RIAs, There’s A War On For Students

With an estimated 110,000 financial advisors expected to retire over the next decade, registered investment advisors (RIAs) need to introduce – or perhaps reintroduce – themselves to financial planning students, and with some urgency.

But making the case to students to join the independent channel isn’t necessarily easy, not with big brand-name wirehouses and broker-dealers hunting for the same talent.

“The war for talent starts at the undergraduate level,” said Kate Healy, managing director, Generation Next, at TD Ameritrade Institutional. “To win, RIAs need to get out in front of the next generation on campus and make themselves known.”

Short of real war, what are RIAs to do?

Hire college interns, for one, according to a TD Ameritrade Institutional survey of college financial planning program directors.

College financial planning program directors also say RIAs should attend career days, serve as guest lecturers or as adjunct professors, participate in on-campus recruiting events and host informal and informational lunches and lectures on campus, the survey found.

RIAs who eschew engaging students about the benefits of a financial planning career in the independent channel risk ceding the discussion to competing sectors whose foot soldiers are more than happy to talk about why students should be joining a wirehouse, broker-dealer or hedge fund.

“If RIAs aren’t having conversations about the benefits of their chosen career path, the competition most certainly will,” Healy said.

Findings appear in the TD Ameritrade Institutional 2017 Financial Planning Program Director Survey, which collected data from 37 of 105 four-year colleges and universities with undergraduate financial planning programs in the U.S.

TD Ameritrade is the No. 2 ranked custodian of fee-based financial advisors, according to Tiburon Strategic Advisors, a consulting firm that follows advisor market.

Plenty to Talk About

The mantra that “you can’t be what you don’t see” applies in this case, Healy said.

Indeed, 54 percent of planning directors who responded said women do not view financial planning as a career option, and 44 percent of planning directors who responded said minorities do not view financial planning as a career option, the survey found.

Women and minorities simply don’t know about financial planning as an option, despite the flexibility and work-life balance the profession provides.

Just over one in four – 26 percent – of planning directors said the perception among women that RIA compensation involves commissions and commission-based salaries is a deterrent to female students.

Such a view is a costly misperception.

As every RIA knows, compensation comes to independent advisors through fee-based or fee-only models.

Nor is the independent channel lacking for selling points:

• Assets are flowing into RIAs at a higher clip than into wirehouses or into broker-dealers, and RIAs are often more profitable than brokers.
• Latitude and independence gives RIAs license to serve clients with a broader range of products as many RIAs have the fiduciary standard committed to memory.
• Consumers with low retirement account balances need all the help they can with a holistic planning approach and trillions of dollars’ worth of wealth – money in motion – is expected to flow to younger generations.

RIAs need to talk about how fulfilling and how flexible lives can be and how much it can help people, whether that be on campus, in high school or in front of groups like the Boy Scouts of America.

“We’re seeing more people get involved but not enough,” she said.

An Institutional Push

At its core, the survey’s message is that RIAs need to reintroduce their profession to a new generation – the millennial generation, Healy said in an interview.

Attracting young would-be financial planners is considered vital to infusing new blood to a profession where the average age is nearly 60 years old, and where future job growth is expected to eclipse the average growth rate for all occupations, according to the Bureau of Labor Statistics.

Healy, who was recently appointed to the full-time executive position dedicated to the sustainability of RIAs, saw the shift coming.

Nine years ago, when millennials were sometimes tarred as aimless slackers playing video games in their parents’ basement, TD Ameritrade Institutional decided it wanted to think about the next generation of consumers and raise the visibility of RIAs to those consumers.

Since then, the company has done much to help introduce RIAs to students, and help students get in front of RIAs.

The company earlier this year awarded NextGen RIA Scholarships of $5,000 apiece to 12 students pursuing degrees in financial planning, and bestowed grants totaling $75,000 to two universities to develop financial planning degree programs, TD Ameritrade Institutional said.

Students also attend the company’s Advocacy Leadership Summit at TD Ameritrade expense to network with RIAs.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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