Internships may not be synonymous with stocks and investments, but when it comes to registered independent advisors (RIAs), internships will be a critical component to growing the business and landing top talent.
That's according to Kate Healy, managing director of Generation Next at TD Ameritrade, who said that, outside of the RIA market, little is known about RIAs or even what a fiduciary is, limiting the number of people who pursue a career in the field. That, in turn, makes it harder for independent advisors to attract employees and thus grow their businesses.
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That, says Healy, is where internships come in. "Planting the seeds for the next generation is about creating awareness in schools and providing opportunities for education, training, and mentorship," wrote Healy in a blog post. "We've long advised that RIAs should form mutually beneficial relationships with financial planning Program Directors from their local colleges and universities." Healy noted that, in 2015, 11.1% of firms hired a next generation advisor, while in 2016, that increased to 21.5%. The number one reason for hiring the next generation advisor was to improve client service, with the second place reason being acquiring younger clients. Despite the slow growth in hiring next generation advisors, TD Ameritrade Holding Corporation (AMTD) found that 70% of firms said they are having a hard time filling revenue-generating roles in their firms.
Healy's call to hire interns comes on the heels of a recent survey by the Omaha, Nebraska-based discount brokerage finding that, while RIAs are a growing component within the financial advice industry, college students largely don't know that RIAs exist. The problem is particularly pronounced for females and minorities, who are underrepresented in financial planning degree programs on college campuses across the country. TD Ameritrade polled 105 four-year colleges and universities with Certified Financial Planner Board listed undergraduate financial planning programs. The research found that, while 90% of the schools that have financial planning programs expect enrollment to rise during the next five years, minorities and women are currently underrepresented.
However, the program directors do believe that the number of minorities and females pursuing degrees in financial planning will increase over the years. According to TD Ameritrade, 36% of financial planning students are women, and just 31% are minorities. That's despite the fact that 56% of all U.S. college undergraduates are women and that women make up 51% of the U.S. population, according to the National Center for Education Statistics and the U.S. Census Bureau. Minorities account for 37% of undergraduates and 23% of the population.
Healy said that the number one thing RIAs can do to increase awareness about the industry and boost their talent pipeline is to hire more interns. Furthermore, RIAs should participate in on-campus career days and sign up to be guest lecturers or even adjunct professors.