Why are some new planners having trouble finding a suitable job, even when there is a need for advisers at many firms?
I’ve had entry-level CFPs repeatedly tell me they can’t find a position that allows them to use all of their newfound talents and skills.
Yet their experience flies in the face of industry surveys that report a shortage of qualified planners — that is, those with real-world client experience who are right for existing or upcoming openings. So if there are truly few real professional jobs open to entry-level planners, why do these conditions exist?
The reason is straightforward: There is growing demand for those with strong business development skills. Put another way, the primary demand is for CFPs who can sell business services to others, rather than those trained to analyze data and write financial plans.
This apparent dilemma results from a failure of professional educational programs to prepare new planners for the realities of working in a small business. So what does this mean for new advisers’ hiring futures?
THE SELLING STIGMA
Firms that use merit systems of reward and recognition for business development know CFP courses or college educations don’t provide training or experience in business building.
Courses such as finance, marketing, advertising or even organizational management are tangential to skills needed to develop individual personal connections, give effective counsel, convince clients to buy services and products, and retain and grow new relationships.
Facing this issue, growth-minded firms must close the training and skill gap between newly minted and experienced business-developer CFPs.
Unfortunately, there is a stigma attached to selling in professional firms. We all know selling products in professions such as medicine, law, accounting or financial services can put a tremendous strain on a fiduciary relationship.
However, business development uses sophisticated selling skills and techniques and training to identify opportunities, communicate valuable services, negotiate complex situations, and help clients make important and often deeply emotional decisions.
This is not synonymous with the old-school model of product selling.
Today, aggressive business development at firms that put fiduciary responsibilities first does not negatively impact the fiduciary relationship. Rather, advisers with professional selling skills are absolutely essential to growth-oriented firms.
SCHOOL DAZE
Until recently, most colleges and graduate business schools didn’t teach sales, because they couldn’t add much to the skills necessary for success. This has changed as businesses across the globe have become more competitive.
“While price, quality … and availability of products and services certainly influence customers’ buying decisions, none of these is the most influential factor. Rather, business-to-business customers rank salesperson effectiveness as the most important factor in their buying decisions.” wrote sales consulting firm Chally Group in their 2015 report, “Best Companies for Leaders.”
Higher education has responded. The Sales Education Foundation’s 2016 report on “Top U.S. Universities for Professional Sales Education” noted more than 100 schools with thousands of students. There are more than a dozen high-level programs, such as the Center for Sales Leadership established by DePaul University, with more than 900 students.
Find out where our annual list of financial planning degree programs at colleges and universities fall on the map.
Is formal training working?
Professor Richard Rocco of DePaul University, in his report “2015-2016 Sales Effectiveness – Sales Acceleration Survey,” which covered small to medium businesses, found the use of sales enhancement/acceleration technology and services created statistically significant changes in sales metrics, including sales growth of 35% over the prior year in the 127 firms that completed the survey.
However, the same report states turnover rates of nearly 27%, and Rocco notes “… Sales organizations continue to need to develop more effective methods designed to secure and retain sales talent. The high annual turnover … is costly for firms.”
The report mentions only 25% of the sales force exceeded quotas. Of the staff turnover, 50% voluntarily resigned, 33% were dismissed and 22% retired.
THE MERITS AND DEMERITS OF MERITOCRACY
There’s no doubt about it: Being successful in business development in the financial services industry is very hard work. In a planning firm I helped start in 1988, only four out of 13 — or about 31% — of founding professionals hit or exceeded their targets each year.
It is telling that only those four remain active in our industry today. Fortunately, new hires with undergraduate degrees in sales, including internships, are only half as likely to voluntarily resign from their jobs as those with no prior training.
This is very good news for small firms that expend considerable time and energy to hire new advisers. Ninety percent of advisory firms have less than 10 employees with limited spare time or resources, so most new CFP hires only receive training to operate existing programs or follow current procedures.
They are expected to already know how to gather information, analyze data and develop a financial plan. They are not trained on goal setting, communication, or non-verbal and people skills.
Even so, many new hires who want immediate experience with clients find themselves over their heads because, in a small merit-based organization, they also must develop new client relationships. If they can’t develop business and, as a result, become frustrated, many will leave rather than learn professional sales skills.
At our firm, which offers advisers salaries as well as potentially significant compensation from team bonuses and individual business development, every adviser is regularly involved in sales and technical training, using inside and outside activities and resources.
For example, the StrengthsFinder program helps advisers understand and utilize their natural strengths. Every adviser has a designated supervisor for monthly goal monitoring and mentoring. Business efforts such as prospective client identification, center of influence activity and prospect pipeline activity are reported electronically and used for mentoring, monitoring and future goal setting.
One of our senior advisers, Cal Brown, says this about monitoring goals: “If you don’t know what you’re doing, your high-impact activities will get crowded out and you won’t like where you end up!”
BUILDING A SOLID FOUNDATION FOR SUCCESS
A CFP candidate considering a career as a client-facing adviser should consider a well-rounded college or graduate school education in professional sales. If you’ve already graduated, consider enrolling in one of the many fine comprehensive sales training programs run by private companies.
Remember that direct sales is one of the highest-paid professions in the world, but enduring success will take intense effort and dedication, and will involve some failures along the way.
With a solid foundation of proper education, training and mentorship, failures can strengthen resolve and provide significant learning opportunities. Without this foundation, failures can crush ambitions and dash hopes. Make sure you’ve built your foundation well.
