At this year’s FPA NexGen Gathering, more than 175 young financial planning professionals descended on the University of California Santa Barbara to learn best practices, share ideas, solve challenges and, if you’re me, escape your toddler for a few days to unwind on the west coast. I had an absolute blast joining like-minded colleagues and meeting many of people I’ve only interacted with online, which should come as no surprise considering how we “kids” love our internet and social media.
I am 33 years old, but I’ve been a financial planning professional for more than 14 years. My early foray into the profession has provided me with experience and perspective that very few of my young colleagues get to share. However, as much as I have used my jump start as a competitive advantage in my career, it has been nothing short of a lonely journey. But thanks conferences like the NexGen Gathering, coupled with an ever-expanding online community, today’s young planner doesn’t need to go at it alone.
Fueling the NexGen movement is an insatiable demand for young talent. To be blunt, our profession is rapidly graying, quickly changing and severely lacking diversity and gender equality. Yet, despite the surging demand for new blood, the reality remains that getting in and staying in the profession is quite difficult. Thanks to the continued use of obsolete sales-based recruitment models and deficiencies in managerial skills, young planners are struggling to find viable pathways that offer enough time for them to mature into business development and partnership roles.
What is most striking to me about this situation is that while the profession continues to rapidly shift away from its transaction led, brokerage-based roots to one that now starts with financial planning, it has mistakenly forgotten to also shift how we recruit and retain new talent. I firmly believe that this is one of the largest contributing factors as to why the recruitment and retainment of young talent is so difficult. And it’s not just an oversight that comes with the changing of the times, it comes down to dollars and cents.
If you ever want to light a fire under a financial professional’s rear-end, all one needs to do is threaten how it is they make their money. Coincidentally, the shift from brokerage to planning and advice happens to be that flame. Advisors with enough foresight and self-awareness to see which way the wind is blowing are feeling the proverbial heat. So, as we continue to restructure our businesses to more relevant compensation models, we’ve placed everything else like recruitment, marketing and management second to protecting our toplines and valuations. But hey, at least we can say we’re moving in the right direction. Right?
Compounding this issue, is the sheer number of platforms in which planners can theoretically operate. At a high level, there are insurance agencies, banks, brokerage houses, independent broker dealers and registered investment advisors. Within some of these structures, you will find solo practitioners, small teams, large groups of teams as well as entire field forces sales people. I believe that this variety thwarts our ability to create a more uniform recruitment model needed to bring in and retain the next wave of talent in the planning profession.
However, standardizing recruitment across all platforms is a massive, if not a next to impossible task. It essentially calls for firms (some of which are massive and downright powerful) to not only radically change the way they do business, but also require significant investment into them as well. For a lot of these firms, change of this magnitude could generate short-term losses as well as open their doors to unwanted departures and, not to mention, spark unpleasant conversations with stakeholders and principals alike.
In the long-term, however, if executed properly, these changes can ensure survival, encourage healthy competition, weed out the bad players and, above all, provide a more sustainable platform for new planners to thrive in an profession that desperately needs them. But, of course, investing in the long-game is hard, especially when you’re making money today.
The way I see it, the die is cast. The market has already made up its mind and the invisible hand continues to sculpt (albeit at a slower pace than I would like) a more practical and congruent pathway for young planners to both join and thrive in the profession. It might take 10 or even 20 years to be the norm but, when it’s all said and done, things will look and operate differently than what’s taking place today. The players that choose to accept what the market demands will have their pick of the litter when it comes to young talent. Moreover, they will stand a better chance at fostering growth for years to come. Those who fail to do so will simply be left behind.