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Financial Planning > Trusts and Estates

TD Ameritrade Awards Scholarships, Partners With XY Planning

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If the students gathered at the Nasdaq Market Center on Wednesday are any indication, the future of registered investment advisors is in good hands.

The diverse group of financial planning undergraduates from universities across the U.S. were gathered in New York, along with university educators, to celebrate. For the fourth year in a row, TD Ameritrade awarded 12 students pursuing bachelor degrees in financial planning with $5,000 each in scholarships.

As part of these NextGen Financial Planning Scholarships, TD Ameritrade specifically includes two awards for students from under-represented demographic groups, to help increase racial, ethnic and gender diversity in the RIA industry.

Also, a total of $75,000 of grants were awarded to two universities to foster financial planning education: $50,000 to University of Houston for its established financial planning degree program and $25,000 to Delaware State University for its emerging financial planning degree program.

“We need to do a better job of bringing more young people into the profession not only because of the aging demographic of advisors but the shifting demographic within the United States,” Tom Nally, president, TD Ameritrade Institutional told ThinkAdvisor while in New York. “Next gen … they are really building their own wealth and they’re set to inherit a lot of wealth. They’re going to want advisors that essentially are from their generation.”  

According to Nally, TD Ameritrade received about 250 applications for its student scholarships, and he said that number continues to grow each year.

Not only is this a sign that there is a growing awareness of the financial planning profession among young people, but Nally pointed to two more statistics.

“What we found for the first time in a decade, the average age of [certified financial planners] is under 50, which is great,” he told ThinkAdvisor. “And also, the number of new advisors that are women is something like three to four times the industry average of total women in the space. So we’re making an impact, and it’s all the little things you got to do. It’s about raising visibility, engaging the appropriate groups and spreading the word.”

The Bureau of Labor Statistics predicts that jobs for personal financial advisors are expected to grow by 30% by 2024, more than four times the 7% growth rate for all occupations. But there aren’t enough young people entering the profession to replace the older advisors who are nearing retirement age.

Both Chauncey Thomas, an undergrad at Florida State University, and Megan Manno, an undergrad at Louisiana State University, are aware of the need for young advisors in the industry.

“Since a lot of people are retiring, young people are needed to fill those spots,” Thomas told ThinkAdvisor. “But also with emerging new investment strategies and instruments, you just need different perspectives, and young people can sometimes provide that.”

Manno added that “with this massive amount of wealth being passed down to baby boomers, people are going to need guidance with how to invest and save.”

“I think it’s really important as millennials we are able to step up and fill the roles of people retiring and to help those [people],” she added.

XY Planning Partnership

In a second announcement on Wednesday, TD Ameritrade Institutional again re-emphasized its continuing focus on helping younger advisors and younger investors.

TD Ameritrade Institutional and XY Planning Network announced they are joining forces to launch an “unprecedented effort” to foster the growth of fee-only financial planners who specialize in helping younger generations of Americans save and invest for a brighter financial future.

Through the new program, TD Ameritrade Institutional will provide dedicated service and business-development support to XYPN’s membership of more than 250 independent, fee-only financial planners focused on serving Gen X and Gen Y clients. XYPN said its members will benefit from having access to TD Ameritrade Institutional’s Veo platform, which is integrated with 104 third-party technology providers to help RIAs operate more efficiently and take advantage of the latest innovations.

While the partnership won’t directly affect Pamela Capalad, an XY Planning Network member, because she doesn’t manage assets, she does think it’s important to have young advisors who help the younger generations of clients.

“I know that it would be hard for me to relate to someone that’s older and thinking more about retirement than how to actually grow my wealth,” she told ThinkAdvisor. “I actually have my own financial planner, who’s a young advisor, Sophia Bera, and so having my own financial planner who is also young and who understands the types of things that I’m going through.”

Capalad, owner and financial planner of Brunch & Budget, specializes in comprehensive financial planning for millennials. She has 34 millennial clients ongoing, as well as sees clients on a one-off basis. Prior to opening her own business a year and ahalf ago, Capalad worked in wealth management for seven years.

“The issues that we’re facing – because we’re the post-2008 generation in a lot of ways – they’re completely different from the issues that even our parents are facing,” Capalad said. “Like my mom has a pension and I feel like we don’t have that option. We’re starting to see more people freelancing.”

Capalad helps her clients manage cash flow; grow income; pay down debt, especially student loans; plan for taxes and estates; as well as look at investments, 401(k)s, employee benefits and insurance. One of her biggest focuses, though, is on cash flow.

“It’s the type of stuff that doesn’t show up in the CFP books that we’re talking about with younger clients, I feel like,” she said. “I feel like traditionally financial advisors wait for you to become wealthy and then they’re like ‘Now I can help you!’ And I’m coming at it from the other side.”

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