As the industry works to bring on the next generation of financial advisers, it is important that younger employees have well-defined career paths, observers say.
They want to know “what the job is, how long will I do it and what are the expectations?” said Kim Brown, president of JNBA Financial Advisors Inc.
Young people want “a defined outline of what the next two to four years will look like,” said David Grant, 30, a relationship manager at Vantage Financial Partners Ltd. He is the leader of the National Association of Personal Financial Advisors' networking program for advisers under 33.
Job titles vary, but the typical entry point is paraplanner or associate adviser. A paraplanner's duties might include more administrative and clerical tasks, but both positions usually lead to full advice-giving roles.
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Whether a paraplanner or some type of junior adviser, these jobs should “basically be doing as much as they can to free up a senior adviser,” said Caleb Brown, co-founder of New Planner Recruiting LLC, which finds entry-level hires for registered investment adviser firms.
CLERICAL VS. CLIENT-FACING
Entry-level planners become part of larger teams, learning the business, and the firm's culture and philosophy. On a day-to-day basis, they provide administrative support, write plans, sit in on client meetings and take responsibility for follow-up tasks.
Most advisory firms want to see a job candidate working on the certified financial planner designation, as well.
Entry-level hires can figure on spending about 40% of their time on clerical and administrative chores, Caleb Brown said, because small RIA firms don't have a lot of clerical staff members.
How much time inexperienced advisers will spend with clients varies, but sitting in on client meetings is the usual first step.
“They will start off learning how to prepare for a meeting, and sitting in to see how it happens,” said Jon Yankee, a partner at Fox Joss & Yankee LLC. “As they gain experience, we'll have them do more prep work on their own, and they might take a role in a meeting.”
For example, a younger adviser at his firm recently made a presentation to a client about the difference between simple and compound interest.
Senior staff members can instruct junior colleagues to prepare presentations about a specific need, such as a client's mortgage or college-funding plans, Mr. Brown said.
But firms need to be careful about giving too much responsi-¬¬ ¬bility too soon.
“I've seen examples [where] people have been pushed into an advisory role too fast,” Mr. Grant said.
Young graduates of
financial planning programs “may have the book knowledge but not enough experience to have a full conversation with a client,” he said.
BEHAVIORAL FINANCE
It is the human skills that take time and experience to figure out, observers said.
It is imperative that young advisers see experienced colleagues handle difficult client inquiries, for example, Mr. Grant said.
“It's important they see [a senior colleague] not get flustered but to answer in a respectful way. Some of the best conversations are when you don't answer, but ask back, 'Where is that coming from? Why do you feel you need to ask about that?'” Mr. Grant said.
“You only get that from experience.”
Mr. Brown agrees.
Graduates from planning programs “don't have full grasp of the psychological aspects of a human being who wants to do something dumb,” he said. “It's easy to do investments and asset allocation — with the human element thrown in, it's very hard.”
