Soldier one day, financial planner the next. Kristen Paech reports on why firms must cast their nets even wider in the quest to find the best people.
Today’s soldiers could be the unlikely heroes in the war for talent among financial planning practices. ecruitment companies are leaving no stone unturned in the quest for planners as small firms are forced to cast their nets wider or risk losing out to the cash-rich institutions.
Creating a financial plan might not match the adrenaline rush that comes with fighting on the front line, but recruiters say military servicemen are a natural fit for many businesses. In fact, as recruitment campaigns are thrust into overdrive, anyone who is numerate and has strong communication skills is being seen as a potential target.
Peter Dawson, executive director at Financial Recruitment Group, says he recently spoke to a chemical engineer who was doing his Diploma in Financial Planning (DFP).
“They’re looking for people who have good communication skills, not just technical skills, so teachers, lecturers and also the armed forces, particularly if they’ve been officers who are looking for a new career because they come from a disciplined background, have quite often held leadership positions and can communicate clearly with people,” he says.
Godfrey Group conducts searches across business consulting, broking and accounting on behalf of its high net worth and private banking client base. James Godfrey, managing director of Godfrey Group, says converts include people who have worked in the transactional world, such as corporate banking and structured investments, that are looking for a less hectic environment to continue their career.
‘It’s about looking at people who follow a traditional advice process in their line of work’
“I’ve seen chief financial officers that want to have more flexibility and less corporate life move into financial planning, and the most interesting [career change] I’ve seen is a physiotherapist,” he says.
“Physiotherapists use the same processes that a financial planner goes through, so it’s about looking at people who follow a traditional advice process in their line of work.”
The ability to think outside the box is crucial for independent planning practices if they are to successfully stave off competition from deep-pocketed banks. Methods of recruitment and retention vary widely within the banking and private sectors, but largely depend on the size of the firm’s budget.
Where they are engaging external recruitment consultants, Rod Bertino, partner at Business Health, says headhunting is rampant at all levels from paraplanning through to senior advisers and practice managers.
“The key determinant is the amount of money and time that can be invested,” Bertino says.
“If you’re one of the four largest banks in the country then you can develop more expensive, extensive programs than if you are a one- or two-person adviser practice with three or four support staff.”
Among the banking giants, financial planning academies and cadetships have become commonplace.
BankWest is beefing up its advisory capability, headhunting advisers from rivals and training existing branch staff such as mortgage advisers through an internal academy.
AMP has adopted a similar approach through its Horizons Planner Recruitment Academy. The academy is an initiative designed to attract, recruit, educate and retain financial planners. A fundamental element to the program is training and mentoring provided by experienced planners and support staff.
Godfrey says the banking environment is also building what he defines as “cradle-to-grave” models. Such models provide an entry point to the industry, potentially via a call centre, transition individuals into associate adviser and then adviser roles, and later allow the adviser to buy their book back from the bank and transition it to a traditional licensee using a bank-funded finance product.
“St George has been doing it for a while with Securitor, and Westpac has its partnership program,” Godfrey says.
But while banking innovation and mid-life career changes are helping to bridge the planner shortfall, the industry has little hope of meeting the increasing demand for advice if it cannot find a way to captivate the minds of the younger generation.
While the wider realm of financial services is attracting strong interest from school and university students, the financial planning sector is struggling to coax young people through the door.
The average age of practice principals is 56, according to research from Business Health.
Jo-Anne Bloch, the Financial Planning Association’s chief executive, says financial planning is simply not on the radar for many students choosing their career.
But the association is hoping to turn this around. A newly established Future Financial Planners Council aims to raise awareness of financial planning and its related skills and opportunities as a career, with the ultimate objective of encouraging more people into financial planning.
According to Bloch, competition is rife and graduates with commerce backgrounds are often snapped up by investment banks and accounting firms.
“There is a lot going on out there but we needed a more coordinated and strategic approach,” Bloch says.
“If we can leverage the strength and capacity as an industry we can be much more focused and therefore much more successful.”
The council is a cross-section of FPA members, recruitment and tertiary sector professionals and financial planning students.
Paul Barrett, general manager distribution at Colonial First State, is chairing the council. Members of the council include Phil Guest, principal and financial adviser at Guest McLeod; Greg Kirk, chief executive of Challenger Financial Planning; Neil Younger, head of Securitor; Allan McKay, national manager of network development at Axa; and Godfrey.
The council’s key objectives include developing FPA programs targeted at universities, vocational and other students and graduates to raise awareness; developing marketing material for FPA members highlighting career pathways, education requirements and professional standards; and canvassing supporting activities such as mentoring.
Barrett says a clear short-term goal is to increase the visibility of financial planning as a career.
“Student branding and collateral is an obvious place to start; producing documentation that we can deliver via the web and physically to learning institutions so when people are contemplating their careers they can get some granular information about our profession,” he says.
“The granular information that pertains to other careers is all there. At grass roots level we have to put financial planning in front of people.”
Universities have a big role to play here, and one in particular is making leaps and bounds in this direction.
Griffith University in Queensland has introduced paid work experience, a professional development program and a trimester model via two new degrees in response to industry demand for more qualified professionals and job-ready graduates.
After the first year of full-time study, students complete a paid industry placement part-time and study part-time for the remaining two years.
Mark Brimble, Griffith Business School program director, who is on the FPA’s new council, says take-up of the Bachelor of Commerce (Professional) degrees in accounting and financial planning has roughly doubled in 2008 on the back of the changes.
“Students of all types, but especially the younger generations, want to see the application of what they’re doing in the classroom to the real world,” he says.
“This gives them the opportunity to see what’s going on in the real world first hand, to apply what they’re learning in the classroom to the workplace and to earn some money along the way.”
Brimble believes financial planning suffers from a lack of recognition of being a professional choice of study when students are looking at university careers.
However, he is confident that involving the industry in the education process and including a paid work component will attract more people into the financial planning discipline.
Such an approach offers major benefits for planning firms too. For smaller practices, tie-ups with universities to nab planners at a graduate level could prove an affordable way to recruit and retain talent.
Neil Kendall, principal and financial adviser at Tupicoffs, which is involved in Griffith’s industry link up, says the firm’s three most recent professional staff appointments have come from Griffith’s financial planning course.
“The big challenge is to recruit people with both experience and training,” he says.
“Previously it was possible to get either but not both; this program will in fact produce graduates with both.”
It could also help firms who have built profitable practices when they come to hand over the reigns.
“A lot of individual planners who own their own business are probably getting to a stage where they need to start worrying about succession in their own practices,” says John Prowse, managing director of Pinnacle Financial Services Academy.
“I think the way to do that is to get younger people into paraplanning jobs and develop them over some years into the planning role. It’s about career development more than just producing planners.”
According to the FPA, 12 universities offer tertiary qualifications in financial planning and Bloch says they are getting more innovative in their approach.
“You can now do your core skill in economics but can add your vocational element in financial planning,” she says.
Cameron Gordon, senior lecturer in banking and finance at the University of Canberra, has tried to introduce practical elements to the university’s financial planning major.
“In the advanced class students play the role of client and adviser and have to come up with client facts before producing a statement of advice,” he says.
“I’m trying to simulate as much as possible what they’re going to be doing when they become an adviser.”
All the universities Professional Planner spoke to pointed to growing interest from commerce students in financial planning, particularly on the back of additional regulatory controls and requirements.
“Since the formalisation of the licensing process, effective from 2004, there has been a noticeable increase in interest in students seeking to obtain employment in the financial planning and retail financial services area,” says Peter Lennox, program director, division of business at the Uni-versity of South Australia’s school of commerce.
Likewise, Bruce Clayton, associate professor at Deakin University in Melbourne, says the university has witnessed significant growth in students electing to take financial planning units.
“This interest continues with student numbers in financial planning units growing by 12 per cent from 2007 to 2008,” he says.
In Western Australia, the resources boom has enticed hordes of young people to flee the city and chase lucrative jobs on the mines.
The exodus has led to a shortage of qualified people entering the financial services sector, but Patrick Rowland, senior lecturer at Curtin University’s school of economics, says while there is interest in financial planning, students have a lot of other choices.
South Australia is grappling with a similar challenge.
“A spill over of [the new regulatory controls] is that there has been an increasing interest by commerce and accounting students in financial planning as a career,” says Barry Burgan, University of Adelaide’s business school head.
“But as employment opportunities are so plentiful in those fields, only relatively small numbers are ‘converting’ so there are still gaps,” he says.
Godfrey believes the industry needs to educate university students and school leavers about the long-term opportunities of the marketplace.
Planners enjoy myriad options when it comes to their work environment with the ability to join a boutique firm or large institution, or even own their own business.
They can choose to pursue paraplanning or financial planning and for women returning to the workforce it allows for flexibility around working part-time or from home.
“It’s underwritten by super; there are great growth prospects; there is a shortage of talent, and in regards to advising people you can genuinely help families and individuals, so there is a caring element and even philanthropic feel to it if it’s done in a certain way,” Godfrey says.
“It’s also an opportunity to be part of what has probably been a cottage industry to an extent as it goes into the transition of becoming a profession.”
Faced with a chronic skills shortage, many practices are being forced to blow cash they don’t have in the fight to secure top talent.
“The demand is so strong at the moment so good-quality, experienced paraplanners are probably at the highest earning potential they have ever been,” Bertino says.
Paraplanners with just two years’ experience and an Advanced Diploma of Financial Services (ADFS) can now command between $65,000 and $80,000 per annum, compared to just $40,000 to $60,000 in 2004, according to recent research by eJobs Recruitment Specialists’ financial planning division.
The analysis of advertised industry roles in Sydney, regional NSW and the ACT over the three months to 31 January, 2008, revealed a median salary of $70,000 for paraplanners.
At this level, some firms were willing to consider individuals with just 12 months’ experience.
Some senior paraplanner roles offered salaries of up to $120,000 for three to five years’ experience and ADFS or Certified Financial Planner (CFP) qualifications.
Trevor Punnett, managing director and financial planning recruitment manager at eJobs, says salaries have been artificially inflated beyond what might be considered reasonable.
“Have salaries gone too high to justify the role? Yes, I think so,” he says.
“I am aware of paraplanners getting $90,000 to $100,000. The question is: when does such a role justify that salary? A lot of clients would say that it’s not justifiable to pay someone $100,000 to do a paraplanning role, you may as well outsource your paraplanning, avoid the on-costs and probably get it for cheaper.”
Punnett says the supply imbalance is seeing firms offer senior paraplanner roles to candidates with as little as six months’ experience.
“Demand is so high and supply is so short that clients will look at a six months’ experience paraplanner for a mid-level paraplanning role, whereas a little while ago they needed a senior paraplanner and would hold out for one,” he says.
In the financial planning realm, the most activity was in the $70,000 to $90,000 range, with $80,000 the median salary.
At this level, Punnett says two years’ experience was generally sought, with ads requesting just RG146 or a DFP, although ADFS was “preferred”. Banks are generally offering more generous packages than practices, although the key for independent firms is to emphasise the long-term benefits of becoming a practice adviser. For younger candidates, the potential for them to progress up the ranks within the business is a strong draw card.
More and more practices are looking to introduce incentive programs and/or equity share programs, where staff have the chance to acquire an ownership stake in the business.
“[The banks and institutions] have deeper pockets so a lot of up-and-coming younger advisers are tempted to go to them because of that,” Punnett says.
“But one would have to believe that there’s a break even point beyond which you would earn more as a practice adviser than an institutional senior financial planner. You have to consider equity and building an asset; obviously you can do that in a practice but in a bank they’re not your clients.”
