The RIA industry has a fundamental problem when it comes to recruiting a new generation of financial planners that can ensure growth into the future.
Many students and career changers don’t know that the financial planning career exists, even though RIAs offer many of the benefits job-seekers desire, according to a study released Monday by TD Ameritrade Institutional.
The survey found that just 37% of students were aware of the profession, but 63% became interested after learning more about it.
A similar dynamic was evident among career changers. Only 44% were aware, while 64% became interested after learning more.
“Much needs to be done to make the financial planning profession more attractive and sustainable, and our first job is to make it more visible,” Kate Healy, managing director of Generation Next at TD Ameritrade Institutional, said in a statement.
“With so many advisors expected to retire in the next decade, combined with the rising demand for financial advice, our industry needs to expand its access to talent if it hopes to be sustainable and serve future generations.”
TD Ameritrade Institutional commissioned a comprehensive research study that included online qualitative and quantitative research with more than 2,000 advisors, students, adults changing careers and university program directors surveyed between January and May.
The survey found that most recruiting is focused on experienced advisors with an existing client base, but that can exclude high-potential students, career changers and professionals from diverse backgrounds.
Fifty-seven percent of RIAs said they had hired new associates in the past year, and 56% said they offered internship programs.
When hiring, 36% of advisors said they mainly relied on referrals, while 7% used recruiting and LinkedIn to source potential hires.
The research showed that firms face a major recruitment challenge in that career changers and students lack interest in what they perceive — often inaccurately — to be characteristics of a financial planning career.
Thirty-seven percent of students surveyed said they preferred to pursue a different career, 35% said they were not interested in sales and 31% said they were not interested in finance.
For 46% of career changers, the biggest disincentive was fear of starting over or losing tenure, and for 41%, it was lack of interest in sales.
A third of career changers also worried about unsteady income — another misperception, according to the study.
Advisors in the study said people-oriented skills were an important consideration in assessing job candidates, perhaps more so than math and analytical skills.
Three in four advisors said they looked for enjoyment in working with people in candidates, and some seven in 10 said self-confidence, clear communication and entrepreneurial spirit were important skills.
TD Ameritrade said RIAs could find an upside in the survey, namely, that most students and career changers are looking for work/life balance and purpose in addition to competitive compensation — the very things an RIA career can provide.
Fifty-three percent of students and 52% of career changers in the study put a priority on work/life balance, while compensation was a deciding factor for 53% of students and 45% of career changers.
Personal fulfillment was also a consideration, cited by 38% of career changers and 35% of students.
TD Ameritrade said in the statement that it would use the insights from its research to develop programs that can help RIA firms attract young professionals and expand the pool of potential talent.
“Working together, we need to cast a wider net to attract the next wave of talent,” Healy said. “We need to step up our game at colleges and universities and even high schools. We have much to do, but the good news is: We can do this.”
— Check out Risk Taking Is Crucial to Career Growth on ThinkAdvisor.
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