Perception versus Reality

How does the world perceive financial advisors? I got a taste of what people really think about the financial advice industry recently. I asked a panel of professional women (an accountant, a surgeon, and a lawyer) at a conference why women are choosing their professions in higher numbers but not financial services. The surgeon’s answer was enlightening.

When I think of a financial advisor, I think of men playing golf with their clients. As a surgeon, the work comes to me, but it seems the financial advice business is all about sales.

There is a lot to unpack here. First, as an intelligent woman, she didn’t view financial advice as a career to use her talents. Second, she did not want to be in sales, and I couldn’t agree more with her there. I definitely didn’t want to be “in sales” when I started my career, but more on that later.

There is nothing inherently wrong with golf, (even though I don’t play I find it oddly relaxing to watch on TV) but we have a big problem if this is how the public perceives financial advisors. Unfortunately, it is more than a perception problem, as I have written before, the bar to enter the financial advice industry is way too low. How could we expect to hold ourselves out as professionals with no formal training or credential requirements?

However, a lot has changed in the 15 short years I have been an advisor. First, there are many options for young people entering the business that do not require the ‘eat what you kill’ commission only compensation structure. Most large firms offer salary + bonus compensations models and a longer runway to gather those first crucial clients. RIA firms are reaching a point of maturation, and they are hiring young people to be professional, client-facing advisors. This didn’t exist when I took my first job. I had a choice between the commission-only advisor training program where 99% of people failed, or to take an administrative role on a team. I chose the second option, survived, and scrapped my way to a client-facing role.

Despite the low barrier to entry, more advisors than ever are pursuing professional credentials and higher levels of education. There are more than 80,000 CFP(R) professionals in the U.S. and 154,000 CFA charterholders around the world. When I was in college, there was no degree in financial planning. Now my alma mater, the University of Georgia, features one of the top undergraduate financial planning programs in the country. While the number of financial planning graduates is small, their numbers are growing. The infrastructure for the professionalization of our industry is built. This bodes well for the future of advice.

The financial advice business is experiencing a generational shift, and I believe the trajectory is of this shift is in the right direction. While change isn’t happening fast enough for some of us, it is easy to lose sight of the bigger picture. Large independent RIAs are finally taking meaningful market share from broker dealers, insurance companies, and banks. The large firms are responding in their own way – sometimes by making venture capital investments in their would-be competitors. I am hopeful we will look back on this time as a major pivot point – a pivot to a profession that serves the needs of its clients rather than itself.

I leave you with this iconic Eagle at Number 13 (Azalea) at Augusta National this past weekend and the first winner of the new Women’s Amateur tournament, Jennifer Kupcho.

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