Last year I was invited to join a virtual study group of young financial planners that work with Gen X/Y clients. There are so few young firm owners out there that at times, it can feel a bit lonely when running the business. The study group gives us all the ability to share ideas, get feedback on projects, express excitement or disappointment, and more.
Veronica Dagher, reporter for The Wall Street Journal, asked for a break down of how our study group is run.
Alan Moore, founder, Serenity Financial Consulting, Bozeman, Mont.
All six members are under age 35 and specialize in Gen X/Y clients. Because their offices are spread out across the country, they meet every Monday for 90 minutes using Google Hangouts. Every other meeting features a “Hot Seat” session, in which two members each get 30 minutes to discuss a problem in their practices and ask the group for input. At the end of the discussion, a member is selected to help the “Hot Seat” speaker off-line.
A key factor:
Open communication. “A negative relationship between two members can ruin the entire dynamic,” he says.
On another note, the name of our group is FP Hackers. Check out this video to learn what a “Hacker” is: http://www.youtube.com/watch?v=h11u3vtcpaY
Jeff Schlegel, Senior Editor with Financial Advisor the Magazine, was in the audience for a presentation I gave at the NAPFA National Conference in October last year. Afterwards, we chatted about what I see as the changing landscape for financial advice and how the profession will evolve.
There is data showing the average age of financial advisors is over 56 years old, and we will lose about 200,000 advisors to retirement over the next 10 years. Jeff asked what effect that would have on the profession:
“I hope we lose the 200,000 financial advisors over the next 10 years that everyone keeps talking about [as the older generation leaves the business] because it could let us push the reset button to get new energy into the industry,” says Alan Moore, 26, founder of Serenity Financial Consulting. In many ways, Moore embodies the new wave of Gen Y advisors—tech-savvy, imbued with a sense of purpose and confident they’re at the vanguard of a changing industry.
He also asked how I came to start a firm instead of continuing to work within one. Many folks don’t know I was actually fired, which is when I made the decision to open my own firm.
In Moore’s case, he was fired from his prior job at a successful RIA firm in Wisconsin because he felt it wasn’t moving fast enough into the future. “I was [the problem] employee because I wanted to do things how I wanted to do them, which was tough to do within an established firm,” he says.
After the sting of his firing wore off, Moore talked to people, did some soul searching and concluded he could go it alone. He and his wife fell in love with Bozeman, Mont., but there’s not a big market for financial planning there. But there is in Wisconsin, so Moore set up shop in Milwaukee (with a satellite office in Bozeman) with the intent of attracting clients, getting them used to working with him in a virtual relationship, and then moving full time to Montana and keeping Milwaukee as the satellite location.
“I structured the technology and marketing of the firm with the intention of moving it,” Moore says, noting that creating a virtual office is key to his plans. “I’m amazed by how many advisors refuse to meet with clients other than face-to-face,” Moore says. “It’s an incredibly inefficient way to do business. The use of free video technology has a dramatic effect on clients because they don’t have to drive into the office. Once I have a client do a virtual meeting, I can’t get them back into the office.”
He says most of his clients found him on the Internet, and that only about half of the 40 clients he’s worked with—a mix of hourly planning and retainer fees—live in either Wisconsin or Montana.
Traditionally, fee-only firms charge based on assets which works with older clients, but not necessarily with younger ones.
“The traditional fee-only business model doesn’t work for younger clients who don’t have a lot of assets,” says Alan Moore at Serenity Financial Consulting. “The hourly planning model works, but you need a lot of clients to make that pay.”
With the average age of a financial planner being 56 years old, and the average age of clients hovering around there as well, working with Gen X & Gen Y clients is still an anomaly. A lot of time is spent at national conferences discussing the needs of younger generations of clients, since most advisors have only worked with baby boomers.
I recently spoke with Eric Rasmussen, a reporter for Financial Advisor, about the needs of the next generation clients and how advisors can cater their practice to working with them.
Alan Moore, a fee-only planner in Bozeman, Mont., has his own perspective on this demographic after cobbling out a practice dealing mostly with Gens X and Y. One strategy for winning these younger groups is to be them, he says. If you’re not, hire someone who is.
“Clients want to work with an advisor that understands what they are going through in life and can connect with them,” says Moore. “They also want to know that their advisor will be around for the long haul. If a 30-year-old client hires a 60-year-old advisor, they know they will be shopping for a new advisor in a few years.”
He also agrees with Marston that younger clients, particularly Gen Xers, like to stalk you online first rather than find you through a referral. “You should have a massive presence online to be sure they can learn as much about you as they want,” he says.
Their love of technology is such that many younger would-be clients appreciate it simply if you’re using it—simply doing something like scheduling meetings with online software puts you ahead of the pack, Moore believes. But aside from marketing strategies, it’s also important to know that these clients will have different financial priorities than baby boomers do.
Moore simplifies that even more: “Realize than Gen X and Gen Y aren’t a niche: Saying an entire generation is a niche is like saying working with women is a niche specialty. It isn’t. Realize that these terms only tell how old a client is, nothing more.”
You can read the entire article, which includes comments from several other financial experts, by clicking here.