There is a “major disconnect” in the wealth management profession: Firms say they can’t find young talent. Aspiring financial planning students say they can’t find jobs.
Scott Leak, a director of business development with FP Transitions, said wealth management firms that claim they can’t find new employees are in fact looking for hires who are ready to hit the ground running, not those who may have had some coursework in financial planning but no on-the-job experience.
“So what we need to do is figure out how we give this next generation talent an opportunity out of school and build them up,” he said.
Addressing that issue was the topic of “Focused on the Future,” a think tank last week at the Wealth Management EDGE conference, held at The Boca Raton resort in Boca Raton, Fla., bringing together industry executives, members of the FinServ Foundation and financial planning students just entering the profession.
Setting the stage, Leak and Elise Rodgers, FP Transition’s marketing director, presented the results of their survey of 100 undergraduates in financial planning-focused college programs to assess their motivations, worries and must-haves when evaluating potential employers.
When it comes to what attracts them to a career in wealth management, 96% said helping people reach their life goals was the main driver, followed by a healthy work/life balance at 68%.
In five to 10 years, about 39% of those surveyed hoped to be a “partner or owner in a small/mid-sized firm,” with about 28% expecting to be working at a large, national firm.
Mentorship and in-person experiential learning were top of mind for students as well, with over 72% interested in shadowing a financial advisor and over 90% finding “mentorship and professional growth” essential.
In terms of compensation, about 80% of respondents said base salary was the most important factor, with 53% citing retirement benefits and a 401(k) match as essential. Only 14% of respondents said equity was a priority, though Peak and Rodgers noted that stock-based compensation becomes more important with age and experience.
In a panel discussion following the research presentation, a group of college students focused on financial planning programs shared their personal experiences navigating entry points into wealth management careers. To begin with, there was a unanimous aversion to working at sales and commission-based firms. They said they hoped to find places where they could learn the trade without being expected to sell immediately.
“I prefer to get clients, and then focus on helping them, meeting their needs and working on the technical side,” Moncef Mazousz, a George Washington University student focusing on financial planning, said during the panel. “For me, training is really, really important, and getting something that’s structured, that’s organized, will help me achieve my goals and be a proactive person in that company.”
Victoria O’Tool, the executive director of the FinServ Foundation and a financial advisor at Mercer Advisors (and a recent graduate), stressed the value of having a team of support staff working with planners, as Mercer does, which allows them to “focus on your strengths” and “delegate the weaknesses.”
“A good salesperson isn’t always necessarily going to be a great wealth advisor, and a phenomenal wealth advisor might not have the specific skillset to be a phenomenal salesperson,” she said.
Elevation Point CEO Jim Dickson said students and firms might both be better off if potential hires were exposed to a wider range of roles at wealth management firms beyond financial planning, such as compliance or investment management. A focus on financial planning may limit the number of students who could comfortably find employment at independent wealth management firms.
Some of those students might otherwise lean toward careers in investment banking or consulting, but as those entry-level jobs are shrinking, “they’re drifting towards wealth,” he said. “And I think there’s an opportunity for us to say, ‘come one, come all, we’ll find a role for you.’”
Like many others at the conference, the students had thoughts about artificial intelligence in the wealth management space.
The two most-cited concerns about the use of AI were the over-reliance on automation and loss of human interaction (64%), and accuracy of AI output (63%). Data privacy ranked third at 57%.
According to the survey, students considered it more important for firms to prioritize AI use than to provide training on the technology.
Why? They likely know the tools as well, or better than, their potential supervisors, the researchers suggested. At least they are confident in their ability to pick up the technology intuitively. The students were using AI tools on average for five hours a week, the research found.
