I was recently asked to help create a survey for students at Kansas State University, to determine whether they’d be interested in using a financial planning center. It turns out that they would, with over 75% of the responders reporting that they would be likely to do so. Some of their other answers, however, reinforced my own observations that college graduates, even from financial planning organizations, are woefully ignorant about employee compensation and benefits packages. This hole in their education makes it virtually impossible for them to accurately assess a job offer, causing many young financial planners to turn down jobs that they really should have taken.
In the KSU survey, only 18.9% of respondents said they were knowledgeable about job benefits and contract agreements, and only 14.4% claimed knowledge about job offer negotiations. As we know, survey respondents tend to overestimate their own abilities, so I’d suspect that actual understanding of these subjects is a bit lower still. What’s more, financial planning courses don’t typically cover job benefits or negotiations, so young financial planners right out of college are usually right on par with the rest of their graduating class.
For experienced financial planners who are trying to attract these young professionals, this creates a big problem. Without a solid understanding of benefit packages or compensation structures, most job candidates tend to focus solely on the size of the salary they are offered. Even worse, in my experience, they also tend to overestimate average starting salaries. Which leads many applicants to be dissatisfied with a comp package that, by an objective standard, would be far above average.
Consequently, I advise my clients that they have to take the lead in explaining the advantages and the value of the compensation packages they offer, and be sure not to assume their prospective employee understands the value of what they are being offered–because they probably don’t. Present tables that show the range of salaries, bonuses, profit sharing, and total comp for the position your offering, and where your offer fits in. Detail the benefits you’re offering–the health benefits, vacation time, and pension plan (if you have one). Then formally show total cost of that employee to the firm, including taxes and FICA. Once young planners understand exactly what you are offering, I think you’ll find they’ll be much more inclined to accept the job–and more satisfied with their job in years to come.