A lack of independent registered investment advisors on college campuses is keeping the profession from hiring top talent, according to college administrators of undergraduate financial planning programs surveyed by TD Ameritrade Institutional. Program directors say that increasing recruiting efforts at the undergraduate level among minorities and women will help alleviate shortages in the profession.
TD Ameritrade surveyed all 105 four-year colleges and universities with CFP Board-listed undergraduate financial planning programs in the U.S. as part of what it calls the RIA industry's first-ever survey of financial planning program directors. The findings were released Friday at TD Ameritrade's Advocacy Leadership Summit in Washington, D.C., an event where RIA industry' advocates and stakeholders discussed regulatory and sustainability issues effecting RIAs.
According to the study, 90 percent of schools surveyed that have financial planning programs said they expect growth in enrollment over the next five years, and that will likely apply to both women and minorities—both of which are underrepresented in relation to their respective share of the nation's undergraduate population.
According to the U.S. Census Bureau and the National Center for Education Statistics, women account for 56 percent of college undergraduates and minorities comprise 37 percent.
At present, 36 percent of financial planning students are women and 31 percent are minorities.
"The war for talent starts at the undergraduate level. To win, RIAs need to get out in front of the next generation on campus and make themselves seen," said Kate Healy, managing director, Generation Next at TD Ameritrade Institutional, in a press release. "If RIAs aren't having conversations about the benefits of their chosen career path, the competition most certainly will."
Program directors say the perception that financial planning is all about commissions and commission-based salaries is a big reason there are not more women in financial planning programs. And a lack of minorities in industry leadership roles sends a message that the profession is not accessible to this group. The survey also found that despite lower rates of enrollment, women and minorities receive job offers upon college graduation at slightly higher rates than the overall population of financial planning graduates.
"To change the face of the next generation of planners, RIAs need to start a dialogue," said Healy. "I'm convinced that the more students hear from advisors they can relate to, and learn more about the career opportunities offered by independent RIA firms, the more they'll be attracted to the profession."