Entering the Market for Financial Advice: Insights from Advisors and Financial Planning Students

Abstract

We are acutely aware of the change in the financial advisory landscape. The industry has moved from a product centric focus to an advice model. Given the change in landscape, financial advisory firms and future advisors may benefit from assessing the marketplace to determine opportunities for successful entry and retention of new talent. Such efforts may help to ensure quality client experiences and increased demand for the profession among future entrants. According to the CFP® Board’s Professional Demographics, there are more CFP® certificants older than age 70 than under the age of 30. This asymmetry causes concern for advisors looking to retire with confidence that their clients will continue to receive high quality services. We seek to add insight by highlighting what motivates current students to enter the field and their perceptions of the industry and their value in it. By covering these topics, we hope to identify opportunities for improvement, momentum, and growth in the financial advice profession. This project uses primary research to determine asymmetries in expectations between various stakeholders in the financial planning industry. The initial focus is to look at the firm’s expectations for new advisors, specifically students graduating with degrees in Personal Financial Planning, and compare them to the expectations students have of firms in their first few years of employment. Considering variation in business models and compensations structures, we seek to identify potential gaps in the expectations between hiring firms and students entering the financial advice market. To understand the differences in expectations, we use survey data collected from individuals currently employed in the financial planning industry and students at various CFP® Board registered Personal Financial Planning programs, including undergraduate, graduate, and professional certificate programs. Our initial analysis focuses on the expectation gaps between firms and students. In future studies, client and advisor expectations will be examined. We seek to identify where expectation gaps exist in order help firms and universities build better client, employee, and student experiences, ultimately improving the financial planning profession. Potential benefits for firms include improved retention, better recruitment, and increased loyalty of new advisors entering the industry. This research could be used by firms to help align the interests of firms and new talent entering the profession.