Recently, one of my clients lost a long-time employee to another firm. This employee had been the admin/back office assistant to a solo practitioner for 10 years, and her leave-taking was quite a blow to my client. This employee liked my client, liked the work she was doing, and loved financial planning. Too much, as it turned out.

In her spare time, she took all the CFP education courses, and since her work experience at my client’s firm qualified for the CFP Board’s experience requirement, after passing her test she was granted her CFP. But my client’s firm didn’t have the clients or the revenues to support another financial planner yet. So this great employee took a job as a lead advisor with a firm across town.

I’m frequently asked by young people whether getting their CFP designation is worth the time, effort, and modest cost involved. Although the CFP has emerged as the credential for professional financial advisors, the confusion among the young is understandable. Getting a CFP is a serious undertaking, especially if you’re going to do it in your spare time. Financial planning employers, like my client, aren’t always as supportive as they might be. In fact, I’ve talked to many young advisors who describe how their firms actively discourage them from getting a CFP. Still, the short answer is that if you want to get a job as a financial planner, today, you need to have your CFP. However, the actual value of a CFP has yet to be sorted out by the financial planning community.

These days, most financial planners screen potential employees on, among other things, whether they have their CFP. If they don’t, that’s usually enough to disqualify them from further consideration. Period. Harsh, perhaps, but it’s also understandable. The education that most college programs provide today give CFPs a sound foundation in the principles and current technology of personal finance not found among any other groups of candidates, not even other professionals such as CPAs or CFAs. Combined with the required three years of practical experience, hiring a CFP can save a firm years of training, along with all the cost and the effort that said training would entail.

That’s not to say that some of the larger firms only hire CFP professionals. Often they’ll staff tax or estate planning departments with attorneys or accountants. Sometimes they’ll hire a CFA to select and monitor various securities within client portfolios. Of course, once folks are in those positions they can sometimes advance to a full, lead advisor position (usually after attaining a CFP along the way). But for young professionals who want to become financial advisors from the get go–starting as support advisors, then service advisors, and finally lead advisors and even partners–getting a CFP is the ticket they must have.

Yet, as the example of my client showed above, the financial planning industry still is not laden with opportunities, even for CFPs. In fact, with a few exceptions, it’s only the larger firms that have created environments to maximize the contributions of young professionals; including training, mentoring, and career paths with defined goals, reviews, and rewards. Because these young professionals at larger firms are more productive, the firms can offer them higher compensation packages. Smaller firms, like my client’s, have a much harder time attracting and retaining professional, higher level talent.

Small Firms Lag the Large

Indeed, many smaller firms, again like my client, are a long way from maximizing the contribution of young professionals. Only within the past couple of years have most firms realized that they can benefit from young professionals at all. The result has been the huge leap in demand for professional talent. Yet most firms are solo or two-advisor shops, whose vision of the leverage they want from a young advisor is strictly support: someone to write financial plans, screen and track mutual funds, and help out with the back office technical nightmare, particularly during peak demand such as when quarterly or annual client statements are due. Maybe, and it’s usually a pretty big maybe, if the firm attracts enough clients, the principal(s) will deign to hand off a few of the smaller clients.

The bottom line: most financial planning firms don’t really want more than that from their young professionals. Sure, they may have some vague idea of ultimately selling the firm to their professional employees in 15 or 20 years, but don’t have any intention of doing anything about it for the next 13 or 18 years, respectively. Consequently, whether they are aware of it or not, what they are really offering their professional employees (and prospective employees) is a permanent support advisor position, complete with essentially flat support-advisor compensation.

That, my friends, is not a very attractive proposition for bright-eyed, bushy-tailed, 25-year-old advisors with their CFPs who are itching to set the world on fire. No wonder financial planners discourage their young professionals from getting their CFPs, why detailed career tracks are scarce, why there’s a chronic disconnect between older and younger advisors, and why the turnover rate among young professionals is off the charts.

Easier to See Than Do

The solution to this dilemma is far easier to identify than it is to implement. In fact, for most practices it only has two steps: First, advisors need to decide whether they really want to grow their firms beyond the one or two advisors they currently have. If it’s not your intention to add any more partners, or even another lead advisor, you might want to consider not hiring young professionals who aspire to be lead advisors and partners.

In fact, you might want to explore not hiring any more professionals at all. There are some very good contractors who write excellent financial plans for a flat fee, and if you want to offload your portfolio management, there are a number of third-party asset managers who do an excellent job for most client needs. For everything else–back office, technology, etc.–lower-cost, non-professional staff can more than meet your needs. Moreover, if you get lucky, maybe you’ll find a qualified professional who only wants to work part-time, or wants a full-time job but without aspirations of advancement. But don’t waste a lot of time and energy looking for them; those kinds of employees are harder to find than mutual funds that only go up. Better to seek more certain solutions, and if you get lucky, great.

Once you’ve determined that you do want to grow your firm, the second step is to create an environment where a young professional employee can make a substantial contribution to revenues, so you can afford to pay them enough, and allow them to advance sufficiently, to keep them over the long haul. You may not believe it, but that’s really not as hard as it sounds.

The Case Study

Again, let’s look at the case of my client. How valuable is a 10-year employee whom you trust and respect, is happy at your firm, and likes what you offer clients so much that she wants to become a financial planner herself? From an employer perspective, it really doesn’t get much better than that. Letting her slip away was a real tragedy for the firm. Here was an opportunity to grow the firm with about as little risk as possible, and the firm muffed it.

From the time she announced that she was going to get her CFP, the firm had about a year and a half minimum to prepare. What that advisor should have done is come up with a plan to use this new planning asset to expand firm revenues enough to compensate her as a professional, built around her professional strengths and inclinations. If she is a good public speaker, or writer, then letting her make her own rain by booking some workshops or getting her a newspaper column could have done the trick.

More likely, she’d have a technical bent: having her take over portfolio investment work, or add a new expertise–such as trusts and estate planning–to the firm could have freed up the senior advisor to bring in more than enough clients to offset the added compensation costs. If she had the personality to work directly with clients, that could have leveraged the owner/advisor even more. What’s more, because chances are she really wants to stay with the firm, her compensation could be tied to an increase in revenues. But make it fair: if things work out the way you’ve planned, everyone should share in that success.

This isn’t rocket science–advisors do this kind of strategic planning/implementation every day. Just not enough advisors do it. In fact, because it’s so simple, I wonder if there isn’t some reason that more advisors don’t do it. I have noticed that many employer/advisors have a hard time seeing their employees–even their young professionals–as more than their current job.

If someone is great in the back office, or writes crackerjack financial plans, you might not want to lose those talents in your firm. Or it might prevent you from picturing them as growing into a full-service financial planner. As a mature owner/advisor, you’ve probably grown just about as much as you’re going to grow. To build your firm beyond that, you’re going to have to let your employees grow, too. That’s really the key to your future. Let them become CFPs, and then figure out the best way for them to help your firm grow. The alternative is just to keep being the revolving-door training ground for larger firms. Believe me, that’s not nearly as much fun.


Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at angieherbers@cox.net.