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.