DETROIT — The financial advice business has perhaps never been so rife with opportunities for educated newcomers — a scenario that bodes particularly well for this spring’s crop of college graduates.
“Right now, it seems like the ratio of jobs to students graduating with financial planning degrees is better than in any other field of business,” said Tom Warschauer, professor of finance at San Diego State University. The school is one of more than 100 nationwide that offer undergraduate degrees in the field of financial planning.
At Texas Tech University in Lubbock, where 60 students will graduate next month with degrees in financial planning, every student seeking a job has already secured one, according to Deena Katz, an associate professor.
“We don’t have enough students to meet the demand,” said Ms. Katz, who also is president of Evensky & Katz Wealth Management in Coral Gables, Fla.
According to Ms. Katz, the increased demand for graduates with degrees in financial planning has pushed starting annual salaries to between $35,000 and $50,000 across the United States, depending on the type of firm and region of the country.
This compares with starting salaries in the $20,000-to-$25,000 range just five years ago, she said.
“Those students earning master’s degrees are worth at least $10,000 more,” Ms. Katz added. “Part of the increasing demand is driven by the maturity of the planning industry, and part of it is the level of knowledge and technical expertise of the graduates.”
Product pushing is out
As the financial planning industry continues to evolve beyond the traditional sales culture, the recruitment efforts have shifted from veteran sales skills toward more formal education in financial fundamentals.
“It used to be companies were looking for 40-year-old career changers with sales skills, as opposed to somebody who got an A in economics,” said Tom Potts, finance professor at Baylor University in Waco, Texas.
“We’re definitely seeing a change that is a real positive move for the development of the profession,” he added.
The market is flush with opportunities due to a confluence of events, according to school administrators and industry representatives. Driving an increased demand for financial advice are baby boomers, many of whom soon will retire, the uncertainty surrounding Social Security benefits, and last year’s Pension Protection Act, which is expected to create a demand for another 60,000 financial advisers.
“I used to tell students that financial planning is a great career but that they shouldn’t expect to get work in that field right out of college, but it is so much better now,” Mr. Potts said. “Right now, the good students are getting several good job offers.”
Texas Tech’s financial planning program — widely regarded as the most extensive in the nation — has 300 students studying at the undergraduate, graduate and Ph.D. levels.
“Right now, there’s a lot of need for people with a financial planning background,” said Mary Bell, who earned a master’s degree in financial planning from Texas Tech in August 2005 and is working as a Washington-based lobbyist for the Denver-based Financial Planning Association. Last month, 18 companies that represent the full spectrum of financial firms visited the campus to interview students. “These colleges offering financial planning degrees represent the farm system that is training people for the majors,” Ms. Katz said. “This is an incredible career, and people coming out of college right now are virtually guaranteed a job.” Many graduates seem to shy away from working for large, impersonal financial firms. “I’d say 60% of my fellow graduates went to work for smaller, independent financial planning shops,” Ms. Bell said. The total number of financial intermediaries, across all distribution channels, was more than 315,000 at the end of last year, according to an estimate from Cerulli Associates Inc. of Boston. That represents an 11% increase from the end of 2004. For the industry’s newest arrivals, the opportunities are plentiful, and the more education the better, but shrewd networking isn’t to be ignored.
“The entire industry is so fascinating, I don’t really know where I’ll end up,” said Dandan Zhu, who graduated from Texas Tech in August with a Ph.D. in financial planning and is working as a portfolio analyst at Traverse City, Mich.-based FIM Group, a management firm with $650 million in assets.
“The industry is booming, and there are so many opportunities for financial planners,” she said. “It’s only going to get bigger and stronger.”
The job market for financial planning graduates is such that newcomers often are able to find a niche uniquely suited to their desires right out of college.
“I wanted something in sales, because I think I can market myself, and everybody is looking for advice these days,” said Spencer Christianson, who will graduate in May with a bachelor’s degree in financial planning from Kansas State University in Manhattan.
Mr. Christianson turned down three other offers to accept a job as a financial adviser in the Overland Park, Kan., office of Minneapolis-based Ameriprise Financial.
“I think it’s a good time to get into this industry,” he said. “It’s fulfilling to be able to help people, and you can make a lot of money.”
The FPA recently has increased its focus on advisers who have been in the business for a few years as part of an expanded emphasis on succession planning, while the newcomer market has been growing organically.
“For the first time in the history of our industry, we’re seeing people coming to financial planning as a first career,” said Marvin Tuttle Jr., the FPA’s executive director. “If we’re going to be successful, we have to have a laser-like focus on [those who are studying financial planning] to help them get more familiar with our profession.”
The FPA has loose affiliations with about a half dozen of the colleges that offer financial planning degrees. Part of that relationship involves representation at conferences and discounted membership for students.
But Mr. Tuttle would like to see the FPA establish student chapters affiliated with each of the more than 100 regional chapters around the country.
“All the professional organizations have been working on this to some degree,” he added. “But we really do need to step up pretty quickly and connect better with the academic community to focus on these newcomers.”