When students graduate from medical school, they start a residency program — a post-graduate experience in which freshly minted physicians gain in-depth training on the job. An equivalent program for financial planners aiming for CFP certification is almost nonexistent, however.
It’s a longstanding problem with little progress made over the past two decades, says Carolyn McClanahan, a doctor, advocate for better training for financial planners and founder of the Jacksonville, Florida-based firm Life Planning Partners.
When she trained to be a physician, McClanahan went through a traditional medical residency with a set curriculum and rigorous standards, all of which are needed for residents to graduate, receive licensing and practice their choice of specialty.
“So to me, we need that exact same thing in financial planning,” she says.
There are two pathways for CFP candidates to fulfill the experience requirement of their certification: the standard pathway or the apprenticeship pathway.
The standard pathway requires financial planners to complete 6,000 hours of professional experience related to the financial planning process, while the apprenticeship pathway requires 4,000 hours of apprenticeship experience that meets additional requirements.
However, according to McClanahan, the CFP Board doesn’t offer guidance for financial planners to meet that requirement. A structured program would reduce the piecemeal approach that leaves gaps in learning while offering a livable wage that is essential to get the necessary experience to be a competent financial planner, she says.
The CFP Board declined to comment further on financial planning residencies other than to confirm these programs are one of the approved ways to complete the experience requirement for the 6,000-hour standard pathway, says spokesman John Pappas.
While several advisory firms have created their own residencies, the idea is still uncommon.
Cornerstone Wealth Advisors’ financial planning residency program started in 2010, says Andrea Eaton, a principal and financial planner at the Edina, Minnesota-based RIA.
“Profession-wide, there's a gap between book knowledge and real-life clients. So this is a way to bridge that gap,” she says of Cornerstone’s residency program.
Dissimilar from a typical entry-level position, Eaton says residents get in-depth client experiences and familiarity with all facets of everyday work.
Residents start the three-year program with more behind-the-scenes office tasks, such as scheduling meetings and doing paperwork. Even then, new residents sit in on client meetings and work on projects like tax deductions along the way, with the support and supervision of seasoned professionals.
The goal is for the residents to be full-fledged financial planners capable of succeeding at any firm by the time the residency period ends.
As a small boutique firm with 250 clients, Cornerstone only needs so many advisors. Instead of hiring a permanent financial planning associate with little room for growth, Cornerstone uses its residency program to allow participants to gain experience while still doing technical work for the RIA.
Four residents have successfully graduated from the program, while several others started but failed to complete it. However, all of the feedback thus far has been positive regardless of completion status, Eaton says.
Eaton says the short-term commitment is also attractive because not everyone may want to move to Minnesota for a full-time, permanent job, but they may not mind living in the Twin Cities for three years.
Upon graduation from Virginia Tech in 2013, Amanda Ansell started Cornerstone’s financial planning residency program, drawn to the program because she was able to do meaningful work on the first day, getting to sit in on client meetings earlier than she might have at a traditional entry-level job.
By participating in a residency program, Ansell learned the practical side of financial planning rather quickly, going far beyond the “book knowledge” taught in college, such as Roth conversions, and from studying for the CFP exam.
“You have absolutely no idea what that actually means, or when it's used or why it's used until you're sitting in front of a client. Money is just so personal. A lot of times the book might say in this situation, you should do X, Y and Z, but that's taking all of the emotion out of the life experience from it,” she says.
While a valuable experience, Ansell says the residency program was by no means a “walk in the park.” Cornerstone has high expectations of its residents, and if the residents don’t know something, they’re expected to learn it on their own time.
It’s not a client service role; the expectation is the residents are financial planners.
However difficult, it was ultimately rewarding. Going through the residency program shaped Ansell, so much so that she now oversees a residency program at the Blacksburg, Virginia-based RIA, OLIO Financial Planning, where she works.
Spencer Werres, a current financial planning resident at OLIO, started at the RIA after his graduation from Virginia Tech in 2019, first hearing about the opportunity from Christine Damico, one of his teachers and a graduate of Cornerstone’s residency program.
The ability to focus on more intensive financial planning rather than being stuck doing paperwork at an entry-level position was enticing for Werres. And as someone who switched majors in college, the three-year commitment was also appealing.
Werres likes he was able to get hands-on experience from the beginning, something he says his friends in the profession haven’t necessarily experienced.
“It really came down to the experience aspect, that it was a higher quality experience,” he says. “You have three years in this program, and it pushes you to expand your horizons, whether you want to or not. It's fast-paced. It gets you ready to be a financial planner.”
Newer to the scene, Yeske Buie’s financial residency program started in 2014. It receives a cohort of residents it’s able to train relatively quickly, getting them to a place where they can be contributing members of the firm.
The Vienna, Virginia-based advisory firm’s program is two-pronged, says Yusuf Abugideiri, partner and senior financial planner. It provides the industry with capable young talent and reduces turnover among Yeske Buie’s young financial planners by having a specified arrival and departure date.
Admittance into the program, which draws a dozen or more applicants per year, provides residents with the opportunity to learn how to be a financial planner as part of a robust team that includes other early-career planners.
There’s little difference between a permanent financial planner and a financial planning resident, both hired directly out of school, during their first three years. While the resident has a set graduation date, all other aspects of the job are the same – salary, vacation days, health benefits and reimbursement for the CFP exam fees.
“Residents are treated like any other member of our financial planning team because we want to make the experience attractive in as many ways as we possibly can,” Abugideiri says.
The three-year commitment is definitely a draw, Abugideiri says.
“It's a great way to find out what you're good at, what you're not good at, what you need to learn, what you enjoy. It's not forever. You get great experience, and then you have the freedom to move on,” he says.
Upon beginning the program, residents receive mentorship from multiple sources, with senior firm advisors playing more significant mentoring roles. But the firm also understands its limitations and encourages residents to seek an external mentor if they want.
McClanahan says even these existing programs don’t have structured curriculums, however. Additionally, people who don't have the financial ability to strike out on their own or who cannot get into one of these competitive programs may have to take less conducive jobs to achieve their experience requirements to get their CFP.
But by providing a good education at a living wage, the industry can help decrease the entrenched inequity in the profession and offer better-trained planners to the public, McClanahan says.
A centralized, industry-wide financial planning residency program is still a long way off, but McClanahan would at least like to see the CFP Board create an initiative and set a standardized curriculum.
“It's an issue that we don't have good training programs. For a profession to be a true profession, you have to have not only an education requirement, but you have to give a good broad-based, well-structured experience requirement,” she says.
