100+ canceled internships threaten planning careers, industry talent pipeline
James McDougal, a junior at Texas A&M University, was looking forward to spending the summer working with clients for the first time as a paraplanner at the RIA arm of a national corporation with offices in his hometown of Houston.
“I was super excited,” McDougal, 21, says about the paid internship that dangled the prospect of a job offer at its conclusion in August. Then came the coronavirus pandemic, followed by a phone call from his would-be employer informing him about the quarantine. No one could say when the firm’s physical offices would reopen and the offer was rescinded.
“It was a better-safe-than-sorry sort of thing,” says McDougal, who’s still on track to graduate early in December but now, maybe, without any client experience. “I’m feeling a little more uneasy about going into the workforce.”
McDougal is one of at least 100 planning students nationwide nearing graduation whose internships were canceled due to the coronavirus and the resulting global economic downturn.
That’s the number of disappointed students, at least, who emailed the XY Planning Network in early April after the nationwide network of nearly 1,200 fee-only advisors launched a virtual “internship-in-a-box” program to help make up for the sudden evaporation of opportunities.
The cancellations are not only disrupting careers of hopeful planners but dealing a blow to an industry already desperate for young recruits. Although no one has yet calculated a total of planning internships projected to be lost this summer, the number is likely to be in the thousands, says analyst Awaad Aamir, with the global research firm Celent.
“We know we have a problem” industrywide, XYPN cofounder Alan Moore says.
The program seeks to pair interns with XYPN firms. It also offers training to those firms on onboarding interns, including templates that help new people get up to speed as quickly as possible.
XYPN requires participating firms to certify two things: They will pay interns and the positions will offer good professional experience, meaning no meaningless grunt work, Moore says.
“Now is a time when students can be taken advantage of,” he says, given that students desperate for work experience might find themselves offered work below their skill levels.
So far, 50 firms have signed up for the program, according to Moore, who expects that number to double by the first week in May.
On top of the 100 students who lost positions, another 150 who hadn’t yet lined up internships also have contacted XYPN seeking opportunities, Moore adds. “This tells me that the industry is failing to provide enough internships” even without the cancellations, Moore says.
At Texas A&M, McDougal’s university, 15% to 20% of the upcoming graduating class of about 100 got bad news about internships planned for the summer, says Nathaniel Harness, who heads the program there. Now he’s concerned the profession could lose not only a couple of months or a year of the students’ contributions, but possibly some new planners themselves.
“Internships anchor that passion” for planning among students, Harness says. “When we lose a summer of internships for some of these students, my fear is that a number that might choose alternative career paths.”
Thanks Nathan. Advisors- another great way to find interns from financial planning programs. And virtual interns don’t need to be close by! Check out #RIANextGen resources like Internship guidebooks on @TDA4advisors Education Center. https://t.co/rev9S9j8AL— Kate Healy (@KateHealy_TDA) April 18, 2020
In a typical year, nearly every student of the 30-some person cohort graduating from Virginia Tech completes an internship; However, this coming summer none are yet confirmed to do so, the program’s director Ruth Lytton said via email.
By contrast, of 48 students at Western Kentucky University (20 seniors slated to graduate next month and 28 juniors), none have lost job offers or internships, says the program’s director Ron Rhoades, who thinks the program’s heavy finance emphasis may have insulated them, making them more attractive to employers such as banks.
At yet another extreme, to protect students’ health, Utah Valley University decided last week that it won’t give credit to any of its graduating 50 students if they do internships in programs that are not fully virtual, according to Luke Dean, the program’s director. Typically the university requires that its students complete internships in order to graduate, he says.
The problem with canceled internships is exacerbating problems with cultivating talent. The field has long suffered from attrition, given an insufficient number of both internships and full-time employment opportunities. Even as expanding college programs produce higher numbers of graduates every year, an anecdotally high number are believed to end up pursuing careers in other fields. Smaller firms in particular struggle to devote the hours it takes to serve clients and train young planners. That’s a problem in a profession where the average advisor is 55, according to J.D. Power, and nearing retirement.
The cancellations simply shouldn’t be happening, says Kate Healy, a managing director at TD Ameritrade Institutional. Healy says she thinks firms who’ve canceled programs are missing out.
“Thanks to video conferencing and other online collaboration tools, advisors can attract and work virtually with young talent from anywhere,” Healy said via email. “And, given that this young talent grew up online, they offer firms unique insights into moving into a digital world and capturing next-gen clients.”
To bridge the gap, Healy has been reaching out to RIAs who, in the past, have expressed an interest in bringing on students, a TD spokesman says.
TD confirms it will continue with its previously planned program for 20 student interns this summer — albeit in virtual form. Other firms that are virtualizing summer internship programs include Edward Jones, which will host 54 interns, and Vanguard, which will host 125. While Merrill Lynch plans to continue to bring on its scheduled 200 interns this summer, for now it has stopped interviewing new trainees, according to a spokeswoman. The wirehouse usually has more than 3,000 trainees working in wealth management and banking positions.
Because Texas A&M has long required students secure internships to graduate, Harness initially feared his students might not be able to matriculate without them. But, in early April, the university dropped the requirement given the steep reduction in work opportunities, he says. Whether or not they have in the past, none of the following programs contacted by Financial Planning are requiring internships now as a condition of graduation: San Diego State University, Utah Valley University, Virginia Tech, Western Carolina University and Western Kentucky University .
When he saw the news about XYPN’s virtual internship program, planner Steven Fox, 33, offered to take on a new intern at Next Gen Financial Planning in San Diego, California, the firm he founded in 2016. This despite the fact that he’s already spending about 15 hours a week onboarding two paid paraplanning interns who started two and a half weeks ago. He had confirmed the positions before the advent of the coronavirus pandemic.
Fox, who spent eight and a half years as an active duty Marine before graduating from the planning program at San Diego State, has since virtualized the paraplanners’ jobs, of necessity. Both are on track to graduate from Fox’s alma mater.
“The biggest thing I’ve learned so far is, I need to be very patient and to temper my expectations on what they are capable of doing from day one,” Fox says. “But at the same time, I need to be willing to spend a lot of time with them before it will be a net positive for the firm overall.”
After learning about XYPN’s virtual internship program, McDougal, the college junior who lost his position in Houston, says he logged a follow-up call to the corporation that canceled his internship. He left a message asking if they might reconsider and offer him a virtual version of his internship.
He has yet to receive a response.
Maybe planners like Fox can help. He’d like to hire his two interns full-time and maybe the third intern he now plans to hire as well.
Harness wants to see more firms and advisors step up like Fox:
“We as a profession have to lock arm-in-arm and say, ‘How do we give these young adults this experience even in difficult circumstances?’”