With the growing number of financial planning degree and graduate programs, the pool of educated candidates for job openings is expanding. That's great news for advisors looking to bring on young talent, develop excellent planning staff and, perhaps, find a potential successor.
But for advisors who want to invest time and money in developing young talent, there's a problem: Gen Y employees tend to believe that moving firms every two to five years is acceptable. So how do you attract Gen Y planners-in-the-making - and then, more important, get them to stick around?
I polled the NAPFA Genesis membership (130 fee-only professionals, all 33 or younger) and asked them the following questions:
* What initially attracted you to your current firm?
* In what ways are you making a difference to the company and its clients?
* What would you change about your company to make it more attractive to Gen Y planners?
* How do you feel your company is making an effort to retain you?
While the answers were varied, there were some common themes that arose.
CULTURE AND PHILOSOPHY
Respondents wanted a company they agreed with philosophically - which for the NAPFA group meant a fee-only firm - as well as one where learning was encouraged, where they would be mentored and developed, where work-life balance would be embraced and compensation was fair.
Note that last point. Gen Y employees will often choose a lower-paying job that "feels right" versus a higher-paying job that has the potential of leaving them unhappy.
Gen Y planners have a sensitive nose - they can "smell" the culture of a firm. I once had an interview where, I later learned, the colleagues in the room had had a disagreement before they came in to speak to me. It was obvious that things were not right, and it put me on edge - I began to wonder if this were a normal situation in the firm. I didn't pursue this position any further because I didn't want to find out.
FOCUS ON FLEXIBILITY
Work-life balance is also key, although not in the traditional sense of "I work from 9-to-5 and then leave." Most Gen Y planners do not see normal work hours as the only time in which they can get work done. If they have a family obligation or something else of importance that requires time out during the day, they expect to be able to leave the office - but they also know that they will be putting in the time later to complete all of their tasks. Planners told me they would have reservations about taking a position or working long term for companies that don't allow this flexibility.
Technology matters, too. Seasoned planners who had moved on to a second or third job said they had asked extensively about the technology used at their prospective employer.
Financial planning software and other tools have increased the efficiency of putting together a plan. Gen Y planners want to hear that their prospective firms have these things in place; better efficiency means they'll be able to spend time on other things, not just preparing plans.
Here's another key factor for Gen Y: diversified job tasks. In addition to preparing plans, these planners want to be involved more broadly, from firm marketing initiatives to client meetings and interaction. Make the job diverse and multifaceted - not daily, necessarily, but over time. If a position does not include these responsibilities, you may wind up with burned-out employees and higher turnover.
All respondents who said they were engaged in their firms also said they were working directly with clients and sitting in on meetings with senior planners. This should be a mandatory requirement for an associate planner; the job should be designed to allow time for it. Give your new associates a chance to see what you want them to become; let them learn how to become a great planner by seeing their colleagues at work.
FINDING THE RIGHT TASKS
Another way to engage your younger planners: Give them generation-specific assignments that have meaning and make a difference to your company as well as to your clients. Some respondents said they were placed in charge of reviewing technology. Others were involved in working with younger clients or children of existing clients.
Gen Y is no stranger to technology, so a task in this area may be more natural - although you cannot necessarily make that assumption for every younger employee, so be sure to assess your employees' own strengths. And while it can be hard for a twentysomething planner to relate to a fiftysomething client, it makes sense to have them work on the accounts of 30-year-old clients - or do planning work for the children of older clients.
Almost every respondent said a clearly defined career path was important - but not everyone was lucky enough to have one.
I heard from engaged planners who knew where they were heading, what stage of the path they were on, what they needed to do to get to the next step and how long that would take. But I also heard from planners who had no idea about their firm's intentions, and no idea how they were going to get to the next stage of their career.
Take note: If you do not have a clearly defined career track for your Gen Y employees, they may leave for a firm that does.
Also think carefully about compensation. Although Gen Y planners would take less money to work in a culture that fits them, they also expect a fair wage - and probably know how to research the industry's pay standards.
There are a number of studies out there that show what the average planner's wage is, given specific experience, designations and responsibilities. It would be naÃ¯ve to think Gen Y planners have not viewed these studies for themselves, so take the time to go through the studies with your planners. Discuss why and how they are being paid the way they are, and address any discrepancies from the average.
It goes without saying that you'll want your Gen Y planners to continue learning, in order to gain the relevant designations and degrees that will help them attract and serve clients, as well as progress in their careers. These things serve your firm as well as your employees, so consider having your company help pay for educational advancement.
Many of the planners I heard from had limited reimbursement programs at their company, and one company covered the full cost of any applicable program that an employee wanted to pursue. That employee, who couldn't say enough good things about her firm, said she had already racked up an impressive array of qualifications. She also said that, based on her last few years of experience, she intended to spend much of her career at that firm.
Gen Y planners can be a wonderful addition to your firm - their energy can breathe life to projects, and their fresh perspective will challenge the way "it has always been done" to help develop new and better ways.
Most important, perhaps, they have the potential to help the firm you have built continue to progress long after you have left. Yet it requires some deliberate steps and an attentive eye to keep these employees engaged and enthusiastic. Treat them well and watch your planners stick around.
Dave Grant, a Financial Planning columnist, is a financial planning analyst with Vantage Financial Partners in Arlington Heights, Ill. He's also the founder of NAPFA Genesis, a networking group for young, fee-only planners.
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