Fundamentals of Human Resource Management 5th Edition by Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

Exercise 19

Mentoring the Next Generation of Financial Planners
Often, the people who choose financial planning as a career are attracted to the independence of a small practice where they can work more or less on their own in an office and see their own clients. At the same time, the combination of skills required for success-the financial knowhow coupled with the ability to have clear and motivational conversations with clients, not to mention marketing one's services-is challenging to master. Inexperienced financial planners could greatly benefit from having someone guide them, yet the independent work style does not provide an easy avenue to finding mentors.
Several companies are stepping forward to mentor financial planners in spite of the obstacles. One of the larger organizations is Ameriprise Financial, based in Minneapolis. When new advisers sign on with the company, it matches them with a mentor as part of its training program. Broker-dealers may decide to leave company offices to work independently as franchisees. Those who set this goal can ask for a mentor from the Advisors in Transition Mentor Council, who will prepare them to move out on their own.
Smaller firms, too, can mentor their new hires. At Searcy Financial, which serves clients in Overland Park, Kansas, mentoring is a personal commitment of the founder, Mike Searcy. A leadership conference prompted Searcy to reflect on what kind of legacy he would leave to the next generation. He concluded that the only way his firm would outlive him would be if he hired and developed the next generation of financial advisers to serve his community. He started with his daughter, Jessica Maldonado, whose background is in marketing and communications. The two of them started a formal mentoring program in which Searcy assigned Maldonado readings, which they would meet to discuss. As she learned enough about the financial industry to become proficient, their conversations became more informal, swapping ideas about industry trends and business strategy. Searcy brought in another financial planner, Marc Shaffer, who after four years of mentoring was able to take on an ownership stake as a partner in Searcy's firm.
Besides establishing a company's future, mentoring might play a role in helping the industry develop a broader pool of talent. Today most financial planners are white men, and some industry leaders see this as limiting their ability to relate well to a large segment of the population. Ameritrade, for example, is aiming to have its workforce reflect its market for services. It hosted a women's leadership roundtable at a recent national conference to address that issue. Speakers noted that women tend to handle a majority of household money and tend to outlive men, so they are in great need of financial advice. In that context, Ameritrade's concern for the issue is an intensely practical one.
While women are underrepresented among financial planners, racial and ethnic minorities are even rarer. A recent survey by the Certified Financial Planning Board of Standards found that 93% of certified financial planners were white. Major companies that hire financial planners have stated that diversity is a concern for them in recruiting, but progress can be slow. Karen Pomicter, executive director of the Financial Planning Association of Western New York, says the lack of diversity "bothers us." In her five years as executive director, Pomicter could not recall seeing any minority-group members at the group's events. One of her ideas for encouraging diversity is to offer mentoring programs for new financial planners.
If her group moves ahead with that idea, one person she might recruit for that program is former adviser Lavon Stephens, who worked for four years at Prudential as its only black financial adviser in upstate New York. Stephens sees a need to develop financial literacy in the black community and instill an ambition to leave a legacy. Since leaving Prudential, Stephens has been preparing to obtain a designation as a Certified Financial Planner, with the aim of working as an estate planner and opening a private practice with a mission of teaching financial literacy. If he achieves those goals, Stephens will almost certainly be a mentor to many, many clients-and perhaps to the next generation of financial planners.
Where might a small financial-planning firm find mentors for its staff?