Are We Doing Enough for the Next Generation?

By Yonhee Choi Gordon

As many of us reflect on careers that might span over three decades in this profession, I’m sure I’m not alone in sharing a certain amount of pride in the way our profession has evolved to emphasize the duty to serve as a fiduciary for our clients. Thirty years ago (10 years after NAPFA was created), we were trying to educate the profession, the financial media, and, ultimately, consumers about the benefits of “Fee-Only” financial planning. We have certainly come a long way, and our consumer-friendly vision now embraces newer issues as well, such as holistic planning and diversity, equity, and inclusion. But we need to do more to aid the progress of financial planning.

Past versus Present

Let’s go down memory lane. Twenty-five years ago, for an entry-level college graduate majoring in finance or economics to become a client-facing financial advisor could have taken 10 to 15 years—including maneuvering through the CFP^® certification process while working full-time. Advisory firms were still trying to figure out career paths. Firms also had to decide what services to provide to clients and which business model to employ to be strategic for the future.

Fast forward to today. There are more than 130 colleges that offer the CFP^® curriculum at the undergraduate level. Students are eligible to sit for the CFP^® comprehensive exam upon graduation, but still need the required years of experience before they can use the designation after their name. And some entry-level positions anoint these graduates as “wealth advisors” or similar titles that indicate a seasoned position right out of the gate. Is this really fair to these new graduates in managing expectations?

Are We Doing Enough?

During the pandemic, the current generation of students has grappled with remote learning, emotional stress, and a lack of in-person human interaction. Kudos to the firms that offered externship opportunities, but I think we would agree that students need to develop more skills before being foisted into managing client concerns during such volatile market conditions. As we all know, once you look like a deer in the headlights, you lose credibility and face a deeper hole to climb out of.

I want to challenge all founders and seasoned veterans in this industry to focus on developing the future of this profession. I know, we all talk about it and say we’re doing this, but are we really? What are you doing in this effort? My guess is that many are sharing their own experiences, expecting the young professional to be inspired by their words and take it from there. But I’m skeptical that it’s enough. We are in a different era in which learning by intuition and osmosis is not sufficient. Although these young folks are smart and ambitious, this won’t work for them as it worked for our generation—I started in this field 36 years ago—because the profession of financial planning is now established and continues to expand and grow. Let’s move on.

This is not a new topic. All the financial planning conferences offer sessions on developing the next generation. But when I talk to newer graduates, that development doesn’t appear to be happening. Newer graduates tell me they crave guidance on time management, presentation skills, understanding expectations of their role, and how to develop more self-confidence. Yes, these may sound like skills that a college graduate should have, but let’s not forget that all individuals are not wired the same. More detailed and direct performance evaluations can be a tool in the development process.

Where are we falling short? As suggested above, we are not investing enough time in our future. Growing up at the same firm for over 36 years, I have not only been privileged to work with clients through every stage of their financial lives, but I have also personally hired over 75% of our current employees. Many of them were new college graduates years ago, and now they are my partners. It is a special cycle at our firm because my mentors did the same for me.

With the evolution of new technology in financial planning, the career path has basically been compressed to a much shorter period of time. Is your firm keeping up with this pace? Twenty years ago, a new graduate would have had to manually input data into a spreadsheet or into a tax return one after another, learning from each client situation. Learning the basics of financial planning took time; learning how to conduct a client meeting took time; learning how to develop business took time. Twenty years ago, this career path could have taken 10 to 15 years versus half that time in today’s environment.

Today, we have financial planning software in which one learns on which lines to input income, expenses, assets, and a projected growth rate, and then one can just “push the button” to generate a success rate of fulfilling one’s financial objectives. Yes, this might be oversimplifying the process, but I’m sure you can identify with what I’m referring to.

Now we have technology that can extract data from source documents and import the numbers directly into the tax return. Time spent to prepare a Form 1040 has probably been cut in half. However, how are young advisors developing problem-solving skills and the ability to know when a tax projection does not look reasonable just by looking at it? When we didn’t have this technology available to us, we really had to understand the components of rates of return and present and future values.

At our firm, problem-solving assessments are critical during the interview process. One of the more challenging exercises for candidates is to create a spreadsheet from scratch with instructions and raw data. It is surprising to see the lack of analytical skills and creativity, mainly because candidates have only learned how to input numbers in a financial planning tool. A wise person once reminded me that if you don’t know how the tools work and how to use them, they are worthless to you. Yet we have the next generation thinking they are financial planners because they know how to input numbers and generate a report. The risk, of course, is retaining these folks if they don’t believe they are progressing fast enough in the organization.

4 Suggestions

I raise these issues to provoke some thought. Based on feedback from young professionals, here are some lessons that we should consider as we think about how to positively affect the development of the future of our profession.

1. Be honest and transparent.

The evaluation process should be meaningful, not just superficial comments to appease the employee about their performance. They crave this feedback and need specific details about how to improve.

Help them set objectives and goals beyond revenue metrics. Employees should understand the business model at your firm. They should be informed about what profitability means when assessing how much revenue they might be responsible for bringing to the firm. Beyond financial metrics, help them establish personal goals and objectives. At our firm, we ask employees to list at least three objectives that might start with aspects from their job description as an example. But in addition to having them list objectives, provide some guidance on how to work toward them. This should be an interactive conversation, not one-sided.

2. Practice high emotional intelligence yourself.

Are you practicing self-awareness and relationship management as you work with your colleagues? It’s easy to focus on clients, but are you also paying the same amount of attention to your colleagues? When you exercise good emotional intelligence, you serve as a role model for others.

There are numerous resources on improving emotional intelligence, so why not provide them to the employees and reinforce these attributes? For example, I like Strengths Finder 2.0 by Tom Rath and Emotional Intelligence 2.0 by Travis Bradberry and Jean Greaves.

3. Give immediate feedback.

It is no longer understood that “no news is good news,” as professionals of my era learned. The new generation expects immediate feedback because of the technology we have today. (Don’t we expect an immediate text-message response ourselves?) And yes, if they don’t hear anything, many of them automatically think they are not doing an acceptable job. Investing a few minutes in this process can pay enormous dividends.

You could do something as simple as providing specific feedback immediately after they present a topic at an informal meeting or sending them a brief email with both positive feedback and suggestions to improve for the next time. But remember to tell them why it’s important as well—they need context and validation.

4. Teach them how to attend a meeting.

Think about this: Do new college graduates know how to attend a staff meeting, client meeting, or professional conference? Yes, I know, we weren’t told either, but again many of us grew up in a different environment.

They need to understand the various roles in meetings (moderator, attendee, presenter); what to expect; the purpose of their attendance; and why they need to pay attention. Since we are asking them to lead client meetings (or part of any meeting) earlier in their careers than in the past, we need to equip them with the right interpersonal skills. They don’t learn this in their college programs. Why not have them practice with you first before you put them in front of a client? This is how you help develop their confidence. It’s also a good opportunity to share the mistakes you have made in your own career. It’s comforting for them to know you were also in their shoes at one point.

Let’s Help the Next Generation Succeed!

This advice might be common sense to many, but we sometimes need to take a step back and look at things through a wider lens. The success of the next generation is our success. Let’s not miss the opportunity.

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Yonhee Choi Gordon is principal, chief operating officer, and chief marketing officer of JMG Financial Group.

image credit: istock.com/Portra