Financial planning BA debuts at W. P. Carey School

Are people in the U.S. ready for retirement? It depends on whom you ask.

One 2014 study produced by the Rand Corporation, a non-profit think tank, concluded that 71% of Americans near retirement age were adequately prepared for retirement largely because they’d likely be spending less than they did in younger years. On the flip side, a 2019 report by the Federal Reserve shows that 64% of non-retired adults say they are not financially prepared or are unsure. In that study, 25% of survey respondents said they had no retirement savings, including 13% of non-retirees over the age of 60.

Either way, those who aren’t sure they’re on-track financially might want to connect with graduates of the W. P. Carey School’s new financial planning program. The program is designed to help its graduates come up with tailor-made financial guidance for individuals and families. “This is a brand-new major,” explains Thomas Bates, distinguished scholar among the Dean’s Council of 100 and associate professor of finance. “We weren’t just piecing together existing courses, so it’s not something students could have done on their own.”

Along with giving students the targeted coursework and internship opportunities to enter a financial planning career, the new program prepares students to immediately sit for the certified financial planner (CFP) certification exam.

Supply for demand

Why did ASU add this major? Simply put, there was a demand for it, and that demand came from both students as well as the community.

On the student side, personal finance has long been one of the most popular courses the finance department offers, especially among non-finance majors. “There are hundreds and hundreds of students for that class every year,” Bates says.

Overall, this major also enjoys a bright outlook. Employment for personal financial advisors is forecasted to grow 15% from 2016 to 2026, much faster than average for other occupations, according to the Occupational Information Network (O*NET), which is sponsored by the U.S. Department of Labor’s Employment & Training Administration.

In the Phoenix metro area, Bates notes that several organizations in the financial services industry could use personal finance skills. These include State Farm, Versant, USAA, and Vanguard. “They hire a lot of our students and, frankly, the way we had the original finance major set up, it trained students more for a corporate finance or portfolio management function,” he explains.

Finance students can take one of two paths, says Debra Radway, one professor who championed this program addition. “They can go work for a corporation like an Intel or Walmart, where they work on finance for the company. Or they can work with individuals on their investments, taxes, and insurance … personal finance issues. Students usually have a predisposition to go one way or the other.”

Which students would pick the personal banking or financial planner’s path? Bates says a desire for helping others and an entrepreneurial spirit are two characteristics that might make the field a good fit. “You have to be a people person because that’s who you’re dealing with daily,” he says. He also maintains that planners need a passion for financial markets. As for the entrepreneurial side of things, Bates says many people “go off and set up their own advisory business.”

Wealth of information

To support these people-loving, entrepreneurial students, Bates, Radway, and others in the finance department have already created four new finance courses and one new accounting course for the new major. “None of this material was being taught in any department before,” Bates says. That material includes personal tax planning and personal portfolio management, both of which Bates says are very different from institutional tax or portfolio management.

Whereas most people have shorter investment timeframes because they’re investing for retirement, institutions “have infinite horizons,” he continues. Another difference: Personal tax planning may include avoiding unnecessary tax burdens for heirs through estate planning.

Radway, who spent many years doing private banking and still manages investments for a small number of clients, considers financial planning a mission. “If you look at a family’s happiness, a lot of it has to do with how well they can manage their money. If you don’t have money or you’re unable to manage your money effectively, it creates a lot of stress,” she says. She adds that financial knowledge — particularly that which helps people manage their cash and build capital — “relieves stress for families. It also helps with social justice issues.”

Capital idea

“I’m a big believer in social justice,” Radway says, adding that part of the equation is wealth inequality, which could be ameliorated a bit if people understood that financial stability stems from building up personal capital. That, she says, can be done through retirement savings — such as those made via a 401(k) account — as well as homeownership. “I had many clients who were multi-millionaires, and they were driving old Hondas,” she recalls. “Most of them started from modest means but they worked hard and focused on building capital. They understood how important that was. I hope we can turn out graduates who will increase that knowledge.”

Students in the program will get more than theoretical instruction. The program is designed to give students practical experience, as well. For instance, the course titled Personal Tax Management focuses exclusively on tax issues at the personal level. “We’ve never had a class like that before at the undergraduate level,” Bates says. Built with case studies and modeling exercises, he says the course “will give students experience by exposing them to several different cases associated with personal financial problem-solving. “We’ll have them jump in and get their hands dirty trying to solve some of the problems they’re going to face in the real world,” he adds.

Students will also get some exposure to the customer’s side of the financial planning world. In the insurance class, for instance, students must go out and get insurance quotes for themselves.

Finally, the program helps students immerse themselves in the financial planning field through internships. Given the level of donor support among nearby firms, Bates says “the community seems to want to support this program.”

Students are attracted to it, as well. “We have a high level of excitement about the program,” says Bates. Already, he’s seen some 150 freshmen who’ve expressed an interest in the major. “That’s something that has never happened before. Usually, we don’t even have a lot of students who are aware of a program like this until a year or two after we rolled it out.”

Those who go into the field stand to find plenty of opportunities. Not only are there jobs to fill, but many are also lucrative jobs. According to O*NET, the median salary for a certified financial planner is $90,640. Other jobs that would employ people with this major include bank manager, which has a median salary of $125,080, financial manager — same median salary — and financial specialist, a job that could put $63,780 a year into a financial planning graduate’s annual paycheck.

Learn more about the business degree in financial planning.

By Betsy Loeff

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