In Profile

A Conversation With: Kate Healy

Talent Search

by P.E. Kelley

Mr. Kelley is managing editor of Advisor Magazine. Connect with him by e-mail:

The RIA industry is coming up short in its effort to attract next-generation talent, as older recruitment models struggle to relate to today’s younger prospects. Part of the challenge is our growing diversity across all societal demographics.

Kate Healy is managing director of Generation Next for TD Ameritrade Institutional, overseeing the firm’s Next Gen initiatives for helping RIAs bring younger and more diverse talent into their firms. She spoke with Advisor Magazine about her outreach into the business schools of more than 100 four-year colleges that offer financial planning curriculum.

What she found was informative, if not eye-opening: women are not interested in commission-based careers; minorities do not see enough diversity at the upper echelons of the advisory industry, and so are turned off; and, most revealing, many simply did not know the career even exists.

PEK: Why are RIAs ‘largely invisible’ on today’s college campuses?
KH: The awareness issue isn’t solely a problem for RIAs: it’s an issue for the financial planning industry.  In fact, college financial planning program directors tell us that the number one reason more students are not studying to be financial planners is because students do not realize that the profession exists. Last year, schools with financial planning degrees graduated just 16 students per school on average.

RIAs already know first-hand that the lack of “next generation” talent in the pipeline is an issue they need to address. There are simply not enough young people entering the financial planning profession to meet expected demand, especially with aging advisors themselves preparing to retire and exit the industry.

The shortage of young talent in the RIA pipeline is not going to resolve itself, and RIAs do not have the luxury of leaning on a big, nationally branded employer to fix the problem for them.

The majority of independent RIAs are small businesses, with leaner staff and budgets than their competitors.  The challenge for RIAs is balancing the day-to-day work of managing a practice while also spending some time on strategic planning for the long-term.

PEK: If not colleges, where is the entry-level point for recruiting new talent to the trade?
 KH: Business schools are a great place for independent RIAs to find young people who might be interested in financial planning careers, even if they don’t offer a financial planning program or track. Our survey found that the majority of students who switch into financial planning programs are leaving a business school program to do so.  We also know there are successful RIAs today who majored in sociology, psychology or education — so advisors should be open to considering students from a variety of majors.

There›s also potential new talent among military veterans and mid-career changers. Although these folks may need to be trained on the mechanics of financial planning, people who have had professional success elsewhere typically have skills that translate nicely across industries.

Finding seasoned talent with experience outside of the industry means rethinking your approach to recruiting.  Rather than looking for metrics like size of book or investment returns, screen and qualify candidates based on professional achievements and demonstrated problem-solving skills.  It also means letting your professional and social networks know that you are looking for certain types of people, not just those who have held a specific job title previously.

PEK: What is the value-proposition that RIAs can offer to undergraduates?
 KH: Independent RIAs sit on the same side of the table as their clients, and charge fees based on a percentage of assets under management. This means that RIA firms are not sales-driven environments that reward advisors who generate commissions. This is an important differentiator that is not being discussed on campus because RIAs are not there to talk about it. We’ve heard anecdotally and through our program director survey that when on campus, the competition talks to students about selling products.

Independent RIAs potentially also offer a pathway to equity ownership.  In planning for the sustainability of their firms, some RIA owners may view hiring and grooming younger professionals as part of an eventual succession strategy. In these situations, undergraduates may get operational and service experience by handling these responsibilities more quickly at smaller RIA firms than they would at larger shops.

Why the disconnect, you ask? Minorities do not believe this career is open to them because there are not enough minorities in leadership and senior ranking positions to convince them otherwise

Finally, there›s work-life balance. RIA firms can typically offer careers that help others with investing and asset management and offer flexibility without the 80-hour work-weeks demanded by other Wall Street-related careers.

PEK: You state that the ‘War for Talent’ begins on campus. If not RIAs, who in financial services is actively recruiting?KH: The war for talent is two-fold.  Certainly there’s the need for the financial planning industry as a whole to raise interest in financial planning as a career path.  Right now, there are relatively few financial planning undergraduate programs offered on college campuses nationwide – the CFP Board lists 105 the last time I looked. And as I’ve mentioned before, there’s a general lack of awareness among college students that a career as a financial planner exists.
Likewise, when it comes to recruiting students on campus, RIAs are competing against national brands with massive marketing and recruiting budgets.  That’s not new for RIAs – they win new clients and assets successfully from these competitors all time – but it is a reminder to RIAs that they need to compete for talent as aggressively as they compete for new business.

PEK: How well are women and minorities being introduced into financial services?
KH: The financial planning profession can do a better job of reaching out to women and minority students about potential career opportunities. Right now, the on-campus dialogue does not seem to resonate with these groups.  Just 36 percent of financial planning students are women, and even fewer, 31 percent, are minorities.  Compare this to the fact that women account for 56 percent of college undergraduates and minorities make up 37 percent.

Why the disconnect, you ask? Minorities do not believe this career is open to them because there are not enough minorities in leadership and senior ranking positions to convince them otherwise.  You can’t be what you don’t see! And women are not interested in sales jobs with commissions-based compensation.

While making money is a priority, helping others achieve their financial goals is actually the number one reason both women and minorities choose to study financial planning.  Conversations that address work-life balance issues, which are important to women, and entrepreneurship, which is important to minorities, can help bridge this gap.

College financial planning program directors sense that things are changing for the better, however.  Seventy-two percent of programs are expected to have more women enrolled by 2022, and 67 percent expect more minority students.

PEK: . What is the common perception of a financial services career at the entry-level point (college age)?
KH: College financial program directors tell us that most financial planning students believe that this is a sales job at some level.  This is because most of the firms that come to campus are those that are offering just that – commissions-based compensation and product sales.  Though the majority of programs talk about the independent RIA model in some way as part of the financial planning curriculum, students need to hear from RIAs directly — and more frequently — that there is more than one way to earn a living as a financial planner.

We also hear that some parents dissuade their children from pursuing financial planning careers because of a belief that they›ll be in a commissions-based sales role.

PEK: How can RIAs increase their visibility at the entry-level?
KH: Right now, relatively few RIAs are hiring interns and getting on campus as guest lecturers, hosting informational sessions, and participating in recruiting fairs. Program directors say more RIAs need to more of all of these things, and they’re calling for RIAs to step up on their on-campus engagement.

And if they can only do one thing, RIAs should hire more interns.  Program directors believe this is the best way for independent advisors to help themselves and the RIA industry.

PEK: Are colleges supplanting industry recruitment efforts in any significant way? Why?
KH: In many ways, college program directors are some of the biggest cheerleaders for the financial planning profession.
Financial planning as an academic course of study is relatively young – where they exist, undergraduate programs have only been around for 10 years on average.  So financial planning program directors are tasked with raising awareness about the discipline on campus and with encouraging students to consider it.

These directors say their activism is working, in fact, 90 percent expect enrollment in financial planning program to grow over the next five years. Still, it’s a heavy lift, and so advisers and custodians like TD Ameritrade need to step in and lend a hand. It’s in the best interest of the profession. ◊