Despite strong salaries and a reputation as a “top career,” financial planning isn't drawing a lot of interest from Millennials.
The profession expects to shed 25,000 people in the next five years because of a lack of new recruits at wirehouses and broker-dealers, according to a Cerulli Associates Inc. study.
This is being driven partly by the failure of students who major in finance — specifically, financial planning — to enter the profession.
Last month, a survey by the Certified Financial Planner Board of Standards Inc. showed that more than two-thirds of the student respondents who earned bachelor's and master's degrees in financial planning didn't take the CFP exam.
Many of those students shifted to similar fields, working as brokerage sales agents, financial and budget analysts, public and corporate financial managers, or as insurance or real estate brokers because these positions can pay better.
The median pay for financial managers is $123,260, according to the most recent available data from the Bureau of Labor Statistics, while the average financial services sales agents — such as brokers, traders and investment bankers — earn $100,910.
Those professions enjoy greater glamour that can attract the best students, in part because of higher salaries, according to Jakob C. Loescher, an adviser with Savant Capital Management.
Mr. Loescher, who graduated from Northern Illinois University's finance program, said that his classmates sought professions where they could make at least $80,000 annually, disqualifying many entry-level financial planning jobs.
In addition, many of his classmates perceive the certification exam as “too difficult” and think it is too hard to work with clients several decades older than them.
“People were afraid of interaction with people 50 to 70 years old and having them trust them,” Mr. Loescher said.
Top talent is attracted to other professions because they are perceived as being more technology- savvy, and financial planning is seen as having outdated business models, said Brian Hamburger, managing director of MarketCounsel LLC.
“The next generation has a very clear perspective about how they want to interact and communicate with clients,” Mr. Hamburger said, noting that texts, e-mails and tweets are quite different from the periodic letters financial clients have come to expect from their advisers. “It seems like we're behind.”
The brokerage industry has worked to reinvent itself by building online platforms where users can research securities, trade exchange-traded funds and buy on margin, Mr. Hamburger said.