Financial planning professor shares what educators are doing and what dealers need to do
This industry needs young talent. According to research from ISS MarketSage, the average Canadian advisor is aged 53. 40 per cent of Canadian advisors have been in business for over two decades. Advisors over 55 account for 40 per cent of all advisors at full-service brokerages in Canada and manage around 50 per cent of all assets. Just as advisors serve an aging client demographic, they are aging themselves. One telling finding from the ISS research shows that not enough young advisors have entered the industry: the average advisor age rose by three years over the past decade.
As firms seek to address this issue, academic institutions are stepping up. Daniel W. Richards is an Associate Professor in the School of Administrative Studies at York University, where he teaches in the university’s financial planning stream. Richards explained how the program has aimed to show more young Canadians a path to the planning profession. He outlined what programs like his have done to create a more robust talent pipeline for the industry and emphasized what dealers and firms can do on their side to ensure that these graduates find a career as financial planners.
“We're trying to teach the students about financial planning and everything that they're learning is designed to cover off all of the core and advanced knowledge so that they can finish, graduate, go out, sit their exam and then become a CFP after they get the necessary work experience,” Richards says.
Students in the planning program go into Richards’ course having already covered the core concepts taught to finance students. At York, that includes a study of personal finance. Within Richards’ course, students will learn the difference between core designations such as the CFA, CPA, and CFP. He will talk them through a range of different planning topics, including investments, tax, insurance, and estate planning as well as broader concepts like the time value of money and mathematical finance.
Students who elect to focus on financial planning will then do a series of fourth-year paper topics, including papers on income tax, retirement planning, insurance, investments, and other areas of focus. The program ends with a capstone program that is integrated with FP Canada to help prepare these students to sit their CFP exams.
Richards explains that the program is now striving to offer its students work experience through co-op programs. He emphasized that for all the classroom learning and theoretical study his students can gain, customer service experience can’t be taught. Often, he says, new grads will get jobs as bank tellers or in call centres to obtain that experience. From there they may move into associate planning roles before becoming full-fledged planners themselves.
While the pathways to a career in the industry still face those hurdles of initial work experience, Richards says that the feedback he’s received from the industry about his graduates has been very positive. He notes that the program has created a passionate and knowledgeable student body, some of whom have even formed a financial planning club, separate from the university’s existing finance club. He notes that a certain value proposition for financial planning has been very popular among students: the opportunity for people who are good with numbers to help others.
Richards stresses the importance of more formalized educational pathways for new talent, especially as the industry continues to transition from a distribution business to a service business. Traditional mutual fund sales roles might have recruited more from informal networks of personal connection. However, as firms now emphasize relationships and client service, Richards notes that the value proposition of a planner as a helper is resonating with more students. A more formal pathway to a service business, he notes, can help the industry transition more into that service model.
“It used to be that the value was in the product. Now the value is in the plan… and I think that that move increases the value of financial planning,” Richards says.
For all the ways his program is helping the industry to fill talent gaps, Richards stresses that firms can’t expect graduates to come out as “fully cooked planners.” Just as they would expect a graduate with a more generic education to learn on the job, they should expect to offer these graduates the much-needed work experience required to become a planner. He noted that while firms have work to do, advisors can help as well. He would like to see advisor KPIs introduced that incentivize the recruitment and training of new advisors, creating more mentorship networks and pathways to a full career as an advisor. He argues that advisors and firms need to support these more formal paths in order to ensure a future in the face of demographic change.
“There’s an aging population, and many baby boomer advisors are entering retirement,” Richards says. “They want to exit but they don’t know how to. They have these good relationships with their clients and they don’t know what to do about that, but their retirements are looming. That’s what has created this impetus now.”
