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TD Ameritrade Probes Academia on how RIAs Can Bridge Talent Gap

By Murray Coleman November 13, 2017

Finding fresh talent in the advisory space is already a highly competitive challenge. But recent industry research by TD Ameritrade suggests that compared to large broker-dealers and wirehouses, independent RIAs are most vulnerable to falling behind in recruiting top U.S. college students.

In a new survey of administrators and directors of undergraduate schools offering dedicated planning degrees, the brokerage’s institutional arm finds several employment gaps holding back higher enrollment numbers and crimping indie RIA pipelines of college recruits.

Many seem fairly straightforward in terms of correcting, says Kate Healy, managing director of TD Ameritrade’s Generation Next program. For example, a chief concern identified by the survey is a lack of awareness about employment opportunities the profession holds for new grads.

In particular, college administrators polled highlight a “perception gap” as a prominent issue in bringing more minorities and women students into the fold, Healy notes. According to the survey’s results, 54% of females aren’t believed to be aware of financial planning as a career. At the same time, 44% of minority students still “lack awareness” of the field.

TD Ameritrade reached out to directors and administrators at 105 four-year colleges and universities with CFP Board-listed undergrad financial planning programs for its 2017 Financial Planning Program Directors Survey. It reported a 37% participation rate for responses fielded through emails and phone calls in September.

“RIA firms need to do a better job of getting out there and creating a bigger presence on college campuses,” Healy says. “The program directors tell us that they need more interaction with RIAs – most of the professionals coming into their classrooms represent broker-dealers and insurance companies.”

Besides making more in-class appearances and showing up for campus events, she finds that it's important to offer paid internships to let students know RIAs are “serious” about providing career opportunities.

“Advisors need to do a better job of showcasing what their firms can provide in real terms to top graduates,” Healy says.

A potentially thornier issue brought out in such research relates to how new college recruits are paid once they leave campus for full-time careers. “The perception that compensation is based on or tied to commissions is seen as a major deterrent – especially for women entering the field,” Healy says.

The CFP Board has done similar research finding much the same.

“There’s a misconception that everyone who’s new to the profession is expected to immediately go out and eat what they kill,” Healy says. “But that’s just not true – there are roles new recruits can do that don’t throw them right away into business development roles.”

Wealth firms that don’t already have internships or defined recruiting efforts in place are at a competitive disadvantage these days, agrees Dave Barton, chief wealth management officer at Savant Capital Management in Rockford, Ill., which manages more than $5 billion.

David Barton

“Even managers at smaller firms who don’t plan on doing a lot of hiring in the near future can benefit from bringing interns into their practices," he says. "If nothing else, it helps to get their names out in the workforce and influence a future generation of advisors.”

At Savant, as many as a dozen interns might be hired in a typical summer, according to Barton. But numbers of interns aren’t as important as giving them “something meaningful” to do, he adds.

“We’re not just trying to expose young people to our planning process,” Barton says. “We’re also trying to challenge them and see how they respond. You learn a lot about how someone approaches and tackles a project.”

As competition for fresh talent intensifies, practice managers might find targeting a few leading institutions a good way to develop deeper relationships with leading programs, observes Steven Foldes, vice-chairman of Evensky & Katz/Foldes Financial Wealth Management in Coral Gables, Fla.

In fact, firm founders Harold Evensky and Deena Katz are full-time professors at Texas Tech University. Several other of the firm's advisors also regularly attend campus recruiting events put on by the school, Foldes notes.

The indie RIA, which manages more than $1.7 billion, runs an ongoing internship program each year to complement building a strong name for itself at the university.

“Although we’re color- and gender-blind, among our most recent college hires is a woman from China and a young man from Mexico,” Foldes says. “As it turns out, we’re finding that a growing number of outstanding women and minorities are being attracted these days to top programs like Texas Tech.”