In my last article, I shared the stories of two graduates from financial planning programs who chose to pursue a different career path. These stories shed light on the current dearth of talent in the profession. The question to be considered is what we should be doing now to make financial planning a career of choice. Here are some commonly cited hurdles and possible solutions to attract top talent.
Challenge: “I wasn't aware of the financial planning major at my school.”
Solution: Financial planning programs should have a consistent location and title across educational institutions, rather than an assortment of programs housed in the business school or other non-business-related schools. As of January 2015, there were 373 financial degree programs at 227 institutions registered with the CFP Board. As of the 2014-2015 school year, there were a little over 3,000 four-year degree-granting institutions, according to the Institute of Educations Sciences. I realize it is unrealistic to expect a financial planning major to be offered at each of these institutions, but even increasing the current 6% to a simple 51% majority is a big hill to climb. Current practitioners can go a long way toward changing the mentality of administrators by donating to their alma maters.
Challenge: “I can get a higher paying job right out of college.”
Solution: National salary data for entry level accountants was $48,447 as of November 2016. Based on the FPA's Research & Practice Institute's 2015 Trends in Adviser Compensation and Benefits study, the median compensation for an associate financial advisor is $50,000 per year. In our recruiting business, we see the majority of new college graduates taking entry-level advisor positions in the $45,000 to $55,000 salary range. Based on this data, financial planning is competitively positioned.
Money should not be everything, though. Established professions like accounting, law and medicine have been around for several millennia, and the ability to substantially impact those professions is limited. In financial planning, a new mover and shaker is always right around the corner.
(Related: What to Expect in Your First 90 Days)
Challenge: “There seems to be a lack of opportunities, and I do not know what my career trajectory looks like.”
Solution: Financial planning is one of the fastest growing and most rewarding careers. According to the FPA study, 55% of firms surveyed were planning to hire additional staff in the next 12 months. The Bureau of Labor Statistics projects 30% growth in financial planner positions between 2014 and 2024, which is an additional 75,000 new positions.
Keep in mind that hiring is cyclical and heavily dependent on the health of the financial markets. Candidates who are passionate for the profession, are coachable, have demonstrated initiative and want to serve others will remain attractive, even in the downturns.
Consistent titles for a new planner's career path should help as well. The natural progression of an aspiring planner could be as follows: student, intern, resident, associate, lead planner and partner.
Challenge: “I don't want to be an insurance salesperson or stockbroker.”
Solution: For the profession to develop, there must be a standard definition of financial planning, as well as a credential or licensing requirement. Even with all of the mishaps, the clear frontrunner is the CFP Board's definition and certification. What if beginning in 2018, all new entrants who want to call themselves a financial planner must be a CFP professional? The Financial Planning Coalition could reach out to state boards of education to make personal financial planning a mandatory course for high school graduation. This would increase awareness of the potential career path, in addition to improving financial literacy. Frankly, it is a sad state of affairs when I ask college students about the CFP certification and some think I am talking about the College Football Playoffs.
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 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.
--- Read Job-Seeking Students Have Much to Learn on ThinkAdvisor.