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Kayla-Lynn Kasica probably won't have much trouble finding a job. Kasica, a junior at William Paterson University in New Jersey, is on track to graduate with a double major in financial planning and accounting - training she hopes to parlay into work with a wealth management firm upon graduation. Ultimately, she says, she wants to become a fee-only RIA.
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30 Great Schools for Financial Planning
Kasica is the president of William Paterson's accounting society, has interned at a fee-only wealth management firm and, as one of the recipients of a scholarship from TD Ameritrade, got to watch from the balcony at the New York Stock Exchange as the closing bell rang one evening in August.
"My ultimate dream," she says, "would be to be a principal in a firm."
Indeed, professors at the leading financial planning programs say many of their graduates have little trouble finding work in an industry that is hungry for talent. The majority of William Paterson's spring 2013 financial planning graduates have already landed jobs, many with RIA firms. Texas Tech University, which houses the nation's biggest financial planning program, boasts a 95% placement rate.
"If they're in our program, they get a job, if they want it," says Deena Katz, a Texas Tech associate professor of financial planning. "Our kids walk out with a degree under one arm and a job offer - several job offers - under the other."
ADVISOR SHORTAGE
But with financial planning still a relatively new discipline, colleges and universities face another challenge: Can they produce enough graduates to meet an anticipated spike in demand for advisors?
The U.S. Bureau of Labor Statistics forecasts a 32% growth rate for advisors from 2010 to 2020, amounting to some 66,400 new jobs. The agency describes that projected uptick as "much faster than the average for all occupations," pegging much of the coming demand to the large numbers of boomers heading into retirement and seeking advisors to help them plan.
There's a secondary factor at work as well: Just as American demographics are creating stronger demand, the supply is shrinking. Cerulli Associates projected in September that, across all channels, the advisory industry would shed 25,000 positions between now and 2017. "This reduction is largely due to retirement without sufficient backfilling of new advisors," the research firm explained, noting that other cuts would come from firms parting with underproducing advisors.
Recruiting shifts have added to the demand for young planners. Firms that once sought only established professionals - advisors who could bring in a book of business and start producing on day one - have started warming to the notion that recent grads are essential to their firms' success.
"That adjustment in recruiting practices is well underway," says Paul Blanco, managing director at Barnum Financial Group, a MetLife office in Shelton, Conn. "Historically, there has been a race among some firms to lure big producers. While there should be room at a firm for experience, ... bringing in recent graduates who have an interest in financial planning and service is a path to keeping a firm vital."
In some cases, firms face pressure from their custodians, which are "desperately trying" to persuade them to bring in young talent to "build a farm team," says Caleb Brown, a partner at New Planner Recruiting - which specializes in recruiting new advisors - and the chair of the Financial Planning Association's NexGen group.
"I'm definitely seeing that, where ... these busy RIAs would ideally prefer to bring in someone with more experience who has a book of business," he says. "They also realize that most of the new planners are coming out of these programs, so they're acquiescing."
'HUGE CONCERN'
This likely talent shortfall within the RIA sector is something that academic programs are watching closely. "It's a huge concern for us here," says Duncan Williams, an assistant professor at William Paterson. "That means that there are going to have to be an awful lot of new entrants into the field."
Luke Dean, William Paterson's financial planning program coordinator, adds: "There are way more job and paid internship opportunities than we have students to fill them."
Another organization with a close eye on the job projections is the CFP Board, which works with schools to register their planning programs. As of September, the CFP Board counted 344 registered financial planning programs that confer certificates or degrees at the bachelor's, master's or doctorate levels. Another 52 were under development.
That's up from 317 registered programs in 2009, with programs conferring bachelor's degrees increasing more than 20% the past three years. The board is working to increase the number of schools with planning programs, and to promote and expand established programs.
But student enrollment and retention remain a challenge in what Charles Chaffin, the CFP Board's director of academic programs and initiatives, agrees is "a very new and growing discipline."
Advisors are concerned, as well. "There's so much more demand than there really is supply," says J. Brent Beene, managing partner and wealth advisor at RegentAtlantic in Morristown, N.J.
Beene says his firm actively recruits for entry-level and early-career positions, but has struggled to fill them with top graduates. Even among applicants from CFP-registered programs, he says, there is a sharp fall-off between the few outstanding candidates and the rest. "There tends to be a handful of each of those in the programs, and they're very sought after," he says. "It's a bit of a needle in a haystack."
The real problem is in the numbers. Even with jobs waiting for new graduates, educators say they are struggling to recruit students into their planning programs. Most students entering college aren't aware of financial planning as a distinct career path - unlike, say, the way they understand professions like law or medicine. Kasica, the William Paterson student, only learned about its planning program when professors Dean and Williams made a presentation to the school's accounting society.
"Hardly anybody comes to college campuses and says, 'Hey, I want to be a financial planner,'" Williams says. "We talk to them about the shortage and how supply and demand is in their favor."
"Some of it is selling students," adds James Vizanko, director of the financial planning program at the University of Minnesota at Duluth.
PARTNERSHIPS CRITICAL
Both educators and industry participants stress the importance of partnerships to help connect students with planning careers. Something as simple as bringing in a guest speaker from a firm can help cut through some of the abstraction of the classroom, giving students an opportunity to interact with working planners.
Faculty also rely on advisors for guidance on the skills they seek in young job applicants - feedback that in turn informs the curriculum. "It's easy to develop misunderstandings between what we teach and what they want if you don't have a working relationship," says Tom Warschauer, director of the financial planning program at San Diego State University.
Partnerships with nearby firms can also create an opening for students to land internships or positions after they graduate. Or they can be integrated into the curriculum: At the University of Minnesota at Duluth, students regularly visit a learning lab at the offices of JNBA Financial Advisors to observe meetings (via videoconference) of the firm's financial planning committee in Minneapolis. As the team reviews an actual plan for a client, only the client's name is withheld from the students.
"What I thought would be important would be to have a real office environment in the learning lab," says Richard Brown, JNBA's chief executive, who is a co-instructor for the school's financial planning capstone class (and winner of a 2013 Financial Planning Influencer Award in the New Generation category).
Industry partnerships offer something more basic, as well: extra resources. UMD's learning lab benefited from a contribution from TD Ameritrade Institutional; Texas Tech boasts the Charles Schwab Personal Financial Planning Technology Complex. At San Diego State, a multimillion-dollar gift from Wells Fargo funded a financial markets lab, where students have access to a dozen Bloomberg terminals. And eTrade pitched in several million dollars to create a trading floor at William Paterson, where dozens of computers host common industry software like Morningstar Advisor Workstation, MoneyGuidePro and Junxure.
"All of these things are critically important," Williams says, "because the economics of higher education is changing [and] there's less and less state support." There are only two other options for increased funding, he adds: "increased tuition and partnering with industry."
Industry benefactors get a payoff beyond goodwill: These partnerships can help the schools produce graduates and certificants better prepared to enter the workplace. (Sometimes the relationships go one step further: JNBA, for instance, has hired multiple graduates of the UMD program.)
WHAT ADVISORS WANT
One result of the collaboration: Financial planning programs have warmed to the value of hands-on training and started building out the experiential side of their curricula - a trend that has strong support in the industry, according to Dean and other program directors.
Firms are looking for planning graduates with decidedly low-tech "soft skills" so central to the work of an advisor, says Kate Healy, who runs TD Ameritrade's next-gen program. That's why the CFP Board includes "principles of communication and counseling" in its long list of learning objectives, which is otherwise dominated by technical skills like tax compliance and quantitative investment concepts.
"What separates [the top graduates] is often the charisma, the personality, the passion that exudes from them," Beene says. "Our business is such a high-touch business that you can have someone who's extraordinarily bright, but there's got to be a level of comfort the client feels, a level of confidence the client feels."
Some programs (like Texas Tech and William Paterson's) devote modules - or even, in some cases, full courses - that include public speaking, intuiting nonverbal cues and relationship dynamics. The goal is to equip students with an "understanding [of] the personalities of the people with the money," says Craig Pfeiffer, founder and CEO of Advisors Ahead, an outfit that works with firms and universities and offers a series of placement programs to give students experience working in the industry.
CURRICULUM SHIFT
Chaffin describes the CFP Board's new requirement for a capstone class, approved in 2010 and put in place last year, as a "landmark curriculum change" that evidenced the increasing emphasis on oral communication, presentation skills and other tools that give students more polish. In that course, students are required to develop a comprehensive financial plan and present it to the class.
Compared with a few years ago, "There's no question that it is a monumental increase in that focus now," Chaffin says. "Having 20- and 21-year-olds, who I think it's probably fair to say have varying levels of communication skills, hone those skills in a variety of different contexts makes a lot of sense."
For many students interested in a career in advising, the interpersonal aspect of the profession is a powerful draw - and a sharp contrast to the more conventional work in finance.
"I think a lot of people do look at the Wall Street careers, the ones everyone knows about - investment banking, that sort of thing," says Lera Yalysheva, a senior at the University of Alabama. Yet a Schwab internship this summer convinced Yalysheva, a double major in finance and economics, that she wants to make her mark as an RIA.
"I just wanted to be able to interact with people rather than sitting behind a desk," she says. "You get to interact with individuals that really begin to trust you, and know that you're changing their lives in a better way."
Kenneth Corbin is a Financial Planning contributing writer in Washington.
