York University study finds that the first job is the key step and key barrier to a career in planning
The path to a career in advice can be challenging and vague enough to warrant academic study. Recent research conducted at York University by undergraduate student Raquel Iantorno and Associate Professor Daniel Richards sought to map out exactly how bachelor of commerce graduates end up with careers in financial planning. Their recently published paper, Factors of Employability for Graduates Progressing through a Career in Financial Planning in Canada, found that the first industry job in a customer-facing role — typically as a bank teller — was the most essential step to achieving a career in financial planning. They also found, however, that the first job was among the most difficult roles to obtain and that connections were more important than qualifications in obtaining that role.
Professor Richards spoke with WP about the study outlining the core findings as well as what surprised him most. He spoke to some of how universities, banks, and wealth management firms can start to build out means of creating more initial opportunities. He explained why, in the context of an ongoing advisor succession crisis, the establishment of clearer career paths are an essential part of the future of this industry.
“The thing that surprised me was that the first step of getting a foot in the door is quite hard. Getting that first customer service step was difficult, which I kind of expected in some ways. But what was interesting is that after that first step, it was a lot easier,” Richards says. “We found that social capital, having networks of friends and colleagues, could help you through that initial process. What we call human capital — having degrees, licenses, and credentials like a CFP — those then helped with career progression.”
According to the research, the entry level job has been challenging for many new graduates because it often comes with fewer entry barriers. New grads are up against candidates without a degree or no plans to enter into financial planning as a career. The sheer volume of candidates can mean that hiring managers prefer to simply focus on people they know. Moreover, Richards adds that many financial services firms are scaling back their entry level roles, replacing these jobs with automated platforms. More people seeking fewer positions further preferences those with connections over those with credentials.
Richards argues that universities can take steps to better enable their students to obtain these entry level roles. He notes the example of his own institution, York University, which has started encouraging internships in the early years of a degree program. Having students complete internships as early as their second year, he explains, can help them build those networks essential to a first job. In addition, he notes that York has added all of their final year financial planning courses online to give students later in their degrees greater flexibility to go out and work while they finish their programs.
While building clearer career paths can start with universities, Richards argues it can’t end there. He highlights the central role of the Canadian banks in the financial services ecosystem. Most financial planners will get their first job at one of the big six banks and Richards’ and Iantorno’s paper recommends making some of the customer service roles at banks part-time. That change would help broaden the recruitment pool and accommodate more post-secondary students. Looking at it from a bank’s perspective, he argues that not every new hire will become a planner, so widening the pool with the expectation of attrition at later stages can possibly prove beneficial to the whole industry.
In addition to this work with the banks, Richards recommends better outreach by industry organizations and credentialling bodies. Going to high school guidance counsellors, for example, could help build a greater awareness of financial planning careers among young people. So, too, could adding mentorship KPIs to the expectations for existing financial planners, encouraging them to help new talent rise in the industry. Richards argues that these efforts to help young people get a foot in the door can assist in ending the succession crisis and continue the industry’s transition towards a more professional service-oriented model.
“I think the more these pathways get established and the more professionalized it will look,” Richards says. “There's a perspective often that financial planning is just about sales. So as a profession, having an established career path where people work towards being a financial planner, rather than being dropped in and going out just to sell your wares, improves the profession as a whole and improves the amount of people that will look to seek financial advice. And it'll improve, the standing of financial planning, which is continuing to professionalize.”
