Cultivating The Next Generation Of Financial Services Professionals

Vince Shorb is CEO of the National Financial Educators Council – an IACET Accredited Provider – and a leading financial wellness advocate.

The financial services industry—spanning banking, insurance, investment and wealth management—serves as the backbone of a thriving economy. However, the industry is now grappling with a critical challenge: a shortage of skilled workers. Over the next decade, more than one-third of financial advisors, controlling about 40% of industry assets, will retire. Changing skill requirements and competition for top-qualified employees contribute to this growing shortage.

Addressing the talent gap will require an innovative and multifaceted approach. One key strategy calls for integrating robust financial literacy education into the high school curriculum. Teaching financial literacy at an early age not only empowers youth with essential life skills but also creates a critical pipeline to cultivate interest and proficiency in financial services careers. This article outlines the problem and offers action steps toward a solution.

Root Causes Of The Talent Shortage

Several factors contribute to the shortage of financial services employees. First, the current workforce is approaching retirement age. According to Cerulli Associates, 37% of financial advisors are set to retire by 2032, with one in four saying they have no succession plan. As these experienced professionals exit the industry, companies will struggle to fill the gap.

Changing skill requirements also fuel the talent shortfall. The rise of fintech, AI and blockchain technologies has revolutionized the industry. These innovations create a greater demand for specialized skills in data analytics, programming and cybersecurity–skills not traditionally associated with finance. The current talent pool is inadequate to meet these growing needs. For example, a study by IDC indicated that the global shortage of full-time developers will reach 4 million by 2025, up from 1.4 million in 2021.

That also means financial services now has to compete with the tech industry for the same pool of qualified data scientists, engineers and analysts. Many tech companies offer lucrative salaries and cutting-edge workplace environments. Financial institutions are exploring innovative hiring approaches, strengthened employer brands and competitive compensation packages to help attract a versatile workforce capable of adapting to the changing industry.

Financial Services Represents A Leading Industry

The U.S. Bureau of Labor Statistics anticipates a faster-than-average growth of 7% in the job outlook for this sector between 2023-2033. And for financial managers, the BLS predicts a 17% growth in jobs during the same time frame—much faster than the average. Notably, the 2023 median annual pay for financial managers was $156,100, half again higher than the average for all STEM occupations ($101,650). Clearly, financial services represents a large and growing industry with significant potential to attract young talent entering the workforce.

Financial Literacy Supports The Financial Services Pipeline

Financial literacy is foundational for individuals entering the financial services industry and, at the high school level, provides valuable early exposure to this field. By equipping students with essential knowledge, practical skills and the confidence to explain and apply financial concepts effectively, financial service leaders can help students graduate better prepared for professional roles and future career opportunities.

Financial literacy programming can include insights into the wide range of roles within the financial services industry, from financial advising and risk management to fintech development and compliance. Students can be introduced to real-world applications of finance, sparking their curiosity about related professions.

Guest speakers from the industry, career fairs and hands-on projects that mimic tasks performed by financial professionals could be used to enhance the learning experience and help students visualize themselves in financial services roles. Students will begin to perceive the industry as more appealing and accessible.

Current Curriculums May Fail To Prepare Students For The Financial Service Industry Workforce

In my experience, I’ve noticed high school coursework typically excludes financial literacy education, and students average less than 25 hours of instruction on the topic. This limited exposure falls far short of the standards required for other core subjects and is insufficient to prepare students for real-world financial decisions. Moreover, the lack of rigor in these courses deprives students of the time and opportunity needed to develop essential skills and spark interest in financial service-based careers.

Adding financial education to high school curricula can also help address a significant challenge in hiring financial service personnel: the ability to pass a credit check. Financial services companies routinely conduct credit checks on applicants for positions related to finance and accounting. According to the Society for Human Resource Management (SHRM), employers perform credit checks 91% of the time on applicants for jobs with financial or fiduciary responsibilities.

Solution: How The Financial Service Industry Can Get Involved

Solving the financial services talent shortage requires collaboration. Policymakers play a role in making sure financial literacy becomes a nationwide priority. Mandating personal finance education in high schools can standardize access to these critical skills for tomorrow’s workforce.

The financial services sector can actively support financial education initiatives by advocating for financial literacy at the state and local level. Businesses might create opportunities for professionals to mentor students and share insights into career paths. Institutions and corporations could develop entry-level internships or job-shadowing programs for high school and college students, providing a firsthand look at the industry.

Programs are available to empower whole communities with financial education training to attract team members who are passionate about improving their finances and helping others gain key financial skills.

Conclusion

The looming talent shortage in financial services presents a serious challenge but also offers an opportunity to rethink how we prepare youth for their futures. Teaching financial literacy in high schools equips students with essential life skills that have powerful potential to improve their job outlook. Leveraging that pathway to demystify the financial services industry and align education with workforce needs can create a pipeline of skilled and motivated professionals ready to lead the financial sector into the future. This solution is a win-win-win for individuals, the industry and the larger society.

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