by Cynthia Harrington
The profession of financial advisory is growing up. Anyone who doubts this fact should note the changed agenda of employers recruiting students from the Personal Financial Planning degree program at Texas Tech University. Established financial advisory firms now come on campus to recruit graduates they hope will be partners or future owners of their firms.
"A decade ago, these students expected to be hired on as workers for other planners," said William (Bill) Gustafson, Ph.D., who started the financial planning program in 1987, and is now executive director of the Center for Financial Responsibility at Texas Tech. "Today, they’re being courted with details of partnership tracks and buyout plans as the owners move into retirement."
Despite employment changes and broader training opportunities, newly minted planners face a universal challenge of the profession. Dan Mauck, CFP, and senior associate of the Personal Financial Planning Unit of KPMG, in Dallas, said, "I face the same hurdle that most young planners do, and that’s establishing credibility. The advisory relationship is one built on trust and I’m asking clients sometimes much older than I am to rely on my advice."
To build that credibility, Mauck pursued the CFP designation. Despite receiving his undergrad degree in financial planning from Texas Tech in 1994, he felt that he needed more. He took the exam and was certified in early 2002. "Through the CFP program I enhanced my technical knowledge over what I got in my college training," said Mauck. "And like it or not, the professional designation really helps bolster credibility until I attain the status that gray hair brings."
New planners’ lack of financial planning and financial services experience is an industry-wide concern. Schools, advisory firms and professional organizations find a solution in internships and mentoring relationships.
Nancy Kistner, CFP, and board of directors and career development liaison of the Financial Planning Association, in Atlanta, pointed out that new financial planners starting in 2003 have significantly more tools and resources available to them than a colleague starting in 1983.
"Internships, mentoring and career development opportunities are now being offered through the Financial Planning Association and FPA’s local chapters," said Kistner. "A new financial planner has an ideal start working with an experienced CFP mentor in a paid internship. Through this work they gain experience in building relationships with clients of the firm, and they gain practical financial planning experience under the supervision of a seasoned CFP practitioner."
A new planner can access career development resources at
Gustafson credited the internship program at Texas Tech as one reason for the 100 percent placement rate of graduates of the program. Mauck took advantage of the interning opportunity before entering the work world. He spent his two-month stint at Evensky Brown & Katz, in Coral Gables, Fla. "I was only there a short time right after school, but I still draw on some of things learned from Harold [Evensky]," said Mauck. "It was a great experience working at a firm that I felt was creating the profession of tomorrow.
He added, "What I got to see in practice was that if the advisor truly puts the clients’ goals first, that it’s possible to do it all. It’s possible to give objective advice, help people and be friends with clients all at the same time."
Employers recognize the need for practical experience before new advisors are ready to perform on their own. Chas Smith & Associates, of Lakeland, Fla., addressed this need in two ways. They recruit interns to work at the firm and receive the training in financial advice that all new employees receive. When hiring, the firm wants new CPAs. "We grow our own financial advisors," said James M. Luffman, CPA/PFS. "They don’t come out of school with tradable skills."
Another trend taking shape at financial planning schools could have a profound affect on the business and on new planners. More students are seeking joint degrees, pairing the bachelors in financial planning with a JD or an MBA. "We had our first two financial planning and law degree students snapped up by firms catering to the very high-net-worth market," said Gustafson. "Those two firms have contacted us and want to hire every graduate we can send them."
Texas Tech offers three Ph.D. programs for financial planning undergraduates. Their undergraduate work can lead to doctorates in consumer economics, finance or agricultural economics. Gustafson sees growing interest in students seeking financial planning as their second undergrad degree, many of whom first earned their undergraduate in accounting.
Interest between the two departments has been growing in the last couple of years. "We used to have the accounting people come over to teach the tax course but, this year, they have developed a special course geared to the tax knowledge needed by financial planners," said Gustafson.
The two departments are also talking about adding a minor in financial planning to the 150-hour accounting degree program. Part of reason for the increased interest is the growth in the financial planning degree. This year, 200 students are in the undergraduate program, with another 50 enrolled in the graduate program. A decade ago, they would graduate from 10 to 15 students a semester.
Mauck is representative of the trend to financial planning as a second degree. He took a financial planning course as an elective in his senior year in the agricultural economics program. "I actually gave up grad school to get the second degree," said Mauck. "I fell in love with this material. It wasn’t just about number crunching, but brings in a passion in being applicable to real life and having the ability to help people who really need it. With this knowledge, I can help someone who’s 20 years old develop a financial life based on the knowledge and accumulated wisdom of planners and investors with much more life experience."
Formal training and practical experience can be gained early in a career. But the need to continue to learn never ends, Mauck pointed out. New methods and new technologies improve an advisor’s ability to serve clients, and demand ongoing training for advisors.
"A couple of years ago, to do a long-term capital needs projection, I’d enter the client information and then assume a flat rate of return over their time horizon. Now I present a much more realistic picture with a Monte Carlo simulation and randomized rates of return," he said. "This wasn’t even available when I went to school, so I’ve learned it on the job."
