November 10, 2017

First-ever survey of college administrators reveals that growing next-gen talent pipeline means increasing awareness about financial planning as a profession.

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JERSEY CITY, NJ — Independent registered investment advisors (RIAs) are largely invisible on campus, which is keeping them from hiring top talent, according to college administrators of undergraduate financial planning programs surveyed on behalf of TD Ameritrade Institutional1. These program directors say resolving the pending RIA talent shortage starts with grassroots awareness efforts aimed at recruiting more students, particularly women and minorities, into the industry.

For the RIA industry’s first-ever survey of financial planning program directors, TD Ameritrade reached out to all of the 105 four-year colleges and universities with CFP-Board listed undergraduate financial planning programs in the United States2. The findings were released today at TD Ameritrade’s Advocacy Leadership Summit in Washington, D.C., an event that brings together the RIA industry’s leading advocates and stakeholders to discuss regulatory and sustainability issues facing RIAs.

According to the 2017 Financial Planning Program Directors Survey, 90 percent of schools surveyed that have financial planning programs expect enrollment in these programs to grow over the next five years. Though minorities and women are currently underrepresented in these programs, program directors believe their ranks will increase as well. Currently, just 36 percent of financial planning students are women, and even fewer – 31 percent – are minorities.

According to reports from the U.S. Census Bureau and the National Center for Education Statistics, women account for 56 percent of college undergraduates3 and 51 percent of the U.S. population4. Minorities comprise 37 percent of undergraduates3 and 23 percent of the population4.

“The war for talent starts at the undergraduate level. To win, RIAs need to get out in front of the next generation on campus and make themselves seen,” said Kate Healy, managing director, Generation Next, TD Ameritrade Institutional. “If RIAs aren’t having conversations about the benefits of their chosen career path, the competition most certainly will.”

Cultivating Diverse Next Gen Talent

The lack of RIA visibility and voice on campus can impact the career choices of women and minorities. Program directors say the main reason there are not more women or minorities in financial planning programs is because these groups are less likely to believe the profession is a viable career option.

Those who do enroll find they are in high demand in the job market. The survey found that despite their lower rates of enrollment, women and minorities receive job offers upon college graduation at slightly higher rates than the overall population of financial planning graduates.

The program directors reported that for women, the perception that financial planning only involves commissions and commissions-based salaries is a key deterrent. For minority students, the absence of minorities among industry leadership sends a strong signal that the profession is not open to them.

RIAs can begin to change these perceptions by connecting with the next generation in ways that resonate with their priorities, said Healy.

Though making money is a top priority for all students, the survey found that the number one reason women and minorities study financial planning is to help others reach financial goals. Program directors reported that work/life balance is also very important to women, and minorities are drawn to the appeal of starting and owning a business someday.

“To change the face of the next generation of planners, RIAs need to start a dialogue,” said Healy. “I’m convinced that the more students hear from advisors they can relate to, and learn more about the career opportunities offered by independent RIA firms, the more they’ll be attracted to the profession.”

Bringing the RIA Channel to Life

Though the RIA channel is discussed within the context of the financial planning curriculum, program directors say that independent advisors can help their cause by increasing their engagement with students.

The most effective thing RIAs can do to increase awareness and build their talent pipeline is hire more interns, program directors say. More RIAs should participate in on-campus career days and become guest lecturers, or even adjunct professors.

Seventy percent of programs surveyed currently teach students about RIAs, largely by bringing in advisors as guest lecturers and by talking about the independent RIAs as a channel option. Fifty-four percent of the schools have an on-campus student chapter of a trade organization, typically the Financial Planning Association. Close to 80 percent of schools offer networking events for financial planning students.

Many college program directors get involved personally as recruiters, actively encouraging students to consider financial planning careers. More than half of the students in financial planning programs come in as juniors or seniors, most commonly switching out of finance, accounting or economics majors.

Financial planning as an undergraduate degree is still fairly young at most colleges and universities: program directors report that the average age of these programs is 10 years old. The average program has 66 students enrolled and six faculty members, which typically includes two women, one minority and two financial advisors. Eighty percent of financial planning programs surveyed are housed in the business school.

About the Survey

The TD Ameritrade Institutional 2017 Financial Planning Program Director Survey is the RIA industry’s first-ever survey of financial planning program directors, TD Ameritrade engaged True North to reach out to all of the 105 four-year colleges and universities with undergraduate financial planning programs in the United States according to the CFP Board’s list of registered programs. Thirty-seven percent of schools participated in the survey, which was fielded via email and telephone in September 2017. TD Ameritrade and True North are separate and unaffiliated and not responsible for each other’s services and policies.

TD Ameritrade Institutional is a leading provider of comprehensive brokerage and custody services.

Brokerage services provided by TD Ameritrade, Inc., member FINRA / SIPC

1 TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation

2 CFP Board: Find an Education Program, as of September 2017

3 U.S. Department of Education, National Center for Education Statistics, 2016

4 U.S. Census Bureau reports, 2016

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