AS fiNANCIAL PLANNERS APproach retirement in large numbers, a new program is aiming to help younger advisors get their start in the business and acquaint them with established financial planners who may soon be looking for an exit strategy.

The Delta, B. C.-based Institute of Advanced Financial Planners (IAFP), which administers the registered financial planner (RFP) designation, has launched a mentoring program that pairs established financial planners with those new to the business. The idea is to help younger advisors and recent graduates get the guidance and support they need to earn their RFP designation and begin establishing their business.

“There’s a wealth of information here,” says Jeff Wachman, chairman of the IAFP’s membership committee and a senior financial planning advisor with Assante Financial Management Ltd. in Mississauga, Ont. “We just want to make sure that it gets shared.”

FILLING A SIZABLE GAP

The mentoring concept fills a sizable gap in the financial planning industry, says Kathy McMillan, director of wealth management and an investment advisor with McMillan Wealth Management Solutions in Calgary, which is licensed through Toronto-based Richardson GMP Ltd., and a member of the IAFP’s membership committee. Although most professions have an internship or apprenticeship program, McMillan notes, no formal program currently is available to financial planners: “Lawyers article, accountants article, doctors intern. We deal with people’s money and people’s futures, [so] there should be a mentoring program.”

Shadowing a mentor could provide young financial planners with hands-on experience as they learn the ropes of the business. Although students graduating from financial planning programs have a broad base of theoretical knowledge, they typically don’t have any practical experience in working with clients. Thus, it can be a daunting task to begin cold-calling prospects and sitting down with clients for the first time. “You have all the theory,” says McMillan, “but you have none of the practical.”

Essential soft skills, in particular, can be developed by working with an experienced financial planner, says Evelyn Jacks, president of the Knowledge Bureau in Winnipeg. For instance, she says, young financial planners must learn how to communicate with clients effectively. “Having the opportunity,” Jacks says, “to observe and understand the language of business is very important.”

Mentoring also can provide much needed guidance during the rigorous process of earning the RFP designation. To earn the designation, candidates must prove their ability to create a comprehensive financial plan for clients with complex financial situations, factoring in all relevant components. Candidates also must successfully complete examinations evaluating their technical competency, ethics and practice standards, and must submit a sample financial plan for peer review. Candidates also are required to have at least three years of experience in financial planning, among other criteria.

It’s a challenging pursuit, Wachman says: “When I was doing it, we didn’t have anybody to bounce ideas off of; now, there’s a resource to learn from.”

The mentoring program also provides a key opportunity for advisors to connect with potential successors. The average age of an RFP in Canada is about 50, Wachman says, which means many are approaching retirement.

A TWO-WAY STREET

“We’re in our 50s; we’re looking to get out,” he says. “What better opportunity to pair with someone who wants to come into the industry and to be a mentor to him or her, learn how he or she works and see how you guys work together.”

McMillan, who began mentoring two young women a few years ago, says mentoring is an ideal way to get the succession ball rolling: “We’re mentoring them with a succession plan in mind.”

The young associates have been learning about the financial planning process gradually, and one recently has begun taking on accounts of her own from among the grown children of McMillan’s clients.

In addition to the succession planning opportunities, mentors can benefit from young advisors’ skills and ideas. “They bring a whole new energy to the business, and a whole new view,” McMillan says. “It’s really rewarding when you bring somebody young and smart into your business.”

Jacks agrees that mentors can gain valuable new insights from working with members of the next generation: “It does work both ways. We have just as much to learn from the new people who are coming on board as they have to learn from the people who are already there.”

So far, more than 40 of the IAFP’s 380 members have signed up to be mentors under the new program. The association plans to compile a roster of mentors, including a description of the type of practice each mentor operates. The IAFP will circulate the list among colleges offering financial planning programs so that students can be matched with a mentor best suited to the students’ goals and interests.

Part of the purpose of the program is to bolster the IAFP’s membership: RFPs have begun retiring – and there are too few new RFPs to replace those who are departing.

“We want to build the organization back up,” says Wachman, “and that will give us the latitude we need to continue strongly.”

© 2012 Investment Executive. All rights reserved.