Reading biographies of recent hires at various financial planning firms, I'm struck by how many graduates have undergraduate degrees in finance. As the financial planning profession continues to grow and mature, do we only need people with a finance background, or do we also need hires who know how people work and understand human behavior? My opinion is some of the first, but just as many of the latter.
Of course, this view is biased. My own undergraduate degree is not in finance and it isn't even from the United States - I have an undergraduate degree in psychology from a mid-ranking university in England. I decided to become a planner three years after I'd graduated from school, and studied for the CFP exam when I was working in an unrelated industry.
Yet not having a finance degree hasn't hurt at all - I'm still making good progress in the financial planning profession. In fact, knowing a bit about psychology has proved enormously helpful in dealing with clients.
But if owners of planning firms insist on only hiring finance graduates and then expect them to learn how to have effective conversations with prospects and clients, how to deal with a client who is dealing with grief, or participate in a conversation where there is marital dysfunction, I believe those new hires are being set up for a long, frustrating journey. Some of the current misalignment may come from the type of work graduates are being hired to do. The initial duties of an associate include detail-oriented data entry, account form completion and other back-office duties.
While these kinds of skills are certainly needed by an advisor, a client-facing advisor also needs skills that are vastly different from this, including an understanding of psychology and interpersonal dynamics. What if the hiring process were occasionally approached from the other direction? What if people with these interpersonal skills were hired and then pursued the necessary financial knowledge?
This way, those with innate skills in effective communication could be hired with a view to making them client-facing advisors who pick up the CFP knowledge on the job as part of their training. Putting this into practice may be challenging, of course, because it would make the hiring and training process more complex. Not many owners will feel they have a large amount of time to dedicate to this concept, but those who do could find themselves with a high-performing team.
Dave Grant, CFP, is a financial planning analyst with Vantage Financial Partners and founder of NAPFA Genesis, a group of fee-only planners age 33 or younger.
