Other - NOVEMBER 10, 2017

TD Ameritrade Institutional releases survey about next-gen RIAs

by Released

Independent registered investment advisers are largely invisible on college campuses, which is keeping them from hiring top talent, according to a survey conducted by TD Ameritrade Institutional.

“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.”

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.

Approximately 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 undergraduates and 51 percent of the U.S. population. Minorities comprise 37 percent of undergraduates and 23 percent of the population.

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.

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 advisers 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 advisers. Eighty percent of financial planning programs surveyed are housed in the business school.

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 States.


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