Next Generation Planner: May 2021
Hannah Moore, CFP®
Owner and Principal Financial Planner, Guiding WealthHost, You’re a Financial Planner…Now What?
www.linkedin.com/in/hannahmoorecfp/
The financial planning profession is vast and deep. How can you find the right firm for you?
Nearly two years ago, an all-star team of academics and practitioners developed deeper what has come to be known as the “12 Tribes of Financial Planning.”
Luke Dean, Ph.D., CRC, RFC, CFP program director and assistant professor at Utah Valley University, said the framework was initially developed to educate students about what to expect from various firms in terms of culture and work environment in the profession.
“For someone looking from the outside into financial services, they think that working at Vanguard is the same as working as a small RIA firm and is the same as working at Lincoln Financial or Northwestern Mutual,” Luke told me on a 2020 episode of You’re a Financial Planner…Now What? “But people who work in those firms know that there are cultural differences.”
On the episode with Dean and a few members from the 12 tribes development team—Nathan Harness, Ph.D., and Craig Lemoine, Ph.D.—we dove into the “tribes” next-generation planners may want to join, and their cultural differences.
The 12 tribes were worth a revisit in 2021, as this issue of the Next Generation Planner explores career paths into financial planning.
“This not only makes a difference for students in making a choice, [but] it helps those who are explaining our profession—both to clients and, ultimately, to those coming into our profession—what the different opportunities are,” Craig explained. “And for those in our profession, it helps to come up with better differentiation.”
Big Brand Names Are High Risk, High Reward
It’s important to remember that the 12 tribes are not cut and dry. The diagram our guest hosts created is a circle divided into three sections of four tribes each. There are many nuanced differences between each tribe, but they also share similarities, which can make it difficult to generalize and characterize.
In the first grouping of the four tribes, you have wirehouse brokerage, property and casualty (P&C) multi-line agency, life and disability (L&D) insurance and franchise or independent broker-dealer. In this group, you’ll find big, nationally recognized brand names. Ask a student in the financial planning program the question, “What is financial planning?” and they’d throw out names that are grouped in this quartet, explained Nathan.
They have big budgets, high sales, formalized training and national advertising. Think Merrill Lynch (wirehouse brokerage), Allstate (P&C) and Northwestern Mutual (L&D). You may have little to no salary coming in, and you’ll have to work hard to generate your income in this grouping. High risk, but high reward.
Look to RIA, Counseling or GAR if You’re a People Person
The next quartet of tribes include registered investment advisers (RIA), accounting and tax RIA, counseling, and government, academia and research (GAR). These tribes are well suited for “minders” rather than “finders,” as Luke put it.
Finders are hunters; they’re motivated by seeking opportunities and sales. In comparison, minders are operators, people persons and project managers. Because these tribes are often client-focused or student-focused, minders can find jobs that suit their people skills in this grouping.
The Future Is in Robo and FinTech Firms
The final quartet of tribes includes robo advisers and fintech; banking, credit unions and trust companies; discount brokerage; and product distribution.
Craig offered the following to visualize the 12 tribes in general and the third group in particular: the first grouping of tribes can be looked at as the past—where the financial planning profession found its roots. The second grouping can be looked at as the present—where students today find plenty of job opportunities and can get their foot in the door. The third grouping can be looked at as where do we go from here?
Craig predicted that students will start gravitating toward fintech firms and careers with robo advisers. Plus, many companies have gotten more aggressive and competitive in recruiting; big RIA custodian firms like Charles Schwab, Vanguard and Fidelity tend to lure and hire young CFP® professionals with attractive benefits packages and salaries.
Finding Unity Across the Profession
The 12 tribes is an excellent resource for young professionals or students looking for direction. But what do companies in our profession think of this work? Their response was interesting.
Craig explained that many people in the profession get into this mindset of “what is planning and what isn’t?” People can have very passionate opinions about what constitutes financial planning and what doesn’t. And they’re not afraid to voice those opinions.
While the 12 tribes model does label and group career paths, it’s not meant to segregate the different paths in the profession and spark more competition between tribes. In fact, Luke pointed out that financial planners are already on the “lower end of trust” in financial services, so no good comes of attacking competitors. Ultimately, that just inspires less trust in financial advisers in general.
There’s a Tribe for Everyone
Craig and Luke talked about how financial planning can vary wildly from tribe to tribe. In P&C, you may be selling products. At trust companies, your main focus might be estate planning. As a robo adviser, you may focus on mass market. Each company within each tribe may focus on different areas of financial planning itself. Nathan likened it to asking what the difference was between two pro baseball teams. There clearly are differences, but they’re both playing baseball.
“When I have students who come out and go to work in any one of these areas … each area has subareas,” Nathan explained, zeroing in on RIA as an example. “You can go into an ensemble firm, you can go into a multitude of different areas and if that wasn’t the right fit for you—that company or particular path or tribe—that doesn’t mean that you’re not the right fit for financial planning.”
You might feel overwhelmed by all the choices out there in the profession. The key to finding the right tribe or profession for you is to ask the right questions. Those questions include: Where can I be mentored, so I can grow into the best version of myself? What opportunities exist in this profession if I work there? What will my role be, and will it fit with my long-term career plan?
Ultimately, knowing the different paths in the profession and choosing the one that’s right for you is about legacy.
“I believe our legacy in financial planning is going to be in helping people engage their purpose and passion into the industry,” Nathan said. “But they have to know where they fit and they have to have an understanding of the comprehensive nature and opportunities that exist within our profession.”
If you’re curious about the nuances and different cultures of the profession, listen to the episode of the You’re a Financial Planner…Now What? podcast with Luke, Nathan and Craig at www.financialplanningassociation.org/learn/podcast/yafpnw-the-12-tribes-of-financial-planning.
