Next Generation Planner: July 2022
Brian McLaughlin has been working closely with advisers, broker-dealers, and industry partners for almost 20 years. With a keen interest in fintech, Brian is passionate about the CRM-driven solutions Redtail Technology provides to the financial services community and enjoys getting his hands dirty in the pursuit of continuous innovation.
Students hoping to set themselves apart from their peers on a financial services path might be wise to prioritize sitting for the CERTIFIED FINANCIAL PLANNERTM (CFP®) exam pre-graduation, given the results of a recent survey Redtail Technology conducted in conjunction with Brigham Young University–Idaho: “Financial Planning Career Perceptions 2021.” Two significant findings in the survey of 4,033 financial professionals and 224 financial planning students were that (1) 71.2 percent of financial professionals recommend aspiring advisers sit for the CFP® exam while still in school, and (2) that professionals and students alike overwhelmingly prioritize the development of strong interpersonal skills.
There are likely several reasons why financial planning students don’t put taking the CFP® exam higher on their to-do lists. Students are understandably overwhelmed toward the end of their college careers; the pressure of final exams and other graduation requirements coupled with anxiety over finding a job quickly to begin repaying hefty college loans tends to take its toll, even on those who are typically adept at stress management. Additionally, many students simply cannot afford to fork out money to take yet another exam at this point in their young lives.
Those financial concerns don’t even take under consideration a further disconnect revealed by the survey, which showed that financial professionals viewed individual finances (or lack thereof) as the top barrier to entering the industry (46 percent of them chose this as the number one barrier). The students surveyed, however, believed their biggest challenge would be licensing (56.8 percent) followed by certifications (41.8 percent). In turn, this appears to strongly influence the fact that only 17 percent of students surveyed anticipate pursuing their CFP® certification prior to graduation, as they are more focused on licensing.
Interpersonal Skills Top Area for Improvement
While almost 60 percent of professionals feel that college courses are doing an adequate job of preparing students for working life in terms of the level of knowledge new hires are entering the profession with, skilled financial professionals and students are aligned on the priority they place on interpersonal skills; there seemed to be a consensus that university programs could benefit students by requiring more communication courses as a core part of the curriculum. Students looking to take the initiative themselves to work on their interpersonal communication skills should seek out elective or extracurricular public speaking courses that can boost their confidence while instilling best practices. Additionally, it could prove beneficial for students to contribute content to any blogs that might be available to them, as many firms feature blog content on their websites and ask employees to participate. As this form of writing is different than what is required for a presentation or a college paper, it requires practice to hone the methods to persuasively get one’s ideas across.
In addition to requiring more communication courses for their students or pointing them toward resources that will assist in developing those skills, financial planning programs should also be arming students with knowledge concerning the initial and ongoing costs of entering and practicing in the profession, as this might allow more aspiring advisers to enter the field clear-eyed and better prepared to meet those financial challenges.
Students should consider the advantage of having a certification that only 17 percent of their peers, and now job-seeking competitors, say they expect to begin pursuing before graduation. If something as straightforward as passing the CFP® exam prior to graduation can dramatically increase one’s chances of being hired, it appears a no-brainer that students should pursue it as soon as possible. By passing the CFP® exam prior to graduation, you exhibit a level of dedication that other students or peers didn’t have during their collegiate careers. Of equal importance, passing the exam also provides a confidence boost and shows a mastery of those skills and concepts. Additionally, it can alleviate potential employer concerns surrounding the provision of study time for new employees who have not yet achieved their certification.
On a positive note for students, the CFP Board of Standards has also recorded a recent uptick in the pass rate of the CFP® exam, noting that in the March 2022 sitting for the exam, 65 percent of participants passed—that’s an increase over the November 2021 pass rate of 58 percent, placing the odds firmly in the students’ favor. With three sittings a year, the CFP Board offers some flexibility to potential candidates who want to take the exam. So, if possible, barring those financial constraints, it’s in students’ best interest to take their CFP® exam while still in college.
Professionals appear to recognize the monetary constraints many students operate under as well as the challenge personal finances can pose as students attempt to enter the industry. Is expecting them to sit for the CFP® exam while still in school a realistic expectation? Perhaps understanding that their professed desire for new hires to have already passed the CFP® exam is in direct conflict with their understanding of students’ financial challenges, firms may look for ways to coordinate with university programs earlier on. This coordination could serve two purposes. One, it would allow professionals to work directly with financial planning programs to stress the importance of interpersonal communication development as well as the benefit of sitting for the CFP® exam while still in school. Two, firms with the resources to do so might consider offering assistance to promising students who might not otherwise have the resources available to prep for and take the CFP® exam while still taking classes.
In the end, university programs, students, and financial professionals share many of the same aims and a similar understanding of what it will take to reach them. In the case of what was highlighted by our survey this year, our takeaway is that if each of these stakeholders works together to improve the communication skills of those entering the profession and to encourage earlier CFP® certification, all will benefit from the cooperation.
