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Successful advisory firms typically deploy a comprehensive human capital plan. The cornerstone of such a plan is a clearly-defined advisor career path.

While the idea of career paths is not new to the business of financial advice, the model and execution vary from firm to firm. As a result, advisors find it difficult to hire candidates for the right roles, evaluate their performance against a uniform standard, promote them, reward them and train them.

Employees also lack clarity about the functions they need to master in order to advance or, for that matter, what excellence in the role looks like. This makes it challenging for individuals to know where they fit in the job hierarchy and compensation structure within their own firm — or when seeking work elsewhere.

Fortunately, the CFP Board Center for Financial Planning (“the Center”) retained The Ensemble Practice to research this subject, examine existing operating models and compare our industry to other professions. They made a series of recommendations that serve as an excellent starting point for advisors who seek to transform from practice to business.

The advisory profession has been experiencing an acute talent shortage for many years. The shortage appears in age demographics as well as gender and ethnic demographics. The average practitioner is closer to the end of their career than the beginning, and advisory firms as a whole are doing a poor job replacing the pioneers. Today’s advisory firms compete against other compelling careers in law, medicine, engineering, software development and corporate finance.

Those of us who have had fulfilling lives in financial services find it hard to comprehend why recent college graduates and career changers might not consider financial advice. The Center’s Committee on Workforce Development concluded that industry reputation and lack of exposure to the profession precludes many candidates from exploring this option. Research also showed that advisory firms are not as effective as other industries in laying out a clear and attractive career path.

In some cases, advisory firms lack the management experience or discipline to develop a recruitment or people-development process that might differentiate their firm. In other cases, firms fail to outline benchmarks to guide their compensation and promotion processes.

Mixed Models A plethora of conflicting operating models complicates the matter. Firms that emphasize investment management may see employee roles differently than financial planning firms. Multi-family offices may use separate terms from advisory firms that serve the mass-affluent or retirement plan markets, while firms based on CPA business practices may use generic terminology such as director, managing director and partner.

Titles for entry-level employees provide a good example of this confusing dynamic. Job titles include analyst, associate, junior advisor and paraplanner. Each term conjures a different idea of the role, responsibilities and experience required. Employers created these titles to give their new hires a sense of prestige or authority, often bringing these naming conventions from other places of employment.

Imagine a conference for entry-level professionals attended by the top new recruits from many firms. As they exchange business cards and talk about their challenges and opportunities, training process or orientation, how might these discussions unfold?

Now, imagine a conference where advisory firm leaders come together to examine hiring and people-development practices. How will they discuss job hierarchy and the expectations for people in each position? Will the notes they share be helpful?

No wonder both candidates and employers are confused. It is hard to describe what a career in financial advice looks like, and how recruits progress.

Titles, roles and rewards vary from firm to firm; those seeking to advance up the career ladder or move to another firm find it challenging to ascertain where they are relative to new opportunities.

The profession (or industry — another challenge with our vernacular) has many names for professionals: financial advisor, financial planner, wealth advisor, investment advisor and wealth counselor, to name a few. The Center’s white paper establishes some base-line terminology without constricting firms in the actual titles they use; it gives employers a foundation for evaluating the competency, compensation and credentials required for each career level.

Positions on the Financial Planning Career Path While individual firms may design distinct advancement pathways based on the strategy and culture of their organizations, research shows that most firms do share certain basic stages. These stages — or rungs on the career ladder — can help advisory firms outline and implement a financial advisor career path.

The white paper describes five distinct rungs on the financial planning career ladder: analyst, associate advisor, service advisor, lead advisor/managing director and principal/partner.

According to the study, the process of ascending to partner generally takes between 10 and 15 years. Some people advance more quickly, and others take more time, but this provides a frame of reference. Each rung may require anywhere from six months to three years to master.

The above pyramid chart helps to illustrate where career changers or defectors from other advisory firms might fit into the job hierarchy when joining a firm. Leaders can evaluate a candidate against the benchmarks, which also can inform the compensation range for each position.

The Service Advisor role represents a significant addition to the traditional career path in an advisory firm. Analysts, associate advisors and paraplanners commonly do much of the analytical work and support the partners — but most advisory firms depend heavily on the owners for business development. The service advisor role enables junior staff to improve their people and project management expertise while also working on their discipline and business development skills. Within most firms, a promotion to partner requires the ability to generate new business for the firm.

In the past, firms asked new recruits to bring in clients from the get-go, a sink-or-swim strategy that led to a high attrition rate. The service advisor role permits individuals to develop maturity and experience, and build their credentials before engaging with prospects and centers of influence for new business. This intermediate stage mirrors the career ladder within other professions, and facilitates specific training discipline and measurements at key points in a person’s career.

The advisory profession is a compelling choice for those who wish to impact the lives of others. With structure and strategy around how individuals are developed, promoted and rewarded, advisory firms have an opportunity to transform from practices to businesses that will endure.

The study produced by the CFP Center for Financial Planning and Sponsored by BNY Mellon Pershing is entitled “Financial Planning Career Paths: Building More Sustainable and Successful Businesses.” It is available at or

Mark Tibergien is CEO of BNY Mellon’s Pershing Advisor Solutions. Tibergien is also the author most recently of “The Enduring Advisory Firm,” written with Kim Dellarocca of BNY Mellon and published by Wiley. He can be reached at [email protected].