Banking

The Future Of The Financial Planning Industry Depends On New Blood

If you’re shopping for a career, follow the law of supply and demand. Pick an industry where more consumers will pay for what you do but with fewer people equipped to do it.




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From electricians to data scientists to software engineers, labor shortages abound. There’s ongoing concern there won’t be enough nurses, doctors and other health care providers to tend to aging baby boomers.

With so many industries hunting for talent, it’s easy to overlook the dearth of financial planners entering the pipeline. The average age of U.S. advisors is around 55 and roughly one-fifth of them are 65 or older, according to J.D. Power.

Meanwhile, there’s growing demand for financial planning across all ages. Young people seek to budget effectively and manage debt. Mid-career professionals try to invest wisely while planning for retirement and grappling with their kids’ tuition, eldercare responsibilities and other expenses. Pre-retirees and retirees are living longer and seek to preserve assets.

Only 11% of advisors are under age 40. So as older advisors retire, younger ones will become even more coveted.

“I think it’s an amazing career choice for men and women,” said Stephen Langlois, president of Kestra Financial in Austin, Texas. “It’s a noble profession, and we need to get more young people in it.”

There are about 218,000 advisors in the U.S. with a mean annual wage of $122,490. For those willing to work hard and persevere for the first few years as they learn the ropes, the prospect for long-term success soars.

Many new planners launch their practice by obtaining licenses (such as Series 7, which enables them to sell investment products), then pursuing a CFP or other designation. There were over 88,000 certified financial planners in the U.S. at the end of 2020.

Seek A Pathway For Professional Development

Advisors need to synthesize complex data sets and communicate concepts and recommendations in plain English to clients. Those working at large financial services companies may have access to proprietary economic or investment research and other resources.

Yet solo practitioners can offer their clients more data-driven analysis than ever before, thanks in part to a growing host of software vendors. Technology platforms can help advisors with everything from assessing investors’ risk tolerance to rebalancing portfolios.

Many advisors enter the field by joining a big wealth management company. The bigger firms train and develop newcomers and groom them to advance in the profession.

After Eric Kittner graduated college, he wanted to pursue a career in accounting. His priority: Learn the business from the ground up.

“I immediately thought of the ‘Big Four’ (accounting firms) because they provide a career path,” said Kittner, now chief executive of Moneta, a Missouri-based financial advisory firm. “I knew they would give me opportunities for professional growth.”

He got hired by one of the big accounting firms, became a CPA and learned the financial aspects of operating a business. This knowledge served him well when he shifted his focus to financial planning, where he has applied his entrepreneurial skills to navigate Moneta’s growth.

Find The Right Fit With The Right Firm

Once newly minted advisors survive their early years in the business, they gain the freedom to choose the next phase of their career. This often involves a pivotal decision: What type of firm do they want to call home?

The largest financial companies offer a wealth of resources and a support structure to help junior advisors gain traction. Smaller firms may appeal to planners who seek a less hierarchical organizational culture and more independence. Some become registered investment advisors (RIAs), adopting a fee-for-service model where they do not earn commissions.

As they build a practice, the challenge for advisors is devoting more time to helping clients and less time to administrative tasks, Kittner says. Managing staff and mastering the latest tech tools can divert attention from delivering superior client service.

“That’s one reason we’re seeing more and more consolidation in the space,” he said. “Unless they merge (with another firm), advisors can spend more time in the business, not on the business, and their growth stalls.”

Successful advisors step back from the day-to-day operation to think strategically and spot trends. Seeing the big picture, they stay a step ahead by offering services and products to meet ever-changing client needs.

As more clients express interest in socially responsible investing, for example, they want their advisor to customize a portfolio that aligns with their values. More tech providers are offering “portfolio optimizer” tools that enable advisors to offer direct indexing, where they assemble a mix of stocks designed to track the performance of an established index such as the S&P 500.

“There’s a maturation in the instruments that advisors are using,” said Barrett Ayers, president of Adhesion Wealth in Charlotte, N.C. “I’ve seen that evolution over the last 20 years, from mutual funds to ETFs to direct indexing.”

Top Advisors Have A Passion For Client Service

Fledging advisors often assume their success hinges on their technical know-how. But a sophisticated understanding of investments, portfolio management and tax planning does not guarantee a long, fruitful career.

The core differentiator is client service. Accessible, engaging advisors who serve as fiduciaries and listen well tend to generate more referrals and build a thriving practice. Anticipating and addressing client concerns sets them apart.

“There’s always money in motion, so an advisor has to make sure to have a robust service model,” said Michael Silver, founder of Focus Partners, a coaching and consulting firm in Paramus, N.J. He suggests that advisors regularly review their client list and confirm that they’re staying in touch with all of them.

For mid-career professionals pondering a career change, a proclivity for personal finance shouldn’t be the only reason to want to become an advisor. It’s more important to feel driven to help people grapple with money — saving, spending, investing and planning.

For Langlois, teachers are often well suited to make a smooth transition to financial planning.

“They have the empathy skills characteristic of really good advisors,” Langlois said. “And they already have the coaching and education skills.”

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