In April, Investment Executive editorial director Kevin Press wrote a column about why so many young people are turning their backs on the financial planning profession. He referenced a research project I completed on the subject with Professor Daniel Richards.
Press invited us to publish a summary of our report.
Bridging the gap between graduation and a successful financial planning career is not straightforward and graduates entering the industry face challenges due to their limited awareness of career paths and success factors. A significant number of financial planning professionals are nearing retirement, creating a pressing succession issue. I conducted research alongside Professor Daniel Richards that investigated the employability factors for graduates entering financial planning in Canada. What we learned through interviewing 20 professionals across the industry was truly eye-opening, not only for charting a vital roadmap for students but also for educators and employers looking to strengthen the talent pipeline. Our research focused on three critical employability factors: individual attributes (career self-management), human capital (education) and social capital (professional relationships). We identified two key roles that were shown to be essential for career development: customer service and associate financial planner roles.
Customer service roles
Obtaining a customer service position in finance is extremely competitive and is considered the hardest step in the initial stages of the career path. Although highly competitive and not exclusive to financial planning students, customer services roles such as bank tellers, administrative or personal banking associates, are a common initial step for graduates to “get a foot in the door.” They provide foundational skills and experience in client interaction, communication skills and financial systems.
Due to the frequent engagement with potential clients and building relationships with financial planners within the institution, those in customer service often act as referral sources. Co-op programs and internships can also be an effective first step but do not always provide the essential customer service experience required to work in financial planning. Our research suggests that students proactively seek part-time customer service employment alongside their studies to gain this vital experience.
Associate financial planner roles
Once in a customer service role, career progression was made easier as this position enables the development of skills and the expansion of professional networks. The associate financial planner position is critical to developing a career in financial planning.
This involves supporting a CFP with administrative tasks, client documentation and if allowed, sitting in on client meetings. It is considered a “dress rehearsal” for this line of work, as associate financial planners observe the financial planning process and how financial planners provide advice; however, the associate role may not always offer extensive opportunities to practice and develop high-level client service skills.
Education
Respondents indicated that post-secondary education is important and helps with understanding the underlying concepts and general thinking in their early roles. However, the customer service role required client service knowledge, and the associate financial planner role required specific technical skills that were not learned in their post-secondary education.
What is the purpose of a finance degree, or specifically, a financial planning degree? As a subject area of post-secondary education, it signals intent to work as a financial planner but does not align with what early roles demand.
Participants suggested that technical knowledge from school was helpful, however the skills required to work in customer service roles or associate financial planner roles were provided through experience and obtaining licenses.
Relationships and building social capital
An aspect that came through the most in our research was the strong influence of relationships in the profession. A professional network and building relationships in the industry proves crucial for securing an initial customer service position. As mentioned above, the progression from a customer service position to an associate financial planner position was easier for respondents than getting the customer service position. A large reason for this is that when they were working in a financial institution, they had built relationships with many people who could help them progress in their career.
Financial planners are able to benefit from the relationship with associate financial planners as they are able to delegate client servicing tasks, allowing them to prioritize their time spent on complex aspects of financial planning. A key aspect of this relationship is trust between financial planners and associate financial planners. Participants spoke about how there is a need to prove your competence gradually through error-free execution of tasks.
Progressing from associate positions often hinges on obtaining licenses and certifications, as well as building relationships with financial planners and those working in the finance industry. This network can unlock mentorship opportunities, provide exposure to more complex client interactions and higher-level responsibilities.
Implications for education and the industry
Our research offers takeaways for students, education and industry. For students, it provides a better understanding of early roles such as the customer service role and associate financial planner role. This research can help define their career path and highlights the importance of working in customer service roles even while studying as well as obtaining licenses to succeed in the associate financial planner position.
Financial planning education should place greater emphasis on networking and provide students with opportunities to build professional connections. Educators can provide networking opportunities to students through strong industry connections, social activities, student associations or alumni interactions.
Additionally, this research recognized that current education in finance does not prepare students well for early roles in this career path. Offering stronger integration with industry through the addition of courses or simulations that mimic early roles could help with this. Educators could also emphasize licensing requirements since licenses improve employability.
For the industry, our research suggests that clearer career paths and making entry-level positions more accessible to students, such as offering part-time positions that allow them to gain experience while studying, can be beneficial. Training and mentoring the next generation of financial planners is an important aspect to addressing succession in an aging profession and creating a pipeline of talented financial planners.