation of talent?"8
- Adam Ley, CFP® joined our team last month and we are thrilled to have him! You can read more about Adam here: https://newplannerrec.wpengine.com/meet-the-partners/
- Caleb is speaking at the FPA of Massachusetts Career Night April 3rd https://www.fpama.org/members/events/event-calendar/
- Michael will be speaking at FPA of NJ on April 23rd http://www.kitces.com/schedule/
- Stay tuned for next month's announcements for further information on Caleb's West Coast speaking tour. Currently, he is slated for Los Angeles, Orange County, Fresno, and San Francisco
1 Presentation by Dr Charles Chaffin CFP Board Registered Programs conference August 2013
4 IN 2013 Compensation Study Investment News Research