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Why Millennials are avoiding financial planning as a career

Ensure there's a cultural match between the buyer and new clients. Don't bring in a male millennial to serve retired widows.

Despite strong salaries and great public relations calling it a “top career,” millennials avoid financial planning as a career. But why and where are they going?

Despite strong salaries and great public relations calling it a “top career,” financial planning isn’t drawing a lot of interest from Millennials.

But why and where are they going?

According to a Cerulli Associates Inc. study, 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.

The lack of new recruits is being driven in no small part by the failure of students who major in finance and more specifically, financial planning, to enter the profession.

Last month a survey by the Certified Financial Planner Board of Standards Inc. revealed that more than two thirds of the student respondents who earned bachelor’s and master’s degrees in financial planning did not take the CFP certification test.

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.

The reason: most of these positions can pay better. The median pay for financial managers is $123,260, according to the most recent available data from 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 summa cum laude from the finance program at Northern Illinois University, said 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’s 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.

Brian Hamburger, a compliance consultant to wealth management firms and managing director of MarketCounsel, said top talent is attracted to other professions because they are perceived as being more tech savvy. He said financial planning is seen as having outdated business models.

“The next generation has a very clear perspective about how they want to interact and communicate with clients,” he said, noting that texts, emails and tweets are quite different from the periodic letters financial clients have come to expect from their advisers. “It seems like we’re behind.”

Mr. Hamburger said the brokerage industry has worked to reinvent itself by building online platforms where users can research securities, trade ETFs and buy on margin.

See also: Why young advisers need mentoring – A panel of financial staffing and career experts agree: mentoring is pivotal to the development of NextGen advisers. But what makes it such a critical part of adviser success?