Evaluating Young Financial Planners

I found many students are eager to enter the financial planning world, and their preparedness was notably improved compared to prior years. For instance:

• 100% were dressed appropriately for an interview.

• 100% brought a hard copy of their resume, up from 80% last year.

• 80% had a good idea of what type of firm and role they were seeking, up from 70% last year.

• 65% followed up with a thank you note, up from 50% last year.

• 75% had internship or work experience in the profession. Half were willing to relocate, about the same as last year.

• A handful brought samples of their work or personality profiles they had taken, up from just one student last year.

However, my experience also reinforced the perception that while there are some great new planners out there to hire, there are also some who are not well-prepared to enter a professional planning firm. For example:

• Very few had solid immediate plans to take the CFP certification examination. Several continue to think they have to wait three years to take the exam, a theme that has resurfaced for several years. Some students even shared that during their internships their supervisors discouraged the CFP designation because “it is voluntary and not needed to practice.”

• The majority of students were aware of the Financial Planning Association (FPA), but less familiar with The National Association of Personal Financial Advisors (NAPFA).

• Few had a thorough understanding of the various business models, compensation structures, licensure requirements, recent legislation and industry issues.

• Some thought they had to go into banking or insurance sales for a few years prior to entering financial planning.

Some additional observations I made when I was touring campuses:

• There is still a massive misperception among students on what the financial planning profession actually is. Many of them are adamant about not wanting to follow in the footsteps of the Ponzi scheme perpetrators the profession is often associated with.

• Students are predominantly seeking opportunities in the independent fee-only model.

• Last year, I estimated the ratio of female to male new planners to be 40% female and 60% male, but this year it was closer to 50%-50%.

• Not all students enrolled in a CFP Board-registered program are seeking careers in financial planning. Several were looking to start their own franchises and enter businesses unrelated to the profession. Last year, I reported that several top candidates I interviewed did not want to go into the high-net-worth client space; they wanted to work with lower- to middle-income clients via non-profit or government agencies. Several candidates deemed the robo-advisor model “interesting” this year.

• The number of students in these programs does not appear to be increasing at any material rate, due not only to struggles in marketing the programs but also capacity issues. A few faculty members mentioned they could not accept any additional students until another faculty position was established.

The four programs I visited are top-notch programs. However, just because the educational opportunities have been provided, it does not mean that all students have acquired the same level of knowledge and skills. Just like how a client’s experience with one CFP varies drastically from another, so do the capabilities and readiness of students in the financial planning programs. For these reasons, it is important to examine candidates beyond the courses completed, grades acquired, and basic professional and interpersonal skills.