As the late afternoon sunlight casts shadows through the lecture hall, a handful of students at William Paterson University in Wayne, N.J., watch their professor fill a whiteboard with the words “broker,” “wirehouse,” “insurance,” “RIAs” and “suitability.”
“Has anyone heard of the fiduciary standard before? What is a fiduciary standard; what does that mean?” asks Lukas Dean, a professor and director of the financial planning program at William Paterson, to the 17 students gathered in a lecture hall built for twice as many. “The goal is to cover the financial advice industry and to help you understand the regulatory framework.”
That’s often a challenge for professionals, but the students in Dean’s class are comfortable with the topic. To some, these kids are the future of an industry still trying to define and legitimize itself as it moves away from a sales-based model. Michael Cerone, a transfer student to William Paterson, had some doubts before deciding to declare his major. “I love the investment aspect of it, but I knew I didn’t want to be a stockbroker,” he says.
Indeed, making financial planning a viable academic pursuit for undergraduates is meant to overcome one of the industry’s big obstacles: the fact that young people just don’t seem that interested in joining it. Consider that only 11 percent of all financial advisors were under the age of 35 in 2013, according to data from Cerulli Associates. More advisors retire every year than are replaced.
“We talk about the next generation within the industry, we talk about the need for the next generation to come in as successors, but all that dialogue is in the industry and not on the university campus where the future candidates are,” says Craig Pfeiffer, founder and CEO of Advisors Ahead.
Yet even on campus, Pfeiffer admits, demand (and support) can seem frustratingly lackluster. Programs suffer from lack of recognition and are often placed in the more remote academic outposts. While there are no clear all-encompassing numbers, college programs graduate an estimated 600-2,500 students in a financial planning-related field each year.
Dean puts the number closer to 750. According to data gathered by EMSI from the National Center for Education Statistics, only 637 graduates actually earned a degree specifically in financial planning in 2012. Moreover, the number of students earning this degree has remained relatively flat in recent years. (See chart) Consider that Merrill Lynch alone has 3,500 recruits in its training program annually.
Of course many are earning degrees in other disciplines while taking financial planning courses. A vast majority of the college programs have registered with the CFP Board, which provides curriculum and scholarship requirements to the schools in exchange for the board’s stamp of approval. They started with 25 programs in 1987, just two years after the organization’s creation. Today, there are over 360 registered programs, including certificate, baccalaureate, master’s, and doctoral programs. The number of baccalaureate programs alone has grown from 90 in 2009 to 120 in 2014, with 52 additional programs currently in development.
Yet the number of students has stayed relatively flat. Of the colleges that offer a financial planning curriculum, Pfeiffer estimates that half have 10 or fewer students enrolled. Only a handful have more than 100.
Even new areas of study, such as homeland security and computer game design—both of which didn’t exist 10 years ago, according to financial aid website FastWeb—are gaining traction at much faster rates. Over 150 colleges now offer computer game design degrees, including Massachusetts Institute of Technology’s Game Lab and related programs.
“In other professions, such as accounting, corporate finance, portfolio management, the gaming industry, there are clear roadmaps to success and far fewer barriers to entry for new professionals,” Pfeiffer says. It’s easier to rapidly build a college program if administrators understand the degree, know there is industry support and see a clear career path for students after graduation.