I am like many other young financial planners. I’m also unique. After graduating with a BA in personal financial planning from Kansas State University in 2001, I joined Sheryl Garrett at The Garrett Planning Network, where I worked with hundreds of financial planners, many of them new to the profession. Then in February 2002, I was featured with two other young planners in Investment Advisor’s “The New Faces of Planning.” That article gave readers a synopsis of the challenges and the rewards facing those who, like me, were just getting started in the profession.
It was only then that I came to fully realize the crisis faced by the financial planning profession. I started to receive numerous calls and e-mails from new or young planners asking for help starting and, more importantly, surviving their careers in planning. Amazed by the number of struggling young planners, I decided to focus on understanding and attempting to solve the career development challenges that new planners face. I listened to the voices of the networks of graduates from planning programs at KSU and across the country, to the folks who contacted me after reading the article, and to the many young planners I’ve met at industry gatherings. Three years later, I’ve come to realize that the career development crisis in financial planning is far worse than I imagined.
Many problems facing young planners today are also faced by newcomers to any profession. The most pressing and singular challenge, however, stems from cultural differences between two generations: the pioneering planners who now run established practices; and the well-educated, well-trained graduates of four-year college CFP programs who are ready and eager to hit the ground running in their chosen profession.
This gap between successful planners and the next generation is wider than most people realize, and it’s growing. The cultural differences are leading new planners into careers fraught with obstacles, disappointment, and frustration. The crisis doesn’t just involve newcomers to the profession. I believe that the implications for the established planning community are much worse: The failure to find a place for these young professionals results in low productivity, high employee turnover, and unattractive exit strategies that cost firm owners millions of dollars every year. If the situation doesn’t change, some of the best and brightest young planners are likely to leave the profession, and there will be fewer new graduates to fill the void. It is a serious crisis that threatens the future of financial planning.
Too many new planners feel professionally lonely and confused. Aspiring next-generation planners find themselves directionless and frustrated, facing difficult barriers of entry and a lack of meaningful career opportunities.
You would think that new planners would have much more positive feelings. After all, they’ve chosen to work in a profession that focuses on helping people reach their personal and financial dreams. However, many young advisors are left out of the planning process. Consider this posting on an industry discussion board: “The more I read this board, the more I question whether this is a profession worth pursuing. I am considering becoming a CFP mostly for the satisfaction of knowing my efforts help families plan their lives. But I am wondering why anyone would want to bust their butt for three years to possibly make $50K. From what I gather, 75% of those who started have dropped out, discouraged and having exhausted their savings, and the rest are hanging on out of sheer stubbornness.”
For a long time, I thought the career development and generational problems facing the profession were the same problems other professions face. As in other professions, many experienced planners often protest that new planners want too much too soon, have job commitment phobia, and don’t appreciate the sacrifices their elders made. While some typical generational frictions do exist, I have learned there are many issues facing financial planning that are unique. Here’s a view from the bottom looking up.
What Career Track?
It’s not news that the planning profession lacks a clearly defined career development track for the next generation of talent. In years past, folks came into financial planning largely via the securities or insurance industries. They learned to be good brokers or agents, then later decided they could serve their clients better as independent, comprehensive financial planners. The planner pioneers were usually aged 30 or older, and financially established enough to capitalize the startup of their own firms when they made the move.
While this career shifting effectively built the planning industry and led to many successful planning firms, it’s not the basis on which to build a profession. Doctors don’t start out as drug salespeople nor lawyers as insurance claims adjusters. Professions have their own professional schools, and financial planning has responded with the creation of nearly 200 CFP-registered university undergraduate, graduate, and certificate programs that are churning out hundreds of graduates every year. But what do these newly minted financial planners do? Largely in their early to mid-20s, without financial resources, many are still forced to take jobs in the securities or insurance industries, while the lucky ones find jobs with established planning firms.
Unfortunately, instead of finding a path to success, even the “lucky” graduates are frustrated. Considered by many established planners to be too young and inexperienced to meet with clients or do meaningful planning work, these young planners get stuck with clerical or administrative duties at low pay and with few opportunities to do what they have been trained to do: work with clients as financial planners.
Consequently, the current “career path” for young planners is to stick it out with their firm for three years to fulfill the experience requirement for the CFP certificate, get their CFP, and leave to start their own planning firm. Not only is this a poor excuse for a professional career track, it leads to high levels of employee turnover that costs established planning firms significant time, effort, and money in recruiting and training efforts. Plus, without long-term associates who become junior partners, established planners are forced to turn to strangers when it comes time to sell their practices.
A typical new planner’s story came from a young women who e-mailed me: “I graduated from a CFP-registered program, attended the FPA Residency program, passed the CFP exam, and today am four months away from fulfilling the CFP experience requirement. Yet I’m questioning whether I even want to be in the profession. I spend most of my time addressing envelopes for marketing seminars that I don’t even get to attend, and I make less than $12 per hour, without health insurance. What am I doing wrong?” She later wrote to say she quit her job and became an insurance agent.
They Aren’t Like You
When today’s experienced planners started their planning careers, the option to obtain a four-year or graduate degree in financial planning simply did not exist. Instead, the education and training they received came mostly through trial and error. The next generation of talent has more education, technical knowledge of financial planning concepts, and know-how on the latest trends in the industry than the older generation. Unlike older planners, the majority of those entering the profession today are doing so largely through a choice made while in school.
My experience is typical. I entered the field after graduating from Kansas State’s CFP-registered undergraduate program. In school, I mastered the 101 financial planning topics required by the CFP Board. I completed coursework and projects that helped me to develop life planning, motivational, counseling, and communication skills. I completed marketing, management, and technical writing courses.
In my capstone course, my classmates and I–without the use of planning software–were required to make recommendations for numerous comprehensive case studies. Then we solved another set of comprehensive cases with industry-common software. Moreover, we had to present our recommendations to panels of professionals, to prove that our motivation, communication, counseling, and professional skills were sufficient to work with real people. Just when we thought our senior year was winding down, we were given a final project: Take all our business management, marketing, and financial planning knowledge and package it into a formal business plan.
After completing the coursework and these projects, we entered the profession confident, enthusiastic, and ready to get started. This preparation has knocked 10 years off the professional growth process, something that experienced planners do not understand.
Mismanaging Young Talent
Experienced planners’ failure to grasp the quality of talent graduating from financial planning programs creates another problem–the tendency to mismanage new planners as employees, leaving them directionless and frustrated, and leading them to feel they are being taken advantage of.