RIAs need to visit universities to attract students

It’s no longer a surprise the wealth management industry faces a looming talent crisis.

A recent Cerulli study found not only are two-fifths (38 percent) of industry advisors expected to retire within the next decade, but more than 75 percent of new entrants also won’t make it to the end of their initiation.

Some young advisors, however, are lucky enough to land their big break through a program in college or university.

“I went to Bentley, which is a smaller all-business school outside of Boston, and they just started offering this financial planning program," explains Dinon Hughes, certified financial planner at Nvest Financial. “I said, 'Great, this is super interesting,' and I jumped on it.”

That decision would shape the trajectory of his career. After all, his professor, George Raftopoulos, not only taught him the fundamentals of financial planning but also became his future boss. Raftopoulos is the president of Nvest Financial.

"I tried out Nvest’s internship and it was exactly what I was looking for," he admits. "I've been here ever since, from my senior year in college to now being one of the advisors on the team."

This unique path stands in contrast to the traditional "churn and burn" approach of many wirehouses, where young advisors are often tasked with cold-calling and selling products rather than providing holistic financial planning.

Hughes experienced this firsthand during his internships at Merrill Lynch and another major firm, where the attrition rate was a staggering 95 percent. "That is the majority of jobs out there as entry-level jobs in financial planning," Hughes laments.

"More likely than not, you’re going to be doing cold calling and seeing if your uncle, who you haven't talked with in a couple years, or anyone on your contact list wants to buy insurance policies, annuities or mutual funds or whatever the firm you're with is selling. You’re not going to be doing financial planning."

Hughes’ experience highlights the unique opportunities available at RIA firms, which are poised to play a crucial role in attracting the next generation of wealth management talent.

By fostering connections with universities, hosting events, and showcasing their holistic, relationship-driven approach, RIAs can appeal to young professionals seeking meaningful work and the chance to make a tangible difference in their clients' lives, says Sherri Trombley, director of business consulting and education at Schwab.

“Once you showcase that client-centric, fiduciary responsibility model to students, it's really appealing to them and most students I talk to don't know this pathway exists,” she says.

“One of the tips we give to students is you have to treat it like a new language,” she added. “You really have to immerse yourself in the industry, whether that's attending conferences, participating in financial planning challenges, or networking with professionals and advisors."

Through its university grant program, Schwab has provided $25 million in funding to 33 schools to enhance their financial planning curriculum. This allows Schwab to introduce students to RIA firms and their distinct culture.

Having an internal support system can also ensure recruitment of students and next gen talent. Chris Mellone, partner and financial advisor at VLP Financial, a Cetera-affiliated firm, highlighted they offer clear career paths, structured mentorship, and a strong team support system “to help new advisors develop in the early stages of their career”, and grow into full-fledged advisors by year seven.

“This structure has led to an average employee tenure of 10+ years. We are a place where nextgen advisors come for a career, not a job,” he says.  

In addition, the firm is heavily involved with the financial planning programs at universities in the area, hosting many students as interns and career day participants.

As Hughes asserts, RIAs need to find the universities in their area that offer financial planning programs and ask to sponsor or host an event at the respective school.

“That's really the best place to meet the future service advisor or paraplanner,” he said.

Schwab’s recently released 2024 RIA Benchmarking Study reaffirmed that growth in the industry has translated to a vast demand for talent with the need to hire more than 70,000 new staff over the next five years without accounting for attrition, retirements, or new firms.

As firms look for new talent, 36 percent said they recruited from colleges and universities last year.

“Not only are firms looking for new talent, but they are recognizing the value of hiring a diverse team of employees to best reflect the needs of clients today, and tomorrow,” said Lisa Salvi, Managing Director of Advisor Services, in a statement.

“The key is meeting students where they are and demonstrating the wealth of opportunities in this industry," Trombley says. "From compliance to fintech, there's a role for every skillset. We just need to raise awareness of this client-focused, flexible career path."