"It's difficult to succeed as an entry-level planner because there is little training and firm owners’ expectations are very high," says Brown, who graduated from Texas Tech's financial planning program in 2002. "Sometimes freshly minted CFP program grads have to go to an insurance or investment company if they can’t find an RIA job."
One key reason is compensation: Positions in insurance and investment companies can pay up to 10% to 25% morethan RIA gigs. That presents a challenge for advisory firms who are looking to hire, Brown says.
And that discrepancy can last well into a career. Once a planner has worked for several years with a higher-paying job that supports a certain lifestyle, even those who say they would like to work at a RIA are often unwilling to take a pay cut, says Brown, founder of New Planner Recruiting -- a recruiting firm specializing in placing talent of all ages in entry-level professional positions within the planning industry.
“I get this a lot with career changers,” says Brown, “because they often have had financially lucrative careers, but still felt unsatisfied. They tend to think they can start where their last pay package left off.” In reality, entry-level starting salaries in financial planning can range anywhere from mid $30,000 per year to mid $50,000 annually -- and almost anyone who has been in another career for a period of time is earning more than that, Brown points out.
Brown, who spent almost six years in an RIA firm prior to founding NPR, says his own background helps him pinpoint good opportunities for candidates. “I know what they are interested in: working directly with clients, a good salary, being mentored, being located in an exciting metropolitan area," he says. "They also want to know the firm is growing so that they can improve their skills and have some assurance the firm is viable long term. They don’t want to go to a firm with flat growth or on the decline, and not all firms are growing.”
Those interests offer RIA firms a key to attracting freshly minted planners. Brown says one of the most common concerns he hears from candidates is that they don’t want to have to sell on the first day on the job, wanting to learn the business first. “There’s a negative connotation around sales,” he says.
Brown says that to make the case to potential hires, RIA firms do need to understand the compensation packages being offered by banks and insurance or investment companies, and create competitive offers.
But compensation is not everything, Brown adds. “I look for passionate people. A question I always ask: ‘If you had a million dollars, would you continue working -- and if yes, would you do financial planning?’”
Brown's recruiting firm recently launched a modified version of its service to help RIA firms screen job candidates -- offering credit history and criminal background checks, FINRA and SEC licensing verification and review and reference checks, along with a personality profile and a proprietary financial planning skills and knowledge assessment tools. “It is crucial for hiring firms to know what a candidate's capabilities are prior to making a hire,” Brown says.
“While in the past we have worked primarily with firms that wanted to outsource the bulk of their hiring process,” says Brown, "an increasing number of firms have approached us recently asking for assistance in screening their candidates to ensure they are making a good decision before putting forth a job offer."